Defence against financial misconduct allegations

Generally speaking, if employees are accused of financial misconduct in office to the point where the case goes to court, they are likely to do all they can to refute evidence brought by their accusers.

To amass this evidence, they often need to employ forensic financial investigators, who will look at the evidence put forward by the prosecution or civil claimants.

One such case, that is currently in the news, is that of Carlos Ghosn, who went from being named in 2003 as one of the 10 most powerful people in business outside the US by Fortune magazine to being arrested in 2018 in Japan on allegations of under-reporting his salary and gross misuse of Renault-Nissan’s company assets.

The allegations he faces include spending around €630,000 on two black-tie dinners that the prosecutors claim were held to celebrate his birthday rather than as a celebration of the Renault-Nissan alliance. He is also accused of funnelling around €11 million to himself and his family members.

At the time of his arrest, Mr Ghosn was Chairman of both Nissan and Mitsubishi and Chief Executive of Renault. The French government was quick to react and froze his assets in France, although he has never been charged with a criminal offence.

However, before he could face trial in Japan, he fled in spectacular fashion to Lebanon.  He has recently agreed to be interviewed by French investigators in Beirut, claiming that he wants to clear his name.  He says that he has been the object of a character assassination campaign led by Nissan, with the complicity of the Japanese Government.

Mr Ghosn now spends his time at his heavily guarded home in Beirut preparing his defence. His defence team said it has uncovered “abnormalities, which undermine the judicial process which are the result of the peculiar methods of the Japanese investigation”.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Business owners can sometimes be tempted to blur the line between personal and valid business expenses.  Doing can amount to tax evasion but it can also be a fraud on other shareholders.

Identifying whether a particular cost for, say, a restaurant meal was incurred to entertain a client to for a family meal out may be impossible from a review only of the receipt.  That is why many cases of wrongdoing only come to light if evidence is put forward by whistle-blowers.

Once allegations of misconduct have been made, it can take many months of painstaking review to go through large volumes of documentation to ascertain whether the misappropriations that triggered the initial enquiry might have been the tip of a much larger iceburg.”

Posted in Forensic, The Forensic Blog.