Ghosn Responds to Charges

Former Nissan Motor Co. Chairman Carlos Ghosn used a court appearance in Tokyo earlier today to reject claims that he underreported deferred compensation and burdened the company with a personal investment loss.

On the first charge, for which he was indicted on Dec. 10, Ghosn does not dispute that some of his compensation was deferred until he retired. But he says he has never been paid compensation that was not disclosed. He also denies that he ever entered into a contract with Nissan to defer any fixed amount of undisclosed compensation.

Ghosn says he understood that any draft proposals for post-retirement compensation were “reviewed by internal and external lawyers” and found to be lawful. He declares that, if he died today, his heirs would be entitled to nothing more than his stated retirement allowance.

Prosecutors also re-arrested Ghosn on Dec. 21 on charges that he assigned personal investment losses on foreign exchange contracts to Nissan.

In his court statement, Ghosn acknowledges that he faced sudden massive losses during the global financial crisis in 2008-2009, when Nissan’s share price plummeted 80% and the yen-dollar exchange rate ballooned to 80 from 114. He says his bank demanded an immediate increase in his collateral on the contracts, which he could not meet alone.

Ghosn says the bank call left him with two options. One was to resign from Nissan, collect his retirement allowance and use it to provide collateral to his bank. But he says he rejected that possibility because of a “moral commitment” not to abandon Nissan during the financial crash.

He says he opted instead to temporarily assign the obligations of his foreign exchange contracts to Nissan. He then gathered the needed collateral from other sources and had the contracts transferred back to him at no loss to Nissan.

Media reports say Ghosn obtained the financial backing to complete the swap through Khaled al-Juffali, a Saudi businessman whose company also represented Nissan’s interests in the Middle East.

Ghosn didn’t say in his court statement whether al-Juffali helped him with the foreign exchange contracts. But he did say al-Juffali’s company performed valuable services for Nissan and was appropriately compensated at rates disclosed to and approved by Nissan financial officials.