Prosecutors indict Nissan's Ghosn for underreporting pay

Prosecutors indict Nissan's Ghosn for underreporting pay
FILE - In this May 12, 2016, file photo, then Nissan Motor Co. President and CEO Carlos Ghosn answers a question during a joint press conference with Mitsubishi Motors Corp. in Yokohama, near Tokyo. Japanese media say Tokyo prosecutors charged Ghosn on Monday, Dec. 10, 2018, with underreporting his income by 5 billion yen ($44 million) over five years, with another executive and the company. (AP Photo/Eugene Hoshiko, File) (Source: Eugene Hoshiko)

TOKYO (AP) — Prosecutors have charged Nissan Motor Co.'s former chairman Carlos Ghosn, another executive and the automaker itself for allegedly violating financial laws by underreporting income.

The charges imposed Monday involve allegations Ghosn's pay was underreported by about 5 billion yen ($44 million) in 2011-2015. The prosecutors said earlier that the allegations were the reason for Ghosn's arrest on Nov. 19.

The arrest of an industry icon admired both in Japan and around the world has stunned many and raised concerns over the Japanese automaker and the future of its alliance with Renault SA of France.

The prosecutors issued statements Monday outlining new allegations against Ghosn and Greg Kelly, the other executive. Those are of underreporting another 4 billion yen ($36 million) in 2016-2018. Nissan as a company was not mentioned in the latest allegations, which did not give details about the income thought to have been underreported.

In Japan, a company can be charged with wrongdoing. A court date is still undecided as the prosecutors continue to question Ghosn and Kelly.

Tokyo Detention Center, where former Nissan chairman Carlos Ghosn is being detained, stands in Tokyo Monday, Dec. 10, 2018. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko)
Tokyo Detention Center, where former Nissan chairman Carlos Ghosn is being detained, stands in Tokyo Monday, Dec. 10, 2018. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

The maximum penalty for violating Japan's financial laws, as the prosecutors allege, is 10 years in prison, a 10 million yen ($89,000) fine, or both.

Some kind of action by the prosecutors had been expected because the detention period allowed for the allegations disclosed earlier was to end on Monday.

Police motorcycles pass by Tokyo Detention Center, background, where former Nissan chairman Carlos Ghosn is being detained, Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko)
Police motorcycles pass by Tokyo Detention Center, background, where former Nissan chairman Carlos Ghosn is being detained, Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

Nissan Motor Co. confirmed the charges against it in a statement and vowed to strengthen its governance and compliance.

"Nissan takes this situation extremely seriously," it said. "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."

A man walks past outside Tokyo Detention Center where former Nissan chairman Carlos Ghosn is being detained Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn who was arrested on Nov. 19 is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko)
A man walks past outside Tokyo Detention Center where former Nissan chairman Carlos Ghosn is being detained Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn who was arrested on Nov. 19 is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

Kelly, 62, an American, is suspected of having collaborated with Ghosn.

Kelly's attorney in the U.S., Aubrey Harwell, told The Associated Press earlier this month that his client is asserting his innocence. He said insiders at Nissan and outside experts had said the handling of the income reporting was legal.

A journalist stands outside Tokyo Detention Center where former Nissan chairman Carlos Ghosn is being detained, Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko)
A journalist stands outside Tokyo Detention Center where former Nissan chairman Carlos Ghosn is being detained, Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

Ghosn has not commented.

Ghosn was ousted as Nissan chairman and Kelly lost his representative director title following their arrests. They both remain on Nissan's board pending a shareholder's meeting.

Journalists stand outside Tokyo Detention Center where former Nissan chairman Carlos Ghosn is being detained, Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko)
Journalists stand outside Tokyo Detention Center where former Nissan chairman Carlos Ghosn is being detained, Monday, Dec. 10, 2018, in Tokyo. Tokyo prosecutors say Ghosn, who was arrested on Nov. 19, is suspected of underreporting income by 5 billion yen ($44 million) over five years. Japanese media are reporting that the government Securities and Exchange Surveillance Commission is accusing Nissan as a company, along with Ghosn and another executive, of underreporting income. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

Ghosn, 64, was sent to Nissan by its partner Renault SA of France in 1999. He led a dramatic turnaround of the near-bankrupt Japanese automaker. But his star-level compensation drew attention since executives in Japan tend to be paid far less than their international counterparts.

Japanese Prime Minister Shinzo Abe told a news conference Monday that relations between Japan and France are unshakable despite concerns over the future of Nissan's alliance with Renault after Ghosn's indictment.

