Carlos Ghosn’s Arrest Warrants Deal with Bonus Funds

PARIS—In issuing arrest warrants for Carlos Ghosn and 4 others, French prosecutors have zeroed in on round 15 million euros, equal to $16.2 million, of bonus funds from auto maker Renault SA RNO -1.34% to an Omani dealership they think ended up in corporations managed by Mr. Ghosn and his household, in keeping with folks conversant in the matter.

The arrest warrants, issued Thursday, are the most recent twist in a yearslong saga that started in November 2018, when Japanese police arrested Mr. Ghosn, then main each Renault and its car-building alliance companion Nissan Motor Co. NSANY -3.11% Japanese prosecutors initially accused him of underreporting his pay earlier than additionally charging him with extra critical monetary crimes. Mr. Ghosn has denied any wrongdoing, and fled Japan in December 2019, hidden in a music-equipment field, forward of a deliberate legal trial. He stays a fugitive in Lebanon. French investigators opened their very own probe into his time at Renault.

The bonus funds from the French automobile maker to the Omani firm had been made between 2012 and 2017, the folks stated, when Mr. Ghosn was serving as Renault’s chief govt. A lot of the funds had been made via Renault’s so-called CEO Reserve, a finances line arrange by Mr. Ghosn on the French automobile maker to fast-track funds and get round finances delays.

French prosecutors consider that these funds transited via the dealership in Oman and had been then utilized by Mr. Ghosn to buy a 120-foot yacht and make investments benefiting him and his household. In 2019, Japanese prosecutors filed costs towards Mr. Ghosn for what they stated was a parallel scheme involving bonus funds from Renault’s companion, Nissan.

It’s common for automobile makers to supply their dealerships with incentive funds, however at Renault this was normally finished via different channels, folks conversant in the matter stated. The Omani dealership was the one distributor to ever obtain a bonus from Renault’s CEO Reserve finances line, they stated.

Jean Tamalet, a lawyer at King & Spalding LLP who represents Mr. Ghosn, stated the arrest warrant was shocking since Mr. Ghosn had at all times cooperated with the French probe. Mr. Ghosn has beforehand stated the funds had been legit seller incentives.

Renault stated it “took notice” of the choice from prosecutors to problem arrest warrants. “This can be a main step,” stated Kami Haeri, a lawyer at Quinn Emanuel Urquhart & Sullivan LLP, who represents Renault. The automobile maker is a authorized get together to the case and is in search of compensation from Mr. Ghosn.

An lawyer for Suhail Bahwan, who owns the Omani dealership that’s on the middle of the probe and who was additionally the goal of an arrest warrant from French prosecutors Thursday, stated his consumer “formally denies having taken half, in any manner by any means, within the offenses focused by the arrest warrant.”

Prosecutors in each France and Japan have lengthy seen the allegations associated to Oman as essentially the most critical towards Mr. Ghosn, however investigations have proved complicated. In looking for proof of an alleged cash loop between Renault, the dealership in Oman and Mr. Ghosn, French investigators have sought the cooperation of a number of different jurisdictions—together with Oman, Switzerland and Lebanon—with various levels of success, folks conversant in the matter stated.

French prosecutors would normally file costs at this stage. Nonetheless, this must be finished when the goal of the costs is on French soil, and Mr. Ghosn gained’t go away Lebanon. The French investigating Justice of the Peace ordered Mr. Ghosn to seem at a courtroom in Nanterre, west of Paris, in December however the auto titan failed to point out.

Now, French investigators might theoretically cross their findings to a courtroom to strive the case. Japan doesn’t do trials in absentia, however France does.

Whereas Mr. Ghosn hasn’t dominated out coming to France for trial sooner or later, there’s little French authorities can do to get him in entrance of a courtroom at this stage. Mr. Ghosn is a Lebanese nationwide, and Lebanon doesn’t extradite its residents. Lebanese authorities have recommended French prosecutors ship their findings to them so Mr. Ghosn will be tried there, however the French have declined to take action.

The submitting of arrest warrants caps an nearly three-year probe through which French investigators have interviewed witnesses, raided personal flats and even wiretapped one among Mr. Ghosn’s shut associates. In 2019, Japanese authorities requested help from French prosecutors in investigating whether or not Mr. Ghosn funneled tens of millions of {dollars} of firm funds via a distributor for Nissan and Renault in Oman.

Key to the French investigation was proof obtained from a tough drive that legal professionals working for Nissan collected from Lebanon on the day of Mr. Ghosn’s arrest in 2018, in keeping with folks conversant in the matter. The laborious drive, which Mr. Ghosn has stated he considers stolen property, contained a trove of emails and different paperwork that after belonged to Mr. Ghosn’s late private lawyer Fady Gebran, in keeping with folks conversant in the matter.

Japanese prosecutors used these paperwork as proof to cost Mr. Ghosn in 2019 with diverting cash from Nissan via the Omani dealership to entities he managed, together with for the acquisition of the yacht and an funding agency within the U.S. Japanese authorities despatched copies of among the laborious drive’s contents to French prosecutors, who used them to construct their case, in keeping with folks conversant in the matter.

Final summer time, Lebanese authorities organized for a crew of French investigators to go to Beirut and interview Mr. Ghosn. Flanked by his Lebanese and French legal professionals, Mr. Ghosn attended a number of voluntary conferences with the investigators inside Beirut’s essential courthouse and answered a whole lot of questions. Throughout that questioning, investigators targeted on Mr. Ghosn’s relationship with Mr. Bahwan, in keeping with folks conversant in the matter.

Mr. Ghosn informed French investigators that he had taken a two-year mortgage of three billion yen, equal to $25 million, from Mr. Bahwan in early 2009 when he had discovered himself in a monetary bind, in keeping with these folks. Mr. Ghosn admitted that he had by no means paid the mortgage again, in keeping with the folks. He stated he nonetheless owed Mr. Bahwan the cash.

Write to Nick Kostov at Nick.Kostov@wsj.com

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