Ex-Nissan chief Ghosn charged, served with fresh arrest warrant
Case represents a stunning turnaround for 64-year exec
TOKYO: Japanese prosecutors yesterday formally charged Carlos Ghosn with financial misconduct for under-reporting his salary and also served him a fresh warrant on separate allegations, meaning the tycoon will likely spend Christmas in a cell.
It represents a stunning turnaround for the 64-yearold Franco-Lebanese-Brazilian executive, a oncerevered colossus of the auto sector who won wide acclaim in Japan for saving car giant Nissan.
In a move that sent shockwaves through the business world, the former Nissan chairman was arrested on November 19 on suspicion of under-declaring his income by some five billion yen ($44 million) between 2010 and 2015.
Prosecutors yesterday pressed formal charges on Ghosn-and key aide Greg Kelly-over this allegation, which both men are said to deny.
The pair were also immediately re-arrested over fresh allegations that they conspired to under-declare Ghosn’s income by a further four billion yen over the past three years.
Under Japanese law, suspects can be re-arrested several times for different allegations, allowing prosecutors to question them for prolonged periods-a system that has drawn criticism internationally. Monday was the final day prosecutors could hold Ghosn and Kelly, 62, before either charging or re-arresting them, and the fresh arrest gives them up to another 22 days of questioning. In addition to charges against Ghosn and Kelly, prosecutors also indicted Nissan itself, as the company submitted the official documents that underreported the income.
Nissan shares dropped 2.90 percent to 945 yen in yesterday trading and the firm voiced “its deepest regret” over the affair. The manufacturer said it would “continue its efforts to strengthen its governance and compliance, including making accurate disclosures of corporate information”.
The Japanese firms in the three-way alliance with LONDON: French government bond yields rose yesterday, pushing the gap over safer German peers to its widest since May, after more violent anti-government protests in France over the weekend.
The turmoil in France comes as heightened global trade tensions, a looming vote in Britain’s parliament on Brexit and caution before this week’s European Central Bank meeting are already bolstering demand for top-rated German debt. While higher-rated French bonds often benefit from risk aversion in world markets, turmoil in France prompted investors to stay away.
The anti-government protests will slow growth to close to a standstill in the final quarter, the central bank said yesterday, complicating President Emmanuel Macron’s task of finding concessions to placate the “yellow vest” movement.
The Bank of France yesterday forecast the eurozone’s number two economy would eke out growth of only 0.2 percent in the quarter from the previous three months, down from 0.4 percent in a previous estimate. “Concern about a BEIJING: Chinese state media yesterday denounced the arrest of a top executive at tech giant Huawei, but did not link it to talks to resolve a trade dispute with the United States, an apparent effort not to undermine prospects for a deal.
Senior White House administration officials on Sunday insisted that Canada’s arrest of Huawei Chief Financial Officer Meng Wanzhou on a US extradition request was solely a law enforcement matter that would not derail talks with China.
China’s Foreign Ministry criticized what it called the US “unreasonable demand” on Canada to detain Meng while she was passing through Vancouver on Dec. 1. But the commerce ministry, which is engaged in trade negotiations, has declined to comment on the matter.
“At present, it seems there has been a fragile adherence in China and the United States to not link the two,” the influential Global Times newspaper said in a commentary.
In a separate commentary, the Global Times suggested that the United States would isolate itself from the world’s digital economy if it shunned Huawei.
The China Daily newspaper said in an editorial on the arrest it hoped Canada would not “hold a candle while the devil does its dirty deeds”. But there was scant Renault-Nissan and Mitsubishi Motors-have both sacked Ghosn as chairman.
But amid reports of tension within the tie-up, which outsold all rival groups last year, the three companies last month said they were “fully committed” to the alliance.
‘Combative’ frame of mind
The millionaire auto sector star, who attracted some criticism for a perceived lavish lifestyle, is now alone in a spartan cell in a Tokyo detention centre, in a tiny room measuring just three tatami mats-around five square metres.
He has reportedly told embassy visitors he is being well treated but has complained of the cold, with yesterday’s temperature in the Japanese capital hovering around five degrees Celsius.
He spends his time reading books and news reports and is said to be unhappy about the rice-based food. But he is in a “combative” frame of mind, according to sources at Renault, the company he still formally leadseven if the French car giant has appointed an interim chairman. According to local news agency Kyodo, he has admitted signing documents to defer part of his salary until after retirement but said this amount did not need to be declared as it has not yet been definitively fixed.
A source close to the investigation has said Ghosn and Kelly allegedly put the system in place after a new law came in obliging the highest-paid members of the firm to declare their salary.
Ghosn is suspected of deferring part of his pay to avoid criticism from staff and shareholders that his salary was too generous. Nissan is appealing to a court in Rio de Janeiro to block access by Ghosn’s representatives to a luxury apartment on Copacabana Beach.
