By on November 24, 2018

As expected, Nissan chairman Carlos Ghosn ended the week with fewer titles than when he started. The automaker’s board of directors voted to remove the executive, instrumental in creating the Renault-Nissan-Mitsubishi Alliance powerhouse, on Thursday, just three days after his arrest on suspicion of under-reported income and misuse of company assets.

The move came as Renault, which hasn’t made decision on whether to remove Ghosn as CEO, found itself at loggerheads with its alliance partner. The French automaker urged caution in the matter, perhaps fearing that Ghosn was the glue holding everything together.

In a statement, Nissan outlined the steps taken in the wake of the whistleblower-prompted investigation and subsequent board meeting:

At the beginning of the session, the board acknowledged the significance of the matter and confirmed that the long-standing Alliance partnership with Renault remains unchanged and that the mission is to minimize the potential impact and confusion on the day-to-day cooperation among the Alliance partners. After reviewing a detailed report of the internal investigation, the board voted unanimously:

  • 1. To discharge Carlos Ghosn as Chairman of the Board

  • 2. To discharge Carlos Ghosn as Representative Director

  • 3. To discharge Greg Kelly as Representative Director

  • 4. To study the creation of a special committee to appropriately take advice from an independent third party regarding the governance management system and better governance of director compensation. Further to the mandate, the three independent directors – Masakazu Toyoda, Keiko Ihara and Jean-Baptiste Duzan – will lead this matter.

  • 5. To approve establishment of an advisory committee chaired by Masakazu Toyoda and including Keiko Ihara and Jean-Baptiste Duzan. The committee will propose nominations from the board of directors for the position of Chairman of the Board.

Thus far, Nissan has not named a replacement. As Ghosn cools his heels in a sparse Tokyo jail cell, Japanese prosecutors claim the high-flying exec under-reported his income to the tune of $44 million between 2010 and 2014, though no charges have yet been laid. Earlier this week, prosecutors said it could be 10 days or more before formal charges are drawn up.

When they are laid, however, the charges will not be light, nor will the penalties be meager.

As reported by Automotive News Europe, Deputy Chief Prosecutor Shinji Akimoto of the Tokyo district public prosecutors’ office said Thursday that the crimes Ghosn is alleged to have committed are extremely serious, and that the arrest was not the result of what some observers have characterized as a “coup.”

“Falsifying the financial statement is categorically one of the most serious crimes in the Financial Instruments and Exchange Act,” Akimoto said. “When a crime is suspected and there is evidence, we will carefully judge if it warrants an indictment. We won’t do that, with an agenda in mind.”

The report also sheds light on a degree of dissent among the alliance’s ranks. Two Renault board members reportedly urged Nissan to hold off on dropping Ghosn until after the completion of the internal probe and a trial. The former chairman won’t be officially stripped of his position until shareholders vote on it, and that meeting’s not expected until June of 2019. Renault holds a 43.3 percent stake in Nissan.

Evidence laid out at the board meeting reportedly calmed the French contingent, with an official at French President Emmanuel Macron’s office telling Reuters, “The accusations are extreme, certainly, but they are also precise. We know there’s a flourishing conspiracy theory about all this, but that’s really not our thinking.”

France holds a 15 percent stake in Renault.

According to Japanese broadcaster NHK, Ghosn received nearly $900,000 in unreported funds from a Netherlands-based Nissan subsidiary, and used another subsidiary (though possibly the same one) to purchase glitzy homes scattered around the world. It’s also alleged that Ghosn used company funds to pay for lavish family vacations, and that Ghosn’s sister collected $100,000 a year from Nissan for an advisory position that “did nothing for the company,” according to Japan’s Asahi newspaper.

Ghosn has reportedly lawyered up, hiring what may be the best defense attorney in Japan.

[Image: Nissan]

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25 Comments on “Board Meets, and Ghosn’s (Almost) Gone From Nissan...”


  • avatar
    ect

    Colour me sceptical. Here’s a guy whose every tax and other required filing is prepared by highly-paid expert professionals, and all of a sudden Japanese authorities come to believe he’s been criminally underreporting his income for a considerable number of years – which leads to an arrest warrant, without (apparently) any prior communication wit the subject of the investigation or his advisors. It smells of a setup.

    Nissan was a failing company when Ghosn/Renault arrived, and iirc Renault now owns 43% of the company. And now that the company’s market and financial positions are fixed, the Japanese may want to be rid of the foreign interlopers.

    • 0 avatar
      jmo2

      You think that’s more likely than good old fashioned embezzlement? He wouldn’t be the first guy.

      https://en.m.wikipedia.org/wiki/Dennis_Kozlowski

      Or this guy:

      https://en.m.wikipedia.org/wiki/Bernard_Ebbers

      Or this guy:

      https://en.m.wikipedia.org/wiki/John_Rigas

      • 0 avatar
        highdesertcat

        jmo2, the three examples you listed aren’t even in the same league as Ghosn.

        I’m with ect above. I’m skeptical.

