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Carlos Ghosn to remain in jail after prosecutors add to misconduct allegations

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Carlos Ghosn to remain in jail after prosecutors add to misconduct allegations

Automotive executive Carlos Ghosn's bid for release on bail from a Tokyo jail was scuppered Dec. 20 after prosecutors added to accusations of financial misconduct, alleging he transferred losses from a derivatives bet to Nissan Motor Co. Ltd.'s account, The Wall Street Journal reported.

Prosecutors said that during the turmoil that shook global financial markets in October 2008, Ghosn transferred a loss-making derivatives contract he had entered into personally to Nissan. At the time, the contract registered a loss of ¥1.85 billion, or $16.6 million, the Journal reported.

Ghosn later reportedly transferred the derivative bet back to his own account, but between 2009 and 2012 the executive oversaw a transfer of $14.7 million from a Nissan subsidiary's account to an unidentified person who helped him administer the derivative transaction.

Those actions could amount to a "special breach of trust" under Japanese law in instances where an executive has abused his position for his own benefit, the report stated. Ghosn could now face up to 20 more days in detention after prosecutors re-arrested him over the new allegations.

The former Nissan chairman has been in detention since Nov. 19 after the company notified prosecutors of suspicions he under-reported his earnings to the securities regulator and used company cash for personal expenses. Nissan sacked Ghosn two days later but prosecutors have since pressed charges against the corporation as well as against Ghosn for its alleged role in under-stating his earnings. Ghosn denies the charges, Japanese media has reported.

The executive has not been seen in public since his arrest or made a statement, but looked set to be released after a court on Dec. 19 turned down prosecutors' requests to extend his detention.

Greg Kelly, Ghosn's senior aide who was arrested the same day and remains in detention, could still be released as the new charges do not involve him and his lawyer had filed an application for bail, the Journal reported.

Renault has owned 43.4% of Nissan since investing to rescue it from bankruptcy in 1999. Nissan owns 15% of Renault but has no voting rights.

The intrigue of what began as a story of alleged personal misconduct has grown as news reports from Japan and personal declarations by Nissan CEO Hiroto Saikawa shed light on growing tensions in the alliance between Renault and Nissan, and Ghosn's reportedly autocratic management style. One report suggested that before Ghosn's arrest, he had been considering sacking Saikawa.

Ghosn remains CEO and chairman of Renault SA, which says it will stand by its leader until it receives evidence of the allegations. Renault and Nissan, and since 2016, Mitsubishi Motors Corp., have teamed up on procurement, manufacturing and personnel sourcing in a cost-saving alliance forged by Ghosn over almost two decades, which all three say they are eager to preserve.

As of Dec. 20, US$1 was equivalent to ¥111.52.