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MarketScreener Homepage  >  Equities  >  Tokyo  >  Nissan Motor Co Ltd    7201   JP3672400003

NISSAN MOTOR CO LTD

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Nissan Motor : New Charges Bring Ghosn Closer to Bail

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01/12/2019 | 03:48am EDT

By Sean McLain

TOKYO -- Carlos Ghosn was hit with fresh charges Friday of abusing his position at Nissan Motor Co. for personal gain, paving the way for him to seek his release on bail.

Tokyo prosecutors formally accused Mr. Ghosn of arranging for Nissan to pay $14.7 million to the company of a Saudi Arabian businessman who had earlier helped Mr. Ghosn with a personal financial problem, making official a charge previously cited as a basis for detaining Mr. Ghosn.

Under Japan's legal system, suspects can be held without possibility of bail for several weeks while prosecutors investigate a suspected crime, but once they are formally charged, they can seek to be released on bail. Mr. Ghosn's lawyer did so a few hours after the charges.

A bail hearing was set for Tuesday, and the Tokyo court lifted restrictions on visitors, Mr. Ghosn's defense team said. Until now, he hasn't been able to see his family.

Mr. Ghosn was arrested Nov. 19 in Tokyo and has been in jail since. He was charged Dec. 10 with understating his compensation on five years of Nissan's financial reports, and prosecutors on Friday added three more years to the charges. Altogether, over eight years ending March 2018, Mr. Ghosn is accused of failing to report Yen9.1 billion ($84 million) in deferred compensation.

In addition, according to Friday's new charges, Mr. Ghosn had Nissan take temporary ownership in October 2008 of a personal derivatives contract that was facing unrealized losses of around Yen1.85 billion ($17 million). Prosecutors say Nissan suffered as a result.

Mr. Ghosn took back control of the contract in February 2009 with the aid of a letter of credit arranged by his friend, Saudi businessman Khaled Al Juffali, according to both sides in the case. Prosecutors said Mr. Juffali's company received $14.7 million from Nissan between 2009 and 2012, payments they said were made for the personal benefit of Messrs. Ghosn and Juffali.

At a court appearance Tuesday, Mr. Ghosn said he was innocent of all wrongdoing and said the prosecutors' entire case was "meritless and unsubstantiated."

Mr. Ghosn and Mr. Juffali's company said the payments were for legitimate business purposes, including settling a dispute with Nissan's business partner in Saudi Arabia. The Saudi company also arranged for government approval and financing for a Nissan factory in the country, they said.

Mr. Ghosn said the derivatives contract with a Japanese bank was aimed at protecting him from a fall in the Japanese yen, the currency in which he received his Nissan pay, but it was facing losses during the 2008 global financial crisis. His lawyer said that although Nissan temporarily took over Mr. Ghosn's side of the deal, Mr. Ghosn signed an agreement ensuring that Nissan couldn't suffer losses, and in fact no losses for Nissan resulted.

Nissan said it filed a criminal complaint against Mr. Ghosn, accusing him of inflicting losses on the company through the same actions targeted in the prosecutors' charges. Nissan said its own investigation into alleged misuse of company funds by Mr. Ghosn was continuing.

The crime of aggravated breach of trust -- the formal name for abusing one's executive position for personal gain -- carries a maximum sentence of 10 years in prison and a fine of Yen10 million ($92,000) in Japan.

As for the charges about his alleged deferred compensation, Mr. Ghosn said any internal discussions about paying him after retirement were hypothetical and nonbinding. Mr. Ghosn cited what he called the "death test," whether Nissan would owe his heirs anything beyond his standard retirement allowance. "The answer is an unequivocal 'No,' " he said on Tuesday.

Nissan as a company and Mr. Ghosn's alleged co-conspirator, former Nissan legal head Greg Kelly, have also been charged with falsifying Mr. Ghosn's compensation over the eight-year period. Nissan expressed regret over the case but didn't say whether it would contest the allegations.

Mr. Kelly, a lawyer, has said he advised Mr. Ghosn on his compensation based on legal advice he received. Mr. Kelly has said he is innocent and looks forward to defending himself at trial.

Mr. Kelly was discharged Friday from a hospital about an hour outside Tokyo, where he had been recovering from neck surgery. He was released on bail on Christmas Day. He had been due to receive surgery in the U.S. when he was arrested alongside Mr. Ghosn in November. Mr. Kelly is recovering well from his surgery and is moving to a residence in Tokyo approved by the court, his lawyer said.

Mr. Ghosn had a high fever on Thursday and couldn't meet his lawyers, but the fever eased and he resumed his usual schedule Friday.

Assuming prosecutors don't cite a fresh set of suspicions as a basis for interrogating Mr. Ghosn further without possibility of bail, Friday's charges will bring the initial stage of the case to a close and put the focus on whether Mr. Ghosn can finally get out of jail.

Japan allows for the lengthy detention of criminal suspects, during which period they are ineligible for bail. Suspects also face daily grilling from prosecutors without the presence of their defense attorneys.

Mr. Ghosn is far from certain to receive bail, according to his lawyer, Motonari Otsuru, who formerly led the special investigation section of the Tokyo prosecutors' office that is now pursuing Mr. Ghosn. Defendants charged with breach of trust are rarely released on bail before trial if they don't confess, Mr. Otsuru said. He said he believed a trial wouldn't start for at least six months.

The process of preparing for trial in Japan can take as long as a year, said Shin Kukimoto, deputy chief prosecutor in Tokyo, at a Friday news conference.

Megumi Fujikawa contributed to this article.

Write to Sean McLain at sean.mclain@wsj.com

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Financials (JPY)
Sales 2019 11 739 B
EBIT 2019 -
Net income 2019 466 B
Debt 2019 6 590 B
Yield 2019 5,96%
P/E ratio 2019 8,05
P/E ratio 2020 7,38
EV / Sales 2019 0,90x
EV / Sales 2020 0,90x
Capitalization 4 018 B
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Mean consensus HOLD
Number of Analysts 20
Average target price 1 006  JPY
Spread / Average Target 5,7%
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Managers
NameTitle
Hiroto Saikawa Vice Chairman, President & Chief Executive Officer
Hiroshi Karube Chief Financial Officer
Takao Asami Senior Managing Executive Officer & Head-Research
Anthony Thomas Chief Information Officer & Corporate VP
Carlos Ghosn Bichara Director
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