This undated photo released by Nissan Motor Co. shows Nissan executive Greg Kelly. Tokyo prosecutors on Monday, Dec. 10, 2018, charged Nissan's former chairman Carlos Ghosn with underreporting his income, with Kelly and the company, according to Japanese media reports. Kelly, 62, is suspected of having collaborated with Ghosn. Kelly's attorney in the U.S. says he is asserting his innocence. (Nissan Motor Co. via AP)
This undated photo released by Nissan Motor Co. shows Nissan executive Greg Kelly. Tokyo prosecutors on Monday, Dec. 10, 2018, charged Nissan's former chairman Carlos Ghosn with underreporting his income, with Kelly and the company, according to Japanese media reports. Kelly, 62, is suspected of having collaborated with Ghosn. Kelly's attorney in the U.S. says he is asserting his innocence. (Nissan Motor Co. via AP) (Source: Nissan/Nissan Motor Co.)

"It is important to maintain stability in the Nissan-Renault-Mitsubishi alliance, which is a symbol of industrial cooperation between Japan and France," he told a televised news conference Monday, adding that Japan will promote improved corporate governance in line with global standards.

It is typical in the Japanese legal system for there to be little access to comment by suspects. Prosecutors have also said little.

In this Nov. 21, 2018, photo, a man walks past the logo, left, of Nissan Motor Co. at its Global Headquarters in Yokohama, near Tokyo. Japanese media say Tokyo prosecutors charged Nissan former chairman Carlos Ghosn on Monday, Dec. 10, 2018, with underreporting his income by 5 billion yen ($44 million) over five years, with another executive and the company. (AP Photo/Eugene Hoshiko)
In this Nov. 21, 2018, photo, a man walks past the logo, left, of Nissan Motor Co. at its Global Headquarters in Yokohama, near Tokyo. Japanese media say Tokyo prosecutors charged Nissan former chairman Carlos Ghosn on Monday, Dec. 10, 2018, with underreporting his income by 5 billion yen ($44 million) over five years, with another executive and the company. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

Only Ghosn's attorneys and embassy officials from Lebanon, France and Brazil, where he has citizenship, have been allowed to visit him.

Shin Kukimoto, deputy chief prosecutor at the Tokyo District Prosecutor's Office, declined Monday to say if the suspects were rejecting the allegations. He said Ghosn and Kelly were being detained because they are considered flight risks.

Japanese Prime Minister Shinzo Abe delivers a speech during a press conference at the prime minister's official residence Monday, Dec. 10, 2018, in Tokyo. (AP Photo/Eugene Hoshiko)
Japanese Prime Minister Shinzo Abe delivers a speech during a press conference at the prime minister's official residence Monday, Dec. 10, 2018, in Tokyo. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

Japan's criminal justice system long has been criticized for detaining people for extended periods to pressure them to confess. The conviction rate for those charged is more than 99 percent.

Kukimoto denied that prosecutors were working to force confessions.

In this Nov. 21, 2018, photo, a man walks near the logo of Nissan Motor Co. at its Global Headquarters in Yokohama, near Tokyo. Japanese media say Tokyo prosecutors charged Nissan former chairman Carlos Ghosn on Monday, Dec. 10, 2018, with underreporting his income by 5 billion yen ($44 million) over five years, with another executive and the company. (AP Photo/Eugene Hoshiko)
In this Nov. 21, 2018, photo, a man walks near the logo of Nissan Motor Co. at its Global Headquarters in Yokohama, near Tokyo. Japanese media say Tokyo prosecutors charged Nissan former chairman Carlos Ghosn on Monday, Dec. 10, 2018, with underreporting his income by 5 billion yen ($44 million) over five years, with another executive and the company. (AP Photo/Eugene Hoshiko) (Source: Eugene Hoshiko)

"We do not have such a scenario. There is no such thing and we do not force suspects to make confessions to fit the story," he said in response to a reporter's question.

Meanwhile, the Securities and Exchange Commission said it had filed criminal complaints against Ghosn, Nissan and Kelly, paving the way for the prosecutors to charge them. A commission official said Monday that Nissan, Ghosn and Kelly were suspected of falsifying reports on millions of dollars' worth of Ghosn's income.

Nissan has said that an internal investigation found three types of misconduct: underreporting income to financial authorities, using investment funds for personal gain and illicit use of company expenses.