Nissan and Ghosn settle with SEC over pay disclosure

Carlos Ghosn and Nissan have agreed to settle fraud charges with US regulators over claims the carmaker’s former chief executive hid $140m of his pay package, details of which are likely to form part of a Japanese criminal case against him.

Nissan will pay $15m, Mr Ghosn will pay $1m and Greg Kelly, a former director, will pay $100,000 to settle Securities and Exchange Commission charges, which all three neither admit or deny.

The settlement, which bans Mr Ghosn from senior positions in any US company for a decade, for the first time lays out in detail some of the ways he allegedly hid his remuneration while leading the Japanese carmaker.

Mr Ghosn, who was arrested last November on his private jet in Tokyo, faces several charges of financial misconduct in Japan, including inflating his pay and using Nissan funds for personal gain. He denies the allegations.

The filings, released on Monday, set out detailed charges on how Mr Ghosn allegedly increased the value of his pay while at Nissan, including bumping up his pension, claiming that previous company pay calculations were incorrect, and even choosing the currency of his pay.

Steven Peikin, co-director of the SEC’s enforcement division, said: “Nissan’s disclosures about Ghosn’s compensation were false. Through these disclosures, Nissan advanced Ghosn and Kelly’s deceptions and misled investors, including US investors.”

Following the introduction of rules that forced Japanese companies to disclose executive pay, Mr Ghosn and Mr Kelly allegedly set aside $90m of pay to be given to Mr Ghosn on his retirement, as well as increasing the value of his pension allowances by a further $50m. None of the money was ever paid to him.

These included awarding remuneration to him in future years labelled as “consultant fees”, which were to be paid when he stepped down from the board. Two letters, in 2011 and 2013, signed by Mr Ghosn and another unnamed Nissan employee set up the arrangement, the SEC charges state.

In addition, Mr Ghosn was to be allowed to choose the currency of his retirement allowance, in yen or dollars, in a move that would increase the value of his total pot by some $20m, the SEC filings say. In another case, one Nissan staffer allegedly told the company’s chief financial officer that an undisclosed increase in Mr Ghosn’s retirement allowance was the result of a “miscalculation at the secretariat”.

A spokesman for Mr Ghosn’s legal team on Monday said: “Mr Ghosn settled this action without admitting or denying the SEC’s allegations. The SEC settlement expressly permits Mr Ghosn to continue to contest and deny the factual and legal allegations against him in the criminal proceedings in Japan, and Mr Ghosn fully intends to do so.”

The commission also charged Mr Kelly with aiding and abetting Mr Ghosn. Mr Kelly accepted a fine of $100,000, as well as a five-year ban on serving as a director and also appearing as a lawyer before the commission.

Yoichi Kitamura, lead defence lawyer for Mr Kelly, said the settlement has “no effect on the Japanese criminal case against Mr Kelly”.

Nissan said the carmaker “actively co-operated with the investigation” and has implemented changes in its board including introducing an independent pay committee.

Thanks to the Courtesy of :

https://www.ft.com/content/aa6ce5e8-de0f-11e9-9743-db5a370481bc

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