Nissan has significantly expanded its internal investigation into the financial affairs of Carlos Ghosn, widening its scope to include his dealings with business associates in India, other parts of Asia, the Middle East and Latin America.
The former Nissan chairman, who remains chief executive of the Japanese automaker’s alliance partner, Renault, has been detained in Tokyo since his arrest on November 19.
People close to Nissan said an investigation that began over the summer as an operation conducted under intense secrecy by a handful of senior executives now involved “hundreds” of the company’s compliance, legal and accounting staff worldwide.
The same people said the company was, in effect, obliged to share the findings of its now substantially widened investigation with Tokyo prosecutors, raising the possibility that more allegations against Mr Ghosn could surface in coming weeks.
People familiar with the investigations said a focus of attention was Mr Ghosn’s deployment of money allocated to the “CEO reserve fund” — a discretionary fund designed for making unanticipated payments. Anything resembling regular outgoings from that fund would now be covered by Nissan’s internal probe, said people with knowledge of the investigation.
People inside Nissan said that Mr Ghosn’s arrest had affected morale across the company. A company-wide edict was issued in recent days asking employees not to contact either Mr Ghosn or Greg Kelly, a close aide and board member who was also arrested in November. Mr Kelly was released on bail earlier this week and is currently understood to be in hospital in Ibaraki, a prefecture adjacent to Tokyo. He released a statement to the media saying that he believed he would be found innocent in court.
Mr Ghosn has been held for more than five weeks on charges of filing corporate accounts that understated his true salary. Prosecutors last week rearrested him on suspicion of breach of trust, adding to the list of allegations.
Prosecutors are investigating the background to a series of payments made by Nissan to Khaled al-Juffali, an executive at one of Saudi Arabia’s biggest conglomerates, according to people with knowledge of the investigations.
Last week, a brief statement by Tokyo prosecutors said it was investigating allegations that Mr Ghosn had attempted to address unrealised losses from a derivatives transaction totalling ¥1.85bn ($16.7m) by transferring them to Nissan from his personal asset management company at the height of the financial crisis in 2008.
Mr Ghosn is also alleged to have transferred, via a series of payments across four different years, $14.7m from a Nissan subsidiary account to one held by an unidentified person, the prosecutors said. That person is alleged to have helped the former Nissan boss move the derivatives transaction back to his Lebanon-based asset management company by arranging a letter of credit to Shinsei Bank, which demanded additional collateral on the currency swaps agreement. Shinsei declined to comment.
The payments were allegedly made in four separate years from June 2009 to March 2012 through the CEO reserve fund to Mr Juffali, according to people with knowledge of the deal. Mr Juffali — vice-chairman of the infrastructure, construction, insurance and autos conglomerate EA Juffali and Brothers, whom Mr Ghosn has known for about 20 years — could not immediately be reached for comment.
People close to Nissan said the company was surprised that prosecutors had decided to pursue Mr Ghosn over this particular transaction, details of which arose early in the company’s own investigation but were dismissed as a lower priority.
Through Al-Dahana, a company in which he held a majority stake, Mr Juffali became closely associated with Nissan’s operations in the Middle East, striking a joint venture which people close to the Ghosn family say was a critical part of Nissan’s operations in the region.
Mr Juffali, who has sat on the board of the Saudi Arabian Monetary Authority, the kingdom’s central bank, since 2016, is also an investor in another Nissan joint venture in the region.
A person familiar with Mr Ghosn and his family’s thinking said that they did not believe there was anything suspicious or incriminating about the alleged payments made to Mr Juffali, or that they represented a “quid pro quo” payment relating to Mr Ghosn’s financial transactions.
Mr Ghosn’s lawyers could not immediately be reached for comment but, according to a person familiar with his legal defence, he maintains his innocence.
Mr Ghosn has also told investigators that the payments were made for legitimate business reasons, according to Japanese media.
Nissan said it could not comment on matters related to Mr Ghosn’s alleged breach of trust but in a statement said that its investigation had uncovered substantial and convincing evidence of misconduct, resulting in a unanimous board vote to dismiss Mr Ghosn and Mr Kelly as chairman and representative director.
“Our own investigation is ongoing, and its scope continues to broaden,” said the statement.
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