“We are closely watching if he is actually indicted and then found guilty,” said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.
“If he is exempted from prosecution or found innocent,
bit of political and fiscal capitulation is rarely good for a bond market,” said Chris Bailey, European strategist at international financial services firm at Raymond James.
“In the wider scheme of things, the bond spread is pretty tight versus Germany but does show a bit of tension in the European bond fraternity.”
French bond yields were up to 7 basis points higher on the day across the curve, with France standing out as the weakest performing bond market in the bloc.
Ten-year bond yields rose over 3 bps to 0.72 percent, almost 8 bps above 4 1/2-month lows hit last week. The gap between 10-year bond yields in France and Germany stood at around 46 basis points, its widest since late May, when a rout in Italian bonds rippled over into other eurozone bond markets except Germany.
Macron will make a televised address at 1900 GMT as he seeks to placate protesters, whose revolt poses his biggest challenge yet since assuming the presidency 18 months ago. Analysts said Macron is expected to announce new fiscal measures, implying some upward pressure for French yields.
“The big picture is that the budget deficit will worsen and political problems will make cuts to spending hard,” said Rabobank rates strategist Lyn GrahamTaylor.
French bonds also underperformed other eurozone peers-the Spanish/French
mention in state media of tension over Huawei issue bleeding into the trade talks, a possibility that had roiled global markets as investors worried it could torpedo attempts to ease trade tension.
Tu Xinquan, a trade expert at Beijing’s University of International Business and Economics, said the commerce ministry had not mentioned the Huawei issue because it was focused on negotiations.
“The Chinese government is trying to de-link the two things,” Tu said. “If you don’t see any discussions in Chinese media, that’s the intention of the government.”
‘Pride of the people’ Meng, 46, faces US accusations that she misled multinational banks about Huawei’s control of a company operating in Iran. Her arrest was on the same day that US President Donald Trump met his Chinese counterpart, Xi Jinping, in Argentina to look for ways to resolve the escalating trade war.
The two sides agreed there to delay a planned Jan 1 US increase of tariffs to 25 percent from 10 percent on $200 billion worth of Chinese goods while they negotiate over China’s huge bilateral trade surplus and US complaints that it steals technology.
Huawei, the world’s largest supplier of telecommunications network equipment and second-biggest maker of smartphones, is at the cutting edge of fifth-generation (5G) mobile network technology.
Citing security concerns, the US government has taken a series of steps to block the company from some parts of the US market, which is widely perceived it is going to create huge confusion in Nissan’s management,” Takada said.
‘Lebanese phoenix’
It is unclear if Ghosn will be bailed before a potential trial. In Japan, prosecutors and defendants begin a trial at a district court and can appeal to a high court and 10-year bond yield gap was at its tightest since October as French yields rose. Political uncertainty also put upward pressure on Belgian yields. Prime Minister Charles Michel re-launched his government on Sunday as a minority administration after the biggest party in his coalition quit in a dispute over a United Nations migration compact.
Italy’s bond yields fell 4-5 bps on hopes of a compromise with the in China as an effort to hold the company back.
Huang Jing, a senior researcher at the Chinese think-tank the Pangoal Institution, said connecting the issues “would risk making it more difficult to achieve a compromise in the talks”.
But Tu warned that public anger over Meng’s arrest could eventually force Beijing’s hand into measures that would endanger negotiations.
“If this thing continues, it could put the Chinese government in a very difficult situation. Huawei is the national pride of the Chinese people,” Tu said.
In contrast to some of China’s recent disputes with other countries, there has European Union over Italian budget plans. Italian Prime Minister Giuseppe Conte is expected to meet European Commission President Jean-Claude Juncker tomorrow over the 2019 budget, a source said yesterday.
“This morning, the rumors are that Italy could present another revised budget this week and that has helped push yields lower,” said DZ Bank analyst Sebastian Fellechner. —Reuters been little evidence of an organized campaign to stoke anti-US behavior, or that consumers have begun to shun US goods in any volume due to the trade war. The Global Times’ editor-in-chief, Hu Xijin, took a conciliatory tone in a speech at the newspaper’s annual forum on Saturday, arguing that foreign brands, including US phone maker Apple, should not become a target of nationalist anger in the wake of Meng’s arrest.
“It is also one of China’s core interests to improve China’s relations with the US and the West, and not to lead Sino-US relations to the direction of a Cold War,” Hu said, at one point holding up his iPhone. —Reuters the Supreme Court. It may take several years before reaching a final judgment.
If found guilty, Ghosn could face a 10-year prison sentence. The affair represents a staggering fall from grace for a figure celebrated for saving Nissan from the brink of bankruptcy and rebuilding it as a money-making subsidiary of Renault. —AFP
French bonds feel pain after more violent protests
Chinese state media distance Huawei arrest from US trade talks