New Allegations Against Ghosn

The latest investigation by Tokyo prosecutors into Nissan Motor Co.’s Carlos Ghosn centers on his relationship with a Saudi Arabian businessman, Khaled Al Juffali, who runs part of Nissan’s Middle East business, according to people familiar with the matter. Some of the people said payments by Nissan to a Juffali company—on which prosecutors have cast suspicion—were for legitimate business purposes.

Prosecutors on Dec. 21 cited new suspicions, a move that allowed them to detain Mr. Ghosn further without possibility of bail. They said a person identified only as “B” helped Mr. Ghosn nearly a decade ago when the then-Nissan chief executive was facing losses on a personal derivatives transaction. Later, prosecutors said, Mr. Ghosn arranged Nissan payments of $14.7 million to a company managed by B, alleging it was “with the aim of pursuing profit” for himself and B.

Mr. Ghosn was initially arrested in Tokyo on Nov. 19 and charged Dec. 10 with underreporting his income on Nissan’s financial statements. His lawyer has said Mr. Ghosn denies wrongdoing in that matter. The executive, who was stripped of his title as Nissan chairman but remains a director, is still in a Tokyo jail.

Ghosn’s re-arrest – the latest twist in a saga that has jolted Nissan’ alliance with France’s Renault SA – came a day after a Tokyo court unexpectedly rejected a request from prosecutors to extend Ghosn’s detention. Unlike his previous arrests on allegations of under-reporting his compensation which he faced together with former representative director Greg Kelly, prosecutors have leveled these latest accusations against Ghosn only.

The Nissan sources with knowledge of the matter said the automaker’s investigators concluded that Ghosn was unsuccessful in his attempt to have Nissan shoulder the losses directly. Japan’s Securities and Exchange Surveillance Commission had at some stage flagged Ghosn’s attempt to have Nissan directly shoulder the losses as illegal, one of the sources said. It was not immediately clear what the SESC deemed illegal. A SESC spokesman said he could not comment on specific cases.


Todd “Bubba” Horwitz