Nissan's Management Problem

Matt Posky
by Matt Posky
nissans management problem

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]

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  • 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...

  • JMII So this pretty much confirms the long standing rumor that the C8 platform was designed for hybrid AWD support. If this is even faster then the current Z06 it will be a true rocket ship. GM was already hinting that even more impressive C8 was coming, most assume a turbo ZR1 but an e-assist AWD package seems more like... and apparently it will be called E-Ray.
  • Tassos the announcement is unnecessarily verbose, aka full of it. Most 'justifications" for the shutdown are shameless lies.
  • Jwee I can post images...?????
  • Jwee @Bobby D'OppoThere is no element of the reported plan that involves taking people's carsSeems like you missed the Southpark reference:https://www.youtube.com/watch?v=tO5sxLapAtsMy comment was humor (or humour if you prefer). The city council is not literally taking people's cars, but seems like they wouldn't mind a drop in car ownership. More cyclists! Less pollution! More public transport! A £70 fine per violation! Surely if they came out and said "we are going to take your car", they would get a very stern letter written to them in the strongest language possible, or perhaps even called a bunch of rotters. I am all for good transport networks, but this is just a terrible plan. Visit Amsterdam, and study how to manage traffic skillfully in a dense, medieval city, with no traffic cameras whatsoever, with first rate public transport, where pedestrians, bikes, boats and cars coexist.
  • Tassos with 170k+ miles, and over 15 years old, this vehicle has had a full life. Maybe it's time for the scrapyard.
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