Disgraced Nissan Chairman Bought Luxury Homes With $18 Million In Company Money

Will initially murky after news of Carlos Ghosn's arrest first broke, the details of the alleged misdeeds for which he is being prosecuted by Japanese authorities are beginning to trickle out. Initially, reports that Ghosn underreported his income in filings submitted to the Tokyo Stock Exchange sounded suspiciously staid when weighed against the potential 10 year sentence that Ghosn is facing. But in a shocking new report published Tuesday, the Nikkei Asian Review is reporting that Ghosn's misuse of company resources included an audacious fraud to create what amounted to a private slush fund that purchased homes and other luxuries explicitly for use by the CEO.

With the help of representative director Greg Kelly (who was charged by Tokyo authorities alongside Ghosn), the executive set up a fund that was purportedly seeded with 6 billion yen to invest in "startups". But investigators haven't found any evidence to suggest that any of the money was used in this way.


Instead, the money was used to purchase luxury properties in Rio De Janeiro and Beirut (Ghosn was born in Brazil and spent his high school years in Lebanon) between 2010 and 2015. The homes were used by Ghosn and his family. All told, the fund spent some 2 billion yen ($18 million) on the homes. Ghosn was then able to use them explicitly for personal purposes. All told, Ghosn is accused of underreporting his pay by the equivalent of about $44 million.

The transactions were done through a Dutch subsidiary, created around 2010, with 6 billion yen ($53.4 million at current rates) in capital, ostensibly set up for investment purposes. The sources said it was funded entirely by the Japanese automaker. The official line within Nissan was that the unit would invest in startups, though there is little evidence to support this claim.

The revelations come the day after Nissan accused Ghosn of "numerous... significant acts of misconduct." The statement was made following an internal investigation over several months, sparked by a tipoff from a whistleblower. He is accused of understating his compensation and misusing company assets and funds. He could not be contacted for comment. He is due to be dismissed as Nissan chairman on Thursday.


According to the sources, funds from the Dutch company were apparently used to purchase a condominium in Rio de Janeiro and a luxury home in Beirut, both of which were provided to Ghosn for his personal use. In addition, Nissan is said to have shouldered maintenance and renovation costs. The combined outlays are believed to have exceeded 2 billion yen.

These transactions were overseen by representative director Greg Kelly, according to the sources. Nissan alleged on Monday that "Kelly's deep involvement [had] also been confirmed."

But how did these revelations come to light in the first place? Nissan has said it launched an investigation into the allegations after being tipped off by a whistleblower. According to Nikkei, whistleblowers took advantage of a new law that allowed them cooperate with the government's investigation without risking any charges.

People involved with Nissan used a newly established plea bargain scheme in the investigation, according to sources familiar with the matter. The scheme, introduced in June, reduces or exempts criminal disposition in exchange for cooperating with prosecutors. Ghosn's case is the second known use of the scheme.

It's believed that Ghosn resorted to misappropriating company resources because his pay (he was paid about 1.1 billion yen, or $10 million in 2016) was roughly half what executives at other major automakers received (though he also received another 7.4 million euros ($8.45 million) for his work at Renault).

Whatever the reason, the motivation is clear: An increasingly unaccountable Ghosn felt he deserved more - and decided to reach out an take it unilaterally.