Nissan is facing $22 million for underreporting Ghosn’s pay

NEW YORK, NY - APRIL 12: The 2018 Nissan Rogue is displayed at the New York International Auto Show, April 12, 2017 at the Jacob K. Javits Convention Center in New York City. The New York International Auto Show will open to the public starting Friday April 14 and run through April 23. (Photo by Drew Angerer/Getty Images)

TOKYO–Japan’s market watchdog said it recommended that Nissan be fined 2.4 billion yen ($22 million) for underreporting compensation from former Chairman Carlos Ghosn.

The fine will cover the four years from April 2014 to March 2018, the Securities and Exchange Surveillance Commission of Japan said.

Ghosn was arrested in Tokyo in November last year for allegations of financial misconduct, including understating his salary by around 9.1 billion yen ($84 million) over nearly a decade, and temporarily transferring personal financial losses to Nissan’s books. He denied wrongdoing and is free on bail as he waits for next year’s trial.

Because of the status of limitations, Nissan is not responsible for underreporting before the financial year beginning April 2014, a SESC official told a press briefing. Japan’s financial watchdog, the Financial Services Agency, must finalize the fine.

A 2.4 billion yen fine would be the second largest ever imposed in Japan for misrepresentation in a corporate financial statement, after a 7.3 billion yen fine imposed on Toshiba in 2015, according to the SESC.

In a statement, Nissan said it took SESC’s recommendations seriously.

“We express deep regret to shareholders for any trouble caused. We will continue efforts to improve governance and enforcement, including ensuring reliability of disclosure of corporate data,” the automaker said.

The SESC accepted Nissan’s misreporting based on his investigation, the official told reporters.

Nissan’s new CEO, Makoto Uchida, pledged to repair profitability on his first day on Dec. 2 and said setting realistic goals would be key to that goal as the automaker seeks to make a clean break from Ghosn’s leadership.

Reuters in June cited a source saying Nissan would be fined up to 4 billion yen and could seek a reduced fine of about 2.4 billion yen if the automaker submitted documents to the SESC prior to a formal investigation.

Nissan is trying to map a path to prosperity after reporting a decade-long drop in profitability and 12,500 job cuts and replacing top management.

U.S. in September The Securities and Exchange Commission settled with Nissan and Ghosn over allegations that over $140 million in compensation was not disclosed. Nissan must pay $15 million to the U.S. regulator while the deal hit Ghosn with a $1 million fine.