Nissan's Management Problem

Matt Posky
by Matt Posky

On Tuesday, a subset of Nissan’s board intends to request access to a list of 80 Nissan employees suspected of aiding former Chairman Carlos Ghosn in his alleged financial malfeasance. Assembled by Nissan’s former audit chief, Christina Murray, and company, the document compiles actions taken by staffers believed to have assisted Ghosn directly or attempted to impede the resulting investigations.

Among them is Hari Nada, Nissan’s vice president, who oversees the company’s legal department. Despite being instrumental in Ghosn’s November arrest by acting as a whistleblower to Japanese authorities, along with Toshiaki Onuma, his role as one of the ousted executive’s many confidants has placed him under suspicion — as did his reluctance to recuse himself from the company’s legal affairs.

Nada is now being pressured to resign. However, it’s not clear if this is the result of any actual wrongdoing or an internal power struggle happening inside the Renault-Nissan-Mitsubishi Alliance. Considering the power vacuum created by Ghosn’s arrest and the swift retirement of ex-CEO Hiroto Saikawa (who also makes the 80-person list), both scenarios seem equally plausible.

According to Bloomberg, Nada was recently implicated in a scandal involving excess stock-linked compensation — an issue that also led to Saikawa’s resignation in September.

The Wall Street Journal had more on how Murray’s report played into this and the ongoing management tussle:

Most of the directors at Nissan are relatively new to the job, having joined after the company’s annual meeting in June. The tensions over the list and Mr. Nada’s role reflect a broader power struggle between some of Nissan’s top management — largely holdovers from the Ghosn era — and the board over the company’s direction.

At the monthly board meeting in September, directors were briefed on the results of Nissan’s nearly yearlong investigation into alleged wrongdoing by Mr. Ghosn. The directors initially were given a five-page overview of the findings, instead of the full 170-page report, although they got it a few days later, said people involved in the discussions.

The full report deals mainly with allegations about Mr. Ghosn and his former aide, Greg Kelly, according to people who have seen it. When some board members asked about the lack of details on possible wrongdoing by others, they were told about Ms. Murray’s list, said people who attended the meeting.

Board members then asked to see Ms. Murray’s list, which ranks people over the severity of their actions on a scale of 0 to 5 and gives Mr. Nada a 5, according to people who have seen it. It hasn’t been shared with the full board, said the people familiar with the board’s thinking.

The longtime Nissan employee is believed to be closely involved with many aspects of the chairman’s compensation, serving as one of three administrators at Zi-A Capital BV — the Dutch subsidiary of Nissan created by Kelly that purchased a house for Ghosn in Beirut using the allegedly ill-gotten finances. Nada is also said to have been aware of documents proposing payments totaling $80 million be made to Ghosn after his retirement.

While his status as a whistleblower was supposed to save him from the law, it doesn’t guarantee he’ll have a place to work. If Nissan’s board presses for his resignation, which seems to be the case, Renault is expected to follow suit. But nobody at the company has accused him of doing anything illegal. Instead, the board is focusing on how his involvement in Ghosn’s previous dealings may have created morale and trusts issues within the automaker — likely doing the same with other employees named in the list.

“We have to decide on clear methods to stop this,” one of the directors told The Wall Street Journal. “We may need to change the people in charge quickly. Whether we can remains to be seen.”

While Tuesday’s meaning is primarily intended to help Nissan decide its next CEO before the end of this month, Murray’s list and Nada’s forced retirement are bound to come up. Meanwhile, Ghosn and Kelly continue to profess their innocence by claiming this is all a management coup staged to make them look like criminals.

We can’t possibly claim to know whether or not Ghosn is innocent. But his claims that there’s a management war happening inside Nissan more valid than ever before.

[Image: Memory Stockphoto/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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 5 comments
  • Noble713 Noble713 on Oct 07, 2019

    Jeez, starting to look like the Soviet Great Purge up there. Nobody is safe.

    • See 2 previous
    • SPPPP SPPPP on Oct 08, 2019

      @jmo2 As I understand it, the main issue with Ghosn was that his compensation was set up in such a way that he reported one figure to the Japanese tax authority and to shareholders, but actually received more. This was apparently done with the consent of key executives within Nissan, including then-president-and-CEO Hiroto Saikawa. Instead of simply giving him a raise, "they" looked for any loophole they could find to pay him without public disclosure. This case basically rests on tax fraud and shareholder disclosure laws. Therefore, I don't think you can conclusively say he stole money from Nissan. I guess you could say that he stole money from Japan's tax coffers by improperly delaying compensation and otherwise under-reporting income. The often-repeated idea that Ghosn was accused of wrongdoing in order to eliminate him from the company looks quite plausible. But Nissan's executives look increasingly incompetent as the company's executives are forced to admit their own culpability in the situation. Which, under American law, means that Nissan itself is liable to fines and sanctions. https://www.accountingtoday.com/articles/how-carlos-ghosn-hid-140m-in-compensation-from-nissan https://www.nytimes.com/2019/08/25/business/nissan-ghosn-lawsuits.html

  • Thejohnnycanuck Thejohnnycanuck on Oct 07, 2019

    Good job. This is precisely the kind of teamwork Nissan needs at a time when profits are soaring and sales are through the roof. Oh, wait...

  • Arthur Dailey 'The capitalists will sell use the very rope that we use to hang them.' In our household we have cut down our shopping/spending and pay more to purchase products from 1st world nations or 2nd world nations that are our 'allies'. That also means quite often only buying and eating fruit and vegetables that are in season. Just like our parents and grandparents did.At least TTAC published an article on May 21st regarding LAN transformers that contravene the Uyghur Forced Labour Prevention Act being used in some BMW, Jaguar, Land Rover, and VW products?
  • ToolGuy I wouldn't buy any old Chinese brand of vehicle, but the right EV at the right price, maybe possibly yes. If you told me this would alarm Ford and torque off FreedMike, all the better. 😉P.S. I would *definitely* consider an EV made in Taiwan. Take that, paramount leader!P.P.S. China batteries/components to convert one of my ICE vehicles to EV? Yes.
  • Wolfwagen I expect Renault to be less popular than Fiat
  • ToolGuy Helium-3, baby!
  • Roman Our 1999 Pontiac Sunfire Gt is still running without any issues. 25 years and counting.
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