Ghosn Served New Arrest Warrant for Breach of Trust

December 21, 2018

Tokyo--Tokyo public prosecutors on Friday served a fresh arrest warrant on former Nissan Motor Co. <7201> Chairman Carlos Ghosn on suspicion of aggravated breach of trust in violation of Japan's companies law.

Ghosn, 64, is suspected of fraudulently transferring to Nissan major losses that were originally incurred by his private asset management company.

It was the third time for the Tokyo District Public Prosecutors Office to serve an arrest warrant on Ghosn. The first two were served on suspicion of underreported his pay in two different time periods, in violation of the country's financial instruments and exchange law.

He has been detained since he was first arrested on Nov. 19.

The latest action came at a time when speculation was spreading that Ghosn may be freed on bail soon, after Tokyo District Court dismissed on Thursday a request from the public prosecutors to extend his detention.

Observers said that the focus of investigations had shifted from the hiding of Ghosn's massive executive pay to his suspected utilization of Nissan for personal gains.

Meanwhile, lawyers for former Nissan Representative Director Greg Kelly, 62, who was a key aide of Ghosn and was arrested on the same day as the former chairman on similar charges, submitted a request for his release to Tokyo District Court.

Since the court has also dismissed a request from the prosecutors to keep Kelly detained, the latest move may allow him to be released.

According to the new arrest warrant for Ghosn, in his position to lead Nissan's operations as chief executive officer, he allegedly transferred to Nissan in

October 2008 a loss-making swap contract signed with a bank by his asset management firm. The transferred appraisal losses totaled 1.85 billion yen.

When the contract was transferred back to his asset management company, after authorities questioned the original transfer, Ghosn is suspected of inflicting a loss on a Nissan subsidiary by using its funds to pay a total of 14.7 million dollars to a third party who supported the retransfer on four occasions between June 2009 and March 2012.

According to informed sources, the losses caused by the swap contract resulted from the serious financial crisis triggered by the September 2008 collapse of U.S. investment bank Lehman Brothers.

Japan's Securities and Exchange Surveillance Commission was aware of the contract transfer and pointed out that it might be illegal for the bank involved in the contract to make such a transfer.

At the time, Ghosn denied having shifted personal investment losses to Nissan, claiming that the contract was transferred back to the asset management firm at the commission's suggestion. Jiji Press