Japanese prosecutors have amended one of their indictments against former Nissan Motors chairman Carlos Ghosn, alleging that he received US$20 million from Saudi Arabian businessman, Khaled Al Juffali.

Prosecutors have also said Juffali provided a letter of credit (L/C) to Ghosn to support the Nissan chairman's financial position.

Personal benefits

Prosecutors say Ghosn arranged for Nissan to pay one of Juffali's companies US$14.7 million in a deal that the prosecution describes as profitable for both men.

Now prosecutors have made a new allegation that a Juffali company sent US$20 million in October 2008 to a brokerage account held by a company managing Ghosn's personal assets.

Ghosn claims the same payments were for critical services that substantially benefited Nissan and Juffali maintains the payments he received were for legitimate business purposes.

Currency swap

The allegations stem from a currency swap deal agreed in the mid-2000s between Ghosn and a Japanese bank that was designed to protect the former Nissan chairman from a decline in the yen.

Ghosn was paid by Nissan in yen but had personal expenses mostly in other currencies.

Perefect storm

When the value of the yen increased significantly in the wake of the 2008 global financial crisis, Ghosn was left with unrealised losses of 1.85 billion yen (US$16.9 million).

Meanwhile Ghosn's shares in Nissan, which he put up as collateral for the agreement, plummeted in value.

L/C facilitation

The bank threatened to close the position and initially Nissan agreed to take Ghosn's side of the agreement to keep the bank at bay.

Ghosn took back his position in February 2009 because he received an L/C from Juffali that allowed him to keep the position open.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.