Ghosn planned loan in scheme to obtain money for collateral, sources say

The Yomiuri Shimbun

The Yomiuri ShimbunFormer Nissan Motor Co. Chairman Carlos Ghosn planned to extend a loan of about ¥3 billion from the carmaker to a company run by an acquaintance in Saudi Arabia, aiming to have the money flow back to him and use it for the additional collateral demanded by a bank, sources said.

Ghosn’s move came when he was asked to put up additional collateral for a valuation loss that he had incurred through a personal investment, according to the sources, who are familiar with the case.

Ghosn, 64, was ultimately not able to carry out his plan, as the scheme was seen as problematic within Nissan. Prosecutors believe he may have attempted to get the money paid back to him somehow by the acquaintance’s company and to use it to cover the collateral. Ghosn is currently charged with aggravated breach of trust.

The special investigation squad of the Tokyo District Public Prosecutors Office is expected to serve Ghosn with a supplementary indictment as early as Friday, on suspicion of committing aggravated breach of trust in violation of the Companies Law.

On Tuesday, Ghosn attended a hearing at the Tokyo District Court to disclose the grounds for his detention. It was the first time he had been seen in public since being arrested on suspicion of violating the Financial Instruments and Exchange Law on Nov. 19.

In stating his opinion regarding the case, Ghosn denied the allegations against him as unsubstantiated. He said he was innocent and that he had been wrongly accused and unfairly detained.

On the day, Ghosn’s defense counsel filed a request with the district court to annul his detention.

According to the sources, Ghosn was engaged in swap transactions with Shinsei Bank in Tokyo. However, he suffered a valuation loss worth about ¥1.85 billion due to the so-called Lehman shock in the autumn of 2008. In October that year, he shifted all of his pertinent rights, including the valuation loss, to Nissan.

In November the same year, the Securities and Exchange Surveillance Commission conducted a periodic inspection at the bank, during which it became aware of the transfer of Ghosn’s rights to the carmaker. In late February 2009, he shifted the rights again to his own asset management company.

In doing so, Ghosn was asked by the bank to put up additional collateral of several billion yen. In late January 2009, he held talks with foreign Nissan executives and others, and planned to extend a loan of about ¥3 billion to his acquaintance’s company. Ghosn prepared a document for the approval of the loan mainly in the name of “Financial support to Nissan.” However, his plan fell through as it was viewed as problematic, based on Nissan’s internal check regarding the legal aspects of the loan.

Finally, Ghosn’ acquaintance cooperated with him to secure a credit guarantee, and paid about ¥3 billion in guarantee fees on his behalf. This enabled Ghosn to avoid putting up the additional collateral.

From June 2009 to March 2012, a total of $14.7 million, or about ¥1.6 billion at the current rate, was transferred to his acquaintance’s firm from “CEO reserves,” a confidential fund managed by Nissan Middle East FZE, a Nissan consolidated subsidiary in the United Arab Emirates.

The special investigation team has seized the document for the loan approval, with which Ghosn had attempted to loan the money to his acquaintance’s company. Prosecutors suspect Ghosn of having sent a total of ¥1.6 billion to his acquaintance’s side for such purposes as covering part of the acquaintance’s ¥3 billion payments in guarantee and other fees and also thanking him for that favor.

In his statement before the court Tuesday, Ghosn asserted that the remittance in question was intended to pay adequate fees for his acquaintance’s promotion of extremely important business activities for Nissan.Speech

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