Nissan's ousted chairman Carlos Ghosn told aides to write memos for back-loaded pay

Nissan's ousted chairman Carlos Ghosn told aides to write memos for back-loaded pay
Nissan Motor Co. said Carlos Ghosn will step aside as CEO after leading the firm for 16 years, allowing him to concentrate on deploying his cost-cutting expertise across its alliance with Renault SA and newly added Mitsubishi Motors Corp.
PHOTO: Reuters

Carlos Ghosn, Nissan Motor Co.'s former chairman, instructed his aides to write a memorandum every year stating that he would receive remuneration of about ¥1 billion (S$12.1 million) annually after retiring his post as an executive, according to sources.

Ghosn, 64, allegedly falsified the firm's securities reports by understating his remuneration to make it appear that his pay was lower than it really was. The additional remuneration of about ¥1 billion to be paid later was not included on Nissan's securities reports.

The special investigation squad of the Tokyo District Public Prosecutors Office has obtained the memos, which it believes constitute important evidence showing Ghosn and other suspects intentionally continued understating the top exec's pay on the annual securities reports, sources close to the prosecutors said.

Ghosn was arrested for allegedly understating his remuneration by about ¥5 billion over five years through fiscal 2014, in collusion with Greg Kelly, 62, former representative director of Nissan.

He also is suspected to have understated his remuneration by a total of about ¥3 billion over three years through fiscal 2017.

According to the sources, Ghosn had received about ¥2 billion annually at least from around the mid-2000s.

However, when the remuneration disclosure system for executives started in 2010, Ghosn allegedly gave instructions to Kelly and others to make his remuneration appear on the reports as being around ¥1 billion, while keeping his annual pay at ¥2 billion. He allegedly issued this instruction in a bid to dodge criticism for receiving such a huge income.

About the remaining remuneration, which was not stated in the reports, Ghosn had intended to receive it after his retirement - when he would have no obligation to disclose his pay as an executive.

To ensure that Nissan would pay the difference to Ghosn, he directed Kelly and other executives to create the annual memos stating the amount of the remuneration and a guarantee that the remaining pay would be given later.

The memorandums were reportedly shared only among Kelly and other limited executives close to Ghosn.

Because the post-retirement pay had not been set aside, that remuneration would have to be raised from profits accumulated by Nissan, the sources said.

According to the Financial Services Agency, the Financial Instruments and Exchange Law stipulates that a fixed amount of remuneration for executives is to be stated each year on securities reports, even if it is to be paid in the future.

The remuneration to be paid to Ghosn in the future revealed in the memos could total about ¥8 billion, which would equal the amount that was not stated in the reports over the eight years through fiscal 2017.

The special investigation squad obtained the memos among information received from Nissan in investigating a spate of wrongdoings. Investigators believe that the suspects planned to receive the huge payout after their retirements, the sources said.

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