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The news that Nissan could be prosecuted alongside Ghosn adds a new crease to the unfolding scandal. Picture credits: Reuters

TOKYO – The prosecution is expected to accuse Nissan Motor Co. as a corporation alongside former chairman Carlos Ghosn of alleged violations of Japan's financial laws, a report said.

Nissan is expected to be sued for violating the Financial Instruments and Exchange Act for allegedly failing to report Ghosn's compensation for five years until the fiscal year ended March 31, 2015, Nikkei said on December 7, with no sources to identify.

The lawsuit is expected to arrive on December 10 from the Tokyo Procuratorate along with formal charges against Ghosn and Nissan CEO Greg Kelly, the newspaper said.

Ghosn and Kelly have been detained in a Tokyo detention center since their arrest on November 19 for suspicion of hiding tens of millions of dollars in Ghosn's promised deferred income. Both men have maintained their innocence, and none has been indicted so far.

A Nissan spokesman responded to the report by stating that the company had "identified a serious misconduct in the reporting of Mr. Ghosn's compensation".

Nissan cooperated with investigators, he added.

One person familiar with the matter said Nissan had been preparing for indictment since the charges against Ghosn and Kelly first surfaced last month.

The prosecution states that deferment of Nissan's deferred compensation has to be fully reported in the filing, even though the amount has not yet been disbursed, as this is a future liability against the company, according to a person familiar with the matter. An internal investigation by Nissan has found that Ghosn has received approximately $ 80 million in unpaid compensation payments.

The news that the company could also be sued adds a new crease to the unfolding scandal.

Chairman Hiroto Saikawa has apparently signed documents relating to plans to pay Ghosn's compensation after resigning as a consultant, the Nikkei said.

Clearly, Saikawa did not understand that the document was intended to suspend payments, and the prosecution believes that he was not involved in the misstatement of regulatory filings.

Regardless, Ghosn has added a new Japanese lawyer to his defense team.

English-speaking lawyer Go Kondo, who previously worked for the Boston Consulting Group, will join Motonaru Ohtsuru, a high-ranking former prosecutor. Ghosn has also tapped US law firm Paul, Weiss, Rifkind, Wharton & Garrison.

The prosecution is faced with two hurdles when it tries to convict Ghosn, a former deputy special investigator for Tokyo Public Prosecution, against the Japanese Shukan Shincho.

You must prove that the amount and timing of future payments are final, Masaru Wakasa told the journal. They must also prove that under-compensation is an "important matter" that is required by law to constitute a criminal offense.

Defense lawyers will probably argue that the deferred compensation was still undecided and therefore not an important matter as it was not approved by the Board, Wakasa said.

However, Wakasa said that Ghosn has a 60% to 70% chance of being convicted.

At the same time, according to Wakasa, prosecutors could also opt for a case of a serious breach of trust in Ghosn. This case is based on the allegation that he has abused company funds for personal use, such as the purchase or rental of housing. Nissan's internal investigation claims that it has channeled Nissan money through a subsidiary to pay for flats in Paris, Amsterdam, Rio de Janeiro and Beirut, according to a person familiar with the matter.

Naoto Okamura contributed to this report,

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