Carlos Ghosn: Former Nissan chairman re-arrested after Japanese prosecutors add new allegation

Breach of trust allegations filed a day after court rejected prosecutors’ request for longer detention

Nissan‘s former chairman Carlos Ghosn was re-arrested on Friday after Japanese prosecutors added a new allegation of breach of trust, dashing his hopes for posting bail quickly.

Mr Ghosn and another former Nissan executive, Greg Kelly, were arrested 19 November and charged with underreporting Mr Ghosn’s income by about 5 billion yen (£35m) from 2011-2015. They face the prospect of further charges for underreporting Mr Ghosn’s income for other years by nearly 10 billion in total.

The breach of trust allegations were filed a day after a court rejected prosecutors’ request for a longer detention of both men. The new allegation only applies to Mr Ghosn, and Mr Kelly could still be bailed.

In a statement on Friday, prosecutors alleged that Mr Ghosn in 2008 transferred a private investment loss worth more than $16m (£13m) to Nissan by manipulating an unspecified “swap” contract. Mr Ghosn also profited by having the company transfer a total of $14.7m to another company to benefit himself and that company’s owner, who helped in the contract manipulation, prosecutors said.

Shin Kukimoto, deputy chief prosecutor at the Tokyo District Prosecutors Office, refused to say if the two transactions were related or how Mr Ghosn illegally profited. He also declined to identify the collaborator or whether the transactions were made overseas.

Mr Ghosn and Mr Kelly are only charged with underreporting the former chairman’s pay over five years, in violation of the Financial Instruments and Exchange Act. They have not been formally charged with an additional allegation of underreporting another $36m for 2016-2018, for which their first 10-day detention was to expire on Thursday.

Prosecutors have been criticised for separating the allegations as a tactic to detain Mr Ghosn and Mr Kelly longer. They say Mr Ghosn and Kelly are flight risks.

The maximum penalty for violating the financial act is up to 10 years in prison, a 10 million yen fine, or both. Breach of trust also carries a similar maximum penalty. The conviction rate in Japan is more than 99 per cent for any crime.

Mr Ghosn was sent by Renault in 1999 to turn around Nissan, then on the verge of bankruptcy, and he led its rise to become the world’s second-largest car manufacturer. The arrest has triggered international attention and the scandal has raised concerns over the financial health of the Japanese company and the future of its alliance with Renault.

Nissan has said its own investigation found serious misconduct including underreporting of Mr Ghosn’s income and misuse of company assets. His downfall is seen by some as a manoeuvre by others at Nissan to gain power in the alliance.

Mr Kelly’s wife, Donna, said in a video message carried by TV Asahi and other networks that her husband was “wrongly accused as part of a power grab” at Nissan. “Greg and Mr Ghosn fully believe that they did not break the law,” she said.

Nissan dismissed Mr Ghosn as chairman and Kelly as a representative director. It has also put off a decision on Mr Ghosn’s replacement.

AP