        I would bet that Ghosn doesn’t even SEE his tax filings until he signs them, IF he even signs them.

        I don’t even sign OUR tax filings since we retired. It is all done by our accountant in another State. I don’t even SEE my tax filings unless I download a copy using Adobe from our CPA’s file server.

        Let’s see what develops further as this thing progresses before I make up my mind about Ghosn being guilty as charged.

        AFAIAC Ghosn is an auto industry genius, the likes of which are few and far between in global automotive history. I don’t buy any of his products but I admire what he has accomplished for the global auto industry.

        • 0 avatar
          jmo2

          The reporters aren’t accurately translating the Japanese charges. This is about him paying himself more than the board authorized and not paying taxes on the extra money. That’s the crime. Well that and stealing via approving his own expense reports…as CEOs are want to do.

          • 0 avatar
            highdesertcat

            There were also charges about him paying someone for consulting services she never performed and buying real estate with the companies money, etc etc etc.

            All I am saying is that I am going to hold off making a judgement call until the fat lady sings. Not even Bernie Madoff could have pulled off what Ghosn is accused of.

            In very recent political history, Americans were bombarded with outrageous claims against a jurist who was nominated to the US Supreme Court, Brett Kavanaugh.

            If ANY of those charges were even remotely true he would never have made it to his first job in life.

            People shouldn’t jump to conclusions until all the facts have been brought to light. There is something sinister going on in Japan with these court filings. If true, Ghosn should have been nailed in France many years ago.

            I don’t know if Ghosn is guilty as charged, or not. If he is guilty, he is stupid and should be prosecuted in France as well.

        • 0 avatar
          jmo2

          I should add that it’s entirely possible he had an “understanding” with the board that he would be paid more than would be publicly declared. But as CEO of a public company, paying yourself more than you’re reporting to shareholders is called embezzelement.

          • 0 avatar
            highdesertcat

            That happens more often than the general public knows or hears about.

            I was the happy recipient of receiving consultant fees for work actually performed over 30 years that did not show up on companies’ books.

            But let’s not go there.

          • 0 avatar
            Scoutdude

            Yeah that is entirely possible that the board knew about extra payments from the subsidiary and it was the old wink and nod to keep the golden goose happy. Ditto for the some of the other things like paying for houses and that consulting fee for family.

            Of course they certainly aren’t about to admit that at this point, and they’ll happily throw him under the bus.

            The bigger question is are the authorities going to go after the accountants that cooked the books and filled the actual faked financial reports and tax returns.

          • 0 avatar
            jmo2

            “The bigger question is are the authorities going to go after the accountants that cooked the books and filled the actual faked financial reports and tax returns.”

            The usual process is to grant immunity to the underlings in exchange for testimony against the senior exec who ordered the cooking. As it should be. He’s the one who was the main beneficiary of the fraud.

        • 0 avatar
          civicjohn

          @highdesertcat, you’re not binge watching enough “American Greed”.

          Cue up the HealthSouth/ Richard Scrushy CEO meltdown, a Wall St. darling that ended up being a complete fabrication by a handful of executives who manipulated the quarterly earnings and somehow nobody was smart enough to see what was going on. I have family in Birmingham and that’s when I learned about the company, “what a great corporate citizen”, etc., and it was a shock to the city when it all burned down.

          I also used to run the US sales of a Japanese company, and every year when I did the sales forecasts, if I projected a loss, one board member would always reach out and say “John-San, why we projecting loss”?

          So you can run a scam and fool a lot of people, and Japanese culture is not as pristine and clear as some would believe.

          I guess that means I’ll believe either side…

          • 0 avatar
            highdesertcat

            civicjohn, the reason I chose to comment on this thread is because my oldest son (and his Japanese wife) were both high-level officers in a Japanese Import/Export Bank for many years.

            My son worked for them for 20+ years in both Tokyo and Long Beach, CA, and retired a few years ago to raise cattle in New Mexico.

            His Japanese wife, Aiko, also retired but remained in Tokyo to take care of her aged parents after the unfortunate Fukushima incident that displaced her parents.

            They were both at the VP level, although she was Mgt and outranked him; he was Finance.

            So yes, I understand the nuances.

            And your comment shows great wisdom about the workings of Japanese culture. This is why I am keeping an open mind about Ghosn.

            If you’ve ever been to a Japanese fishmarket when they auction off the freshly caught fish? This is what this whole mess smells like to me. The Japanese should treat Ghosn with much more respect.

            Datsun/Nissan was toast when he took it over! Ghosn gave it new life and made lots of money for the Japanese treasury.

    • 0 avatar
      geozinger

      I’m highly skeptical about this whole thing, too. First off, let me say I have no emotional connection to either company. I’m not a huge fan of Ghosn, either, but you have to admire his tenacity in keeping the alliance going and the goals they have achieved.

      I find it hard to believe that this issue was unknown. People at this level have people to handle these kinds of issues. Like others here have implied that these arrangements may have been condoned but not officially sanctioned.

