By Ritsuko Ando
TOKYO (Reuters) – Nissan Motor Co Ltd said on Monday it was the target of a U.S. Securities and Exchange Commission (SEC) inquiry, widening a scandal involving the Japanese firm and its ousted Chairman Carlos Ghosn over his alleged financial misconduct.
Ghosn, first arrested on Nov. 19 in Japan, has been charged with failing to disclose more than $80 million in additional Nissan compensation for 2010-2018 that he had arranged to be paid later. Ghosn, swiftly dismissed as Nissan chairman after the arrest, has denied wrongdoing.
Nissan was also charged by Japanese prosecutors for under-reporting his pay, and has since pledged to overhaul its governance.
Bloomberg earlier reported that the U.S. regulator was investigating the company’s disclosures on executive pay.
The report, citing sources, said the SEC is examining whether the company maintained adequate controls to prevent improper payments and whether lapses by Nissan violated U.S. securities law.
Separately, the Wall Street Journal reported that the SEC also sent a request for information to Ghosn. A representative for Ghosn could not immediately be reached for comment.
A Nissan spokesman confirmed the automaker received an inquiry from the U.S. regulator, without giving further details. The SEC was not immediately available to comment on the matter.
Such an SEC inquiry does not mean that regulators have found any wrongdoing, but can lead to civil cases against companies and their employees, or they can end with no charges, sometimes months or years later.
A three-year SEC investigation last year found that Dow Chemical failed to properly disclose around $3 million in perks for former CEO Andrew Liveries and the firm agreed to pay $1.75 million in settlement.
In 2004, industrial giant General Electric settled with the regulator over its failure to disclose former CEO Jack Welch’s lavish retirement package.
Tyson Foods Inc also agreed that year to pay a civil penalty of $1.5 million after it failed to properly disclose payments to its former senior chairman.
Nissan has American Depository Receipts traded on the U.S. over-the-counter market, giving the United States authority to investigate it for potential wrongdoing. Other Japanese companies have been the target of SEC inquiries before, including Toyota Motor Corp over its handling of safety problems.
The financial scandal involving Ghosn, one of the auto industry’s most feted executives, has rocked the industry, clouded the future of Nissan and its alliance with French partner Renault and raised questions about governance at Japan’s second-largest automaker.
Nissan set up a committee to examine the root cause of Ghosn’s alleged financial misconduct and propose corporate governance reforms.
The committee plans to make recommendations to Nissan’s board in March on how to tighten lax governance and approval processes for matters including director compensation and chairman selection.
Nissan shares slipped 0.8 percent on Monday in Tokyo, versus a 0.6 percent decline in the Nikkei average.
(Reporting by Ritsuko Ando in Tokyo and Bhanu Pratap in Bengaluru; Editing by Christopher Cushing and Muralikumar Anantharaman)