Carlos Ghosn Underestimated Pay By As Much As $100 Million: Report

It has been nearly a week since Tokyo prosecutors boarded legendary auto executive Carlos Ghosn's private jet and dragged him away in handcuffs to his new temporary residence: An 52-square-foot cell at the Tokyo Detention Center. Nobody has heard from Ghosn since - though media reports claim that the French ambassador to Japan has paid him a visit.

In the meantime, he has been ousted from Nissan's board and (temporarily) relieved of his CEO duties at Renault. Speculation about the possible collapse of the Nissan-Renault-Mitsubishi alliance that Ghosn created has proliferated, with the Wall Street Journal publishing a detailed report on Friday about the resentments toward Renault that had been building at Nissan, where senior executives, possibly including Hirohito Saikawa, have bristled at the influence exercised by men they see as foreign intruders (indeed, some have suggested that Ghosn's arrest was the result of a boardroom plot orchestrated by Saikawa).

But while so much remains uncertain for Ghosn and for the companies he until recently led, details about his alleged wrongdoing remain vague.


In what is perhaps the most detailed explanation on the circumstances surrounding Ghosn's arrest, the nature of his alleged wrongdoings and the emerging tensions between Nissan and Renault, WSJ reported earlier this week that prosecutors believe the missing $44 million - the amount by which Ghosn allegedly underreported his income over 5 years - includes a type of stock-based compensation called share-appreciation rights. These pay out when the share price surmounts a given level. Though it's important to remember that Ghosn has yet to be officially charged, and neither has his alleged accomplice, Nissan director Greg Kelly.

And now, a report in Japan's Kyodo News claims that the amount that Ghosn is suspected of underreporting could be more than double that $44 million figure. Between 2010 and the present day, Ghosn may have underreported his income by as much as 12 billion yen - roughly $100 million. In addition to the underreporting, Ghosn is also under investigation for improperly using funds from a Dutch joint venture between Nissan and Renault to buy "corporate housing" (luxury homes in Brazil and Lebanon) that effectively served as personal residences.

But he was arrested by Tokyo prosecutors for allegedly reporting remuneration about 4.99 billion yen less than he had actually received over five years from April 2010. He is believed to have received nearly 100 billion yen in the period.

The prosecutors are also considering building a case against allegedly underreporting a further 3 billion yen in remuneration received over three years from April 2015.

Ghosn is also suspected to have not reported about 4 billion yen from stock appreciation rights, a scheme similar to stock options that pays bonuses to executives if a company's share price rises above a certain level.

Ghosn also allegedly used company-bought residences in the Netherlands, Brazil, France and Lebanon without paying rent, while making the company pay for family trips and his private wining and dining expenses.

Whatever evidence was unearthed by Nissan's internal investigation into Ghosn's misdeeds must be fairly convincing. After two board members from Renault were initially reluctant to vote to oust Ghosn on Thursday, Nissan supplied them with ledgers detailing Ghosn's alleged under reporting of his income. While he was underpaid compared with other executives of similar stature in his industry, Ghosn also drew salaries from his role as chairman and CEO of Renault and as chairman of Mitsubishi. 


After reading the ledgers, they reportedly agreed that the evidence was sufficient to vote to remove Ghosn and Kelly. According to Kyodo News, Nissan discovered that Ghosn had given Kelly two figures to be used when reporting his remuneration. One set of figures that represented what Ghosn actually made, and another, smaller, set of figures that he wanted reported to the exchange.

Meanwhile, sordid details about Ghosn's personal life were share by his ex-wife Rita, who hinted at possible abuse during their marriage in a cryptic message posted to social media:  "All narcissists are hypocrites. They pretend to have morals and values that they really don't possess. Behind closed doors, they lie, insult, criticize, disrespect and abuse. They can do and say whatever they want, but how dare you say anything back to them or criticize them. They have a whole set of rules for others, but follow none of their own rules, and practice nothing of what they preach."

To sum up, by the time Tokyo's prosecutors are finished with their investigation, Ghosn may be forever cut off from the lifestyle that allowed him to afford a lavish wedding reception at the Palace of Versaille.