Carlos Ghosn - Photo from Renault
Japan's Securities and Exchange Surveillance Commission has officially charged Nissan Motors’ former Representative and Chairman Carlos Ghosn for violating the Financial Instruments and Exchange Act by making false disclosures in annual securities reports.
The former CEO who has been in detention since November 19 is being accused of understating his compensation by about half of the actual 10 billion yen ($88.8 million) over five years from 2010.
"Nissan takes this situation extremely seriously. Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company expresses its deepest regret,” the carmaker said in a statement.
The Japanese prosecutor has also indicted Nissan for filing false financial statements.
The automaker has been trying to distance itself from the high-profile scandal; it discharged Ghosn as Chairman and Representative Director shortly after his detention, along with Greg Kelly the Representative Director who was allegedly involved with Ghosn in the false disclosure.
Prior his arrest, Ghosn was the CEO of both Nissan Motors and Renault, and the chairman of the Renault-Nissan- Mitsubishi Alliance.
The executive’s arrest has also raised concerns over the alliance solidarity, though Renault – Nissan and Mitsubishi sought to assure its shareholders in a joint statement in late November that they remain “fully committed” to the partnership.
Ghosn is largely credited for turning around Renault, aggressively cutting costs and slashing jobs to drive efficiency. He led the successful partnership with Nissan Motors, and revived Mitsubishi Motors, joining Renault-Nissan alliance in late 2016.
Under his tenure, the alliance was among the top three automotive groups worldwide with over 10 million vehicles sold per year. Renault owns 43% of Nissan, France owns 15% of Renault, while Nissan is Mitsubishi Motors' largest shareholder.
"Based on a whistleblower report, Nissan has been conducting an internal investigation over the past several months regarding misconduct involving the company's Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly,” Nissan said in its first statement following Ghosn's detention.
The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities that were less than the actual amount, in order to reduce the disclosed amount of Ghosn's compensation.
Shortly after Nissan's announcement, Mitsubishi Motors Corporation too ousted Ghosn from the board. He continues to remain the chairman and CEO of Renault.
Japan's Securities and Exchange Surveillance Commission has said that the penalty could be either "imprisonment of not more than 10 years or a fine of not more than 10 million yen ($88.800), or both, and a fine of not more than 700 million yen ($6.2 million) per corporation."