NSANY Nissan Motor Company Ltd (PK)

By Nick Kostov and Sean McLain 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 3, 2019).

Nissan Motor Co. has investigated whether ex-CEO Carlos Ghosn funneled millions of dollars of company funds through an Omani car distributor for personal use, possibly including the purchase of a yacht, according to people familiar with the matter.

The scrutiny opens up a potential new area of liability for Mr. Ghosn, who was charged last year by Japanese authorities with failing to properly report deferred compensation. His arrest shook the foundations of the globe-spanning Nissan- Renault SA alliance he oversaw for more than a decade. Mr. Ghosn says he is innocent.

A Nissan internal probe found that Mr. Ghosn approved some $35 million in payments to Suhail Bahwan Automobiles, a distributor in Oman, between 2011-2018 when he was running the auto maker, according to a person familiar the investigation.

Nissan investigators found evidence that the Omani company may have helped finance Mr. Ghosn's purchase of a yacht and funded an investment company partly owned by Mr. Ghosn's son, said people familiar with the probe.

A separate investigation by Renault found that its CEO office, while under Mr. Ghosn, sent about EUR10 million (about $11.2 million) to Suhail Bahwan Automobiles over a number of years, according to people familiar with the matter. Renault has notified French prosecutors about the payments, the people said.

Prosecutors didn't respond to calls or a text message seeking comment.

"The position of Carlos Ghosn is simple and clear: There is nothing here that can be criticized. These are normal payments linked to business," said Jean-Yves Le Borgne, Mr. Ghosn's lawyer. A Paris-based spokeswoman for the Ghosn family said that "under no circumstances has all or part of such payments benefited Carlos Ghosn or his family."

A tweet from Mr. Ghosn's recently created Twitter account said he would hold a press conference on April 11. "I'm getting ready to tell the truth about what's happening," the tweet said.

Representatives for Suhail Bahwan Automobiles didn't respond to requests for comment.

The companies' scrutiny of the Omani payments, which was earlier reported by Reuters, could allow prosecutors in both countries to take their probes of Mr. Ghosn in a new direction. In bringing allegations of financial misconduct against Mr. Ghosn last November, Japanese prosecutors haven't presented evidence that he received significant personal gain.

Japanese prosecutors, acting on information Nissan gathered, charged Mr. Ghosn with misstating deferred compensation on Nissan's annual financial statements to regulators and funneling Nissan money to the business of a Saudi friend who helped him with a personal financial problem.

Mr. Ghosn has said he had hypothetical discussions about future compensation but the amount wasn't fixed and so didn't have to be reported. He has said Nissan paid the Saudi company for "critical services that substantially benefited Nissan."

French prosecutors began investigating Mr. Ghosn on Feb. 28 after Renault told them that Mr. Ghosn used a company sponsorship agreement to make use of a room that rents for EUR50,000 in a château on the grounds of Versailles Palace to celebrate his second marriage and his wife's birthday, said people familiar with the matter. A representative of Mr. Ghosn's family said he would pay EUR50,000 to Versailles to ensure there would be no financial harm to Renault.

Mr. Ghosn hasn't been charged with any wrongdoing in relation to payments made by Renault and Nissan to Suhail Bahwan Automobiles, the Omani distributor.

Suhail Bahwan Automobiles is part of an Omani conglomerate run by billionaire businessman Suhail Bahwan, a friend of Mr. Ghosn, according to people familiar with their relationship. The company has been a distributor of Nissan vehicles since 2004.

During the global financial crisis that began in 2008, Mr. Bahwan took a broader role in Nissan's Middle East business, said people familiar with Nissan business in the region. Mr. Bahwan's business expanded in the region in part to support another Nissan business partner that was struggling, one of the people said.

Suhail Bahwan Automobiles now sells tens of thousands of vehicles a year through the region, said a person familiar with the company's business.

Both Renault and Nissan found that the funds sent to the Omani distributor were described in company records as marketing expenses, the people said. The labeling raised suspicion at Renault because company policy requires regional divisions -- not the budget of the CEO -- to cover most payments for marketing expenses such as dealer incentives, according to people close to Renault.

Renault told French prosecutors about the Omani payments on Friday in response to a request for information from Japanese prosecutors, said people familiar with the matter. The notification came after Nissan told Renault it suspected some of the money the Japanese car maker sent to the Omani distributor may have been diverted to a Lebanese firm called Good Faith Investments, according to these people.

Good Faith Investments was established by a former lawyer for Mr. Ghosn on the CEO's behalf. In 2015, Good Faith Investments paid more than EUR10 million to purchase a yacht, said one of the people familiar with Nissan's investigation.

The 37-meter-long Navetta 37, built by Italian yacht maker Ferretti Group, starts at around $14 million. The vessel has a range of up to 1,900 nautical miles, around 2,200 miles. Mr. Ghosn named the yacht Shachou, which means company president in Japanese.

Last year, the vessel made around 30 port calls in the Mediterranean, stopping in Italy, Spain, Greece and Lebanon, according to ship tracking website MarineTraffic.com. Since October, Shachou has been in dry dock in Italy undergoing routine maintenance, according to workers at the site.

Good Faith Investments also invested nearly $30 million in Shogun Investments LLC, an investment firm partly owned by Mr. Ghosn's son, Anthony, said people familiar with the matter.

One of these people said the money that came into the company didn't come from Suhail Bahwan Automobiles. Instead, it came in a personal capacity from Divyendu Kumar, a senior executive at the parent company of the Omani distributor, this person said. Mr. Kumar owns almost all of Good Faith Investments, according to corporate filings.

Mr. Kumar couldn't be reached for comment.

Anthony Ghosn declined to comment. Nissan has found no evidence to suggest the son knew about the origin of the funds, according to a person familiar with its investigation.

--Rory Jones and Eric Sylvers contributed to this article.

Write to Nick Kostov at Nick.Kostov@wsj.com and Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

April 03, 2019 02:47 ET (06:47 GMT)

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