      A full merger of Renault and Nissan was proposed again recently. Other people’s opinions that I’ve read see that this was the point that Nissan wanted Ghosn out. No gaijin will run one of their bigger companies. Plain and simple.

      Honestly, I can’t see the Germans letting “ausländer” run one of their companies, either. Even in the era where we as a species can put a man on the moon, making automobiles is a point of pride for many nations. If it weren’t why do so many nations want to build their “own” car?

      Sorry kids, this situation smells bad…

      • 0 avatar
        highdesertcat

        The WSJ had a video this morning about Ghosn’s “Deferred Pay” that may have caused these charges.

        That’s like saying “declare your future pay now so that the gov’t can tax you TODAY on what you may or may not receive at some time in the future.”

        Check out the video on the WSJ yourselves. No subscription required. My subscription expired years ago.

      • 0 avatar
        jmo2

        “Like others here have implied that these arrangements may have been condoned but not officially sanctioned.”

        Which means Goshn is guilty of participating in a criminal conspiracy, right?

    • 0 avatar
      MBella

      I see it both ways. I think it’s likely he took some undisclosed payments and kickbacks and committed a crime. That being said, I’m confident it’s probably standard operating procedure at most firms. Somebody wanted to get rid of him and used this as an excuse.

  • avatar
    jeoff

    Yeah, it is a little reminiscent of the Putin taking down certain oligarchs that fell out of favor. The crimes are “very serious”, if someone important wants you out, otherwise it’s “just business”.

  • avatar
    Ol Shel

    Of course, if Ghosn had nothing to uncover, it’d be impossible for “deep-state Nissan” to expose him. But, what fun is that to think about?

    The truth will be found in the basement of a D.C. pizza joint with no basement.

  • avatar
    civicjohn

    @highdesertcat, you obviously have experienced more than I, we’re talking about a culture where before the NIKKEI crash, a company would provide an “office without a window” in lieu of firing. I remember my first visit to the Northern Prefecture to spend a couple of nights in the CEO’s “guest house”. Of course I had a person with me at all times, and you are probably aware of how some Japanese simply can’t drink for health reasons, and I was always assigned to someone who was hell-bent on closing that gap.

    So we took a bullet train, lots of Kirin on the way, and when we arrived, the conductor came over the intercom and said something – I asked what he said and was told that “the conductor was apologizing for being 4 minutes late”…

    The first night was filled with awesome private conversation, at the time the leading cause of death for adult males was suicide – pericieved belief that the person was unable to take care of his family – and they were amazed at the US culture and the amount of guns that Americans had. Having never fired a gun in my life, but my upbringing that it was a right to bear arms, I found myself completely out of my element, and I look back at those conversations and how much I learned.

    So, yeah, I’m on the fence too. I would assume that if the yen was flowing well, we probably would have never heard about this.

    And yes, I have visited several fish markets and you don’t forget the smell. On the other hand, I remember being asked to have a conversation while I was visiting a public park or even a temple, some just wanted to practice their English skills with me. Lots of layers on this onion.

    • 0 avatar
      highdesertcat

      Enjoyed reading your comment. You’re so right! Brought back lots of memories of my first visit to Japan, R&R out of ‘Nam, to Camp Zama in Sept 1967. The Japanese REALLY took an interest in American GI’s back then, especially the girls. Alas, I was already married to the love of my life.

      But I did manage to escort/smuggle a couple of young Japanese beauties in to the NCO club so they could party all night long, and maybe get lucky with one of those young American studs ready, willing and able to spend some big Yen on their R&R.

      I’m going to hold out for more evidence to come out re Ghosn, but I believe the Japanese should treat Ghosn with more respect. (And I’m not a Ghosn fan.)

  • avatar
    civicjohn

    I bet that earned you some street cred at the NCO!

    No Ghosn fan here either, but if he’s lawyering up, I bet this gets worked out on the sidelines.

    Ghosn engineered the corporate move from LA to TN, they are around the corner, I remember the housing market blew up with the announcement. If you’re a real estate agent, just drag some future LA expatriates through a few McMansions in TN and watch how quickly they jump.

    And I forgot to mention the smell of a pig pen is something you never forget either, shout-out to my Uncle Curtis.

    • 0 avatar
      highdesertcat

      I didn’t know a soul there at Zama because I was on R&R out of Tan Son Nhut, but I’m sure the guys who picked up those beauties had a night to remember. Short skirts, very short skirts were very much in fashion in 1967 and these girls left nothing to a man’s imagination. My wife had met me in Hawaii for an earlier R&R I had. Some aircrew members were blessed with TWO R&Rs. Zama was my #2 R&R, a shopping trip for buying Nikon gear, etc.

      My wife’s the real estate broker/agent but we’re both retired and gainfully unemployed now. Time to leave that work for the others.

  • avatar
    musiccitymafia

    What I don’t get is why the Japanese would pursue this so openly thereby causing so much damage to the stock. $44M is small potatoes.


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