Nissan said on Monday an internal investigation triggered by a tip-off from a whistleblower had revealed that Ghosn engaged in wrongdoing including personal use of company money and under-reporting for years how much he was earning.
Nissan's board is now set to meet on Thursday, when it is expected to agree to sack Ghosn and Representative Director Greg Kelly.
In the five-year period, the prosecutors believe Ghosn actually received a total of almost ¥10 billion in salary, but Nissan's annual securities reports show that his remuneration amounted to about ¥4.98 billion.
Saikawa said three major types of misconduct were found, including under-reporting income, using investment funds for personal gain and illicit use of company expenses.
Ghosn is also the chairman and chief executive of France's Renault and chairman of Mitsubishi Motors.
The allegations also involve Nissan's representative director Greg Kelly.
Nissan's announcement came after the close of trading in its stock in Tokyo.
He served as Nissan chief executive from 2001 until April 2017, and also was named chief executive of Renault in 2005, leading the two major automakers at once.
"Nissan deeply apologises for causing great concern to our shareholders and stakeholders", the company added. Nissan seeks to remove both Ghosn and Kelly.
Ghosn helped put Nissan on the right track in the late 1990s after the company neared bankruptcy.
At stake is an alliance that has vaulted Renault into a global heavyweight by giving it access to Nissan's manufacturing and development expertise.
Ghosn's slow retreat from his roles at each company-including stepping down as Nissan's CEO a year ago and suggesting he may step down from his post as CEO of Renault before the scheduled end of his term in 2022-have sparked rumors that he wasn't on board with plans for further integration and might be thinking of leaving the alliance anyway. "We will continue our work to identify our governance and compliance issues, and to take appropriate measures", it said. A Brazilian-French citizen of Lebanese descent who has been with Nissan since 1999, Mr Ghosn heads the world's largest automaker alliance.
Nissan shares have hit a two-year low as its chairman Carlos Ghosn remains in custody over a series of claims including a failure to declare £34.5m in earnings.
French President Emmanuel Macron said the Government, the French car-maker's top shareholder, will be vigilant about Renault and its alliance with Nissan.
Yasuyuki Nakayama, a 36-year-old civil servant living in the city of Akita in northeastern Japan, said, "I'm shocked but I want to keep driving Nissan cars because I like them".
Ghosn, 64, is described by the Guardian as "one of the world's most powerful auto bosses" who "has managed the seemingly impossible job of running one carmaker in Japan, and another in France".