Nissan Chairman Carlos Ghosn - Credit Bloomberg
Khaled Juffali’s company said it played a key role in settling a dealership dispute with a local partner that had depressed Nissan’s Middle East sales.
Tuesday 08, January 2019
(Bloomberg) --Nissan Motor’s Saudi Arabian business partner said his company helped the automaker resolve a dealership dispute and pave the way for a joint venture in justifying $14.7 million in payments now under scrutiny by Tokyo prosecutors in the investigation of ousted Chairman Carlos Ghosn.
A company controlled by Khaled Juffali, the scion of a powerful business family and chairman of one of the kingdom’s biggest conglomerates, E A Juffali & Brothers, defended Ghosn in its first public statement since Tokyo prosecutors re-arrested the embattled auto executive 21 December on suspicion of improperly shifting personal investment losses to the Japanese automaker.
“The $14.7 million in payments over four years from Nissan Motor were for legitimate business purposes in order to support and promote Nissan’s business strategy in the Kingdom of Saudi Arabia, and included reimbursement for business expenses,” according to a statement issued on behalf of Khaled Juffali Company by its New York-based public relations representative Terry Rooney, founder and CEO of RooneyPartners.
In a legal drama that has transfixed the global auto industry, Ghosn has been detained in a Japanese gaol since his initial arrest on 19 November. In mid-December, he and former representative director Greg Kelly were charged with under-reporting income on Nissan’s financial statements. Kelly has been released on bail.
On 21 December, Tokyo prosecutors raised the stakes by re-arresting Ghosn on suspicion of ‘aggravated breach of trust’ by allegedly transferring obligations on his personal investment losses to Nissan, thereby inflicting financial damage to the automaker.
At issue is a derivatives transaction that a company linked to Ghosn made with Japan’s Shinsei Bank. It unravelled when the yen soared during the 2008 financial crisis, saddling Ghosn with $16.7 million in unrealized losses, and prompted Shinsei to demand more collateral.
Prosecutors allege that Ghosn first transferred his position to Nissan and later shifted the investment back onto the books of his affiliated company, with Juffali providing a letter of credit to satisfy the bank.
In the latest arrest warrant, prosecutors accused Ghosn of violating Japan’s Companies Act by allegedly causing financial harm to Nissan. If convicted, the auto executive credited with reviving Nissan in the early 2000s could face a substantial prison sentence. One issue is whether Juffali delivered anything of value in return for four payments he received totalling $14.7 million.
In addition, Juffali’s company ‘worked for years to secure the approval and funding for a new Nissan manufacturing plant in the Kingdom of Saudi Arabia’, according to the statement. “Clearly, Khaled Juffali has provided manifold, tangible services that continue to inure to the substantial benefit of Nissan Motor and Nissan Middle East.”