Carlos Ghosn’s French Arrest Warrants Focus on Bonus Payments

Carlos Ghosn’s French Arrest Warrants Focus on Bonus Payments

PARIS—In issuing arrest warrants for

Carlos Ghosn

and four others, French prosecutors have zeroed in on around 15 million euros, equivalent to $16.2 million, of bonus payments from auto maker

Renault SA

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to an Omani dealership they suspect ended up in companies controlled by Mr. Ghosn and his family, according to people familiar with the matter.

The arrest warrants, issued Thursday, are the latest twist in a yearslong saga that began in November 2018, when Japanese police arrested Mr. Ghosn, then leading both Renault and its car-building alliance partner

Nissan Motor Co.

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Japanese prosecutors initially accused him of underreporting his pay before also charging him with more serious financial crimes. Mr. Ghosn has denied any wrongdoing, and fled Japan in December 2019, hidden in a music-equipment box, ahead of a planned criminal trial. He remains a fugitive in Lebanon. French investigators opened their own probe into his time at Renault.

The bonus payments from the French car maker to the Omani company were made between 2012 and 2017, the people said, when Mr. Ghosn was serving as Renault’s chief executive. Most of the payments were made through Renault’s so-called CEO Reserve, a budget line set up by Mr. Ghosn at the French car maker to fast-track payments and get around budget delays.

French prosecutors believe that these payments transited through the dealership in Oman and were then used by Mr. Ghosn to purchase a 120-foot yacht and make investments benefiting him and his family. In 2019, Japanese prosecutors filed charges against Mr. Ghosn for what they said was a parallel scheme involving bonus payments from Renault’s partner, Nissan.

It is common for car makers to provide their dealerships with incentive payments, but at Renault this was usually done through other channels, people familiar with the matter said. The Omani dealership was the only distributor to ever receive a bonus from Renault’s CEO Reserve budget line, they said.

Jean Tamalet,

a lawyer at King & Spalding LLP who represents Mr. Ghosn, said the arrest warrant was surprising since Mr. Ghosn had always cooperated with the French probe. Mr. Ghosn has previously said the payments were legitimate dealer incentives.

Renault said it “took note” of the decision from prosecutors to issue arrest warrants. “This is a major step,” said

Kami Haeri,

a lawyer at Quinn Emanuel Urquhart & Sullivan LLP, who represents Renault. The car maker is a legal party to the case and is seeking compensation from Mr. Ghosn.

An attorney for

Suhail Bahwan,

who owns the Omani dealership that is at the center of the probe and who was also the target of an arrest warrant from French prosecutors Thursday, said his client “formally denies having taken part, in any way whatsoever, in the offenses targeted by the arrest warrant.”

Prosecutors in both France and Japan have long seen the allegations related to Oman as the most serious against Mr. Ghosn, but investigations have proved complex. In trying to find evidence of an alleged money loop between Renault, the dealership in Oman and Mr. Ghosn, French investigators have sought the cooperation of several other jurisdictions—including Oman, Switzerland and Lebanon—with varying degrees of success, people familiar with the matter said.

French prosecutors would usually file charges at this stage. However, this has to be done when the target of the charges is on French soil, and Mr. Ghosn won’t leave Lebanon. The French investigating magistrate ordered Mr. Ghosn to appear at a court in Nanterre, west of Paris, in December but the auto titan failed to show.

Now, French investigators could theoretically pass their findings to a court to try the case. Japan doesn’t do trials in absentia, but France does.

While Mr. Ghosn hasn’t ruled out coming to France for trial in the future, there is little French authorities can do to get him in front of a court at this stage. Mr. Ghosn is a Lebanese national, and Lebanon doesn’t extradite its citizens. Lebanese authorities have suggested French prosecutors send their findings to them so Mr. Ghosn can be tried there, but the French have declined to do so.

The filing of arrest warrants caps an almost three-year probe in which French investigators have interviewed witnesses, raided private apartments and even wiretapped one of Mr. Ghosn’s close associates. In 2019, Japanese authorities requested assistance from French prosecutors in investigating whether Mr. Ghosn funneled millions of dollars of company funds through a distributor for Nissan and Renault in Oman.

Key to the French investigation was evidence obtained from a hard drive that lawyers working for Nissan collected from Lebanon on the day of Mr. Ghosn’s arrest in 2018, according to people familiar with the matter. The hard drive, which Mr. Ghosn has said he considers stolen property, contained a trove of emails and other documents that once belonged to Mr. Ghosn’s late personal lawyer

Fady Gebran,

according to people familiar with the matter.

Japanese prosecutors used those documents as evidence to charge Mr. Ghosn in 2019 with diverting money from Nissan through the Omani dealership to entities he controlled, including for the purchase of the yacht and an investment firm in the U.S. Japanese authorities sent copies of some of the hard drive’s contents to French prosecutors, who used them to build their case, according to people familiar with the matter.

Last summer, Lebanese authorities arranged for a team of French investigators to visit Beirut and interview Mr. Ghosn. Flanked by his Lebanese and French lawyers, Mr. Ghosn attended several voluntary meetings with the investigators inside Beirut’s main courthouse and answered hundreds of questions. During that questioning, investigators focused on Mr. Ghosn’s relationship with Mr. Bahwan, according to people familiar with the matter.

Mr. Ghosn told French investigators that he had taken a two-year loan of three billion yen, equivalent to $25 million, from Mr. Bahwan in early 2009 when he had found himself in a financial bind, according to these people. Mr. Ghosn admitted that he had never paid the loan back, according to the people. He said he still owed Mr. Bahwan the money.

Write to Nick Kostov at [email protected]

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