Nissan to correct earnings to account for Ghosn's unreported income

TOKYO — Nissan will file corrected earnings for past years in which Carlos Ghosn, the company's ousted chairman, allegedly under-reported his compensation by tens of millions of dollars.

The move comes after Ghosn was indicted on charges of falsifying securities filings and could diminish what is shaping to be one of his probable defenses: That the remuneration amount wasn't fixed.

Nissan wants to remedy the filings by pinpointing an exact amount owed to Ghosn and by accounting for that in corrected securities reports by early February, when the company expects to release earnings for its fiscal third quarter, a person familiar with the situation said.

The company announced it would correct the reports in a Monday filing to the Tokyo Stock Exchange.

Ghosn, aide Greg Kelly and Nissan itself were indicted the same day for allegedly making false securities disclosures by understating Ghosn's income by some 5 billion yen ($44.3 million) during the 2010-14 fiscal years. That amount was set aside as deferred remuneration to be paid to Ghosn at a later date, such as after retirement, people close to the matter said.

Ghosn's lawyers, who have said the prosecutor's case is flawed, filed an appeal to overturn the detention midday Tuesday, but it was rejected by the court by evening, Reuters reported.

A key leg of Ghosn's defense is that the amount of deferred pay had yet to be finalized, thus there was no obligation to report it, Japanese media have reported.

Now that Nissan has uncovered the what it considers unreported liabilities, the company says it is required to correct its filings in line with the regulations of Japan's Financial Services Agency.

But doing so, in effect, ascribes a definite monetary amount to the deferred compensation owed Ghosn and also obliges Nissan, in theory, to pay it, people familiar with the matter said.

"There are two reasons for us to do it," one person said.

"One is that we have to do it. The other is that it makes sense in the whole context."

Although the corrections would affirm Nissan's obligation to pay Ghosn, Nissan may not, in the end, need to actually disburse the amount, one person said.

Nissan could, for example, file a lawsuit against Ghosn to try reclaiming it.

Nissan said it was still assessing how much deferred income must be accounted for and the period over which the compensation was supposed to extend. The company was also still deciding how to book the amount, as a one-time hit or parceled over several past periods, one source said.