WASHINGTON (AP) — Nissan has agreed to pay $15 million and its former chairman Carlos Ghosn is paying $1 million to settle federal regulators’ civil fraud charges of hiding from investors more than $140 million in compensation and retirement benefits for Ghosn.
The Securities and Exchange Commission announced the settlement Sept. 23 with the major Japanese automaker and its former chairman, who also agreed to be barred for 10 years from serving as an officer or director of a public company. Ghosn, 65, is awaiting trial in Japan on financial misconduct allegations in a criminal case.
Ghosn, who led Nissan for two decades, was arrested by Japanese authorities in Tokyo and jailed four times since November. He has maintained that he is innocent.
He is currently out on bail but faces restrictions on his activities such as not being allowed to contact his wife, Carole Ghosn. She has appeared before a Japanese judge to answer questions in the case. The first hearing in the trial has been set for April.
Ghosn and Nissan Motor Co. settled the charges without admitting or denying the SEC’s allegations, but agreed to refrain from future anti-fraud violations.
In addition, a former Nissan director, Greg Kelly, agreed to pay a $100,000 penalty to settle the SEC charges, to be barred for five years from serving as an officer or director of a public company, and to be suspended for five years from practicing as an attorney before the SEC.
In a statement, Ghosn’s team of lawyers noted that he will be allowed to contest and deny the allegations in the criminal case in Japan, and they said he “fully intends to do so.”
“Mr. Ghosn and his defense team are now able to focus their efforts on continuing to vigorously fight the criminal case in Japan and pursue his claims against Nissan around the world,” the statement said. “They remain confident that, if given a fair trial, he will be acquitted of all charges and fully vindicated.”
In a statement issued in Japan, Nissan noted that it had cooperated with the SEC’s investigation. It said it has taken actions to prevent problems from recurring, including setting up a new governance structure. The automaker said it has amended all its affected financial reports.
“Nissan is firmly committed to continuing to further cultivate robust corporate governance,” the statement said.
An attorney for Kelly wasn’t immediately available for comment.
Starting in 2009, Ghosn, with the help of Kelly and subordinates at Nissan, conducted a scheme to conceal more than $90 million of his compensation from investors and public disclosure, while also acting to increase his retirement benefits by over $50 million, the SEC alleged. Each year, Ghosn fixed a total amount of compensation for himself, with a certain amount paid and disclosed, and an additional amount unpaid and undisclosed, according to the agency.
The regulators said that Ghosn and his subordinates concocted various ways of structuring payment of the undisclosed compensation after his retirement, including entering into secret contracts, backdating letters to grant him interests in Nissan’s long-term incentive plan, and changing the way his pension was calculated to generate over $50 million in additional benefits.
“Simply put, Nissan’s disclosures about Ghosn’s compensation were false,” Steven Peikin, co-director of the SEC’s enforcement division, said in a statement. “Through these disclosures, Nissan advanced Ghosn and Kelly’s deceptions and misled investors, including U.S. investors.”