Monday, October 26, 2020

Nissan and its former boss Carlos Ghosn agrees settlement with US regulators over fraud charges

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Japanese car giant Nissan and its ousted former chief executive Carlos Ghosn were charged with fraud today by US regulators.

The US Securities and Exchange Commission said that Nissan, Ghosn and former director Greg Kelly had made false financial disclosures that omitted more than $140m (£112.6m) to be paid to Ghosn in retirement.

Nissan, Ghosn and Kelly have agreed to settle the charges, without admitting or denying wrongdoing.

Ghosn was arrested in Japan late last year and sacked by Nissan on charges of financial misconduct, which he denies. He has also been sacked as chief executive and chairman of Renault.

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He was freed from jail in Japan in April on $4.5m (£3.6m) bail.

The SEC said that Ghosn, with substantial assistance from Kelly and other subordinates at Nissan, engaged in a scheme from 2009 to conceal more than $90m in compensation from public disclosure, while taking steps to increase Ghosn’s retirement allowance by more than $50m.

The complaint said Nissan’s board delegated to Ghosn the authority to set executive compensation levels, including his own, in 2004.

It said that each year, Ghosn fixed a total amount of compensation for himself, with a certain amount paid and disclosed and an additional amount that was unpaid and undisclosed.

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The SEC said that Ghosn and his subordinates, used different methods to structure payments of the undisclosed compensation, such as entering into secret contracts, backdating letters to grant Ghosn interests in Nissan’s long term incentive plan and changing calculations on his pension allowance to provide more than $50m in additional benefits.

Kelly and Ghosn’s Nissan subordinates misled Nissan’s chief financial officer and Nissan issued a misleading disclosure in connection with the increased pension allowance, the SEC said.

The $140m in undisclosed compensation and retirement benefits was never paid to Ghosn, the SEC said.

Nissan agreed to settle the charges, paying a $15m fine.

Ghosn also settled the charges, agreeing to pay a $1m fine and receiving a 10-year officer and director ban.

Kelly agreed to a $100,000 fine and a five-year officer and director bar and a five-year ban on appearing before the SEC as a lawyer.

Stephanie Avakian, co-director of the SEC’s division of enforcement, said: “Investors are entitled to know how, and how much, a company compensates its top executives. Carlos Ghosn and Kelly went to great lengths to conceal this information from investors and the market.”

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