By on December 26, 2019

As a terrible year draws to a close, Nissan can’t seem to put its bad luck behind it. In a case of “the hits keep on coming”, the automaker’s vice chief operating officer, Jun Seki, announced his departure from the company less than a month after taking on the position.

Seki, once a candidate for the CEO chair, was tasked with helping turn around the struggling company in the wake of the Carlos Ghosn scandal and concurrent sales plunge. At the same time, an American dealer group is suing Nissan over alleged Ghosn-era financial misdealings.

A merry Christmas it was not.

Seki told Reuters that his three-decade career at Nissan will come to an end in the new year after receiving an offer to head Nidec Corp, a Japanese components manufacturer.

“I love Nissan and I feel bad about leaving the turnaround work unfinished, but I am 58 years old, and this is an offer I could not refuse. It’s probably my last chance to lead a company too,” Seki said, adding, “It’s not about money. In fact, I will take a financial hit since Nissan pays us well.”

Reuters noted that the company’s turnaround team, consisting of Seki, Chief Operating Officer Ashwani Gupta, and CEO Makoto Uchida, have failed to “gel” as a team following their appointments. Seki will likely leave the company in the coming month.

In California, Nissan finds itself on the receiving end of a lawsuit from the receiver for the Sage Group of Nissan-Infiniti dealerships. The suit names Nissan, Nissan Motor Acceptance Corp, and Trophy Automotive Dealer Group LLC — the latter being an outfit owned by Nassar Watar, a partner of a Saudi national linked to Ghosn via the former chairman’s breach of trust indictment.

In the lawsuit, Byron Moldo (court-appointed receiver for Sage Group), claims “a culture of corporate corruption and greed” forced the group into the “fire sale” of two California dealerships to Ghosn “cronies.” Those individuals are listed as Watar and Khaled al-Juffali.

From Automotive News:

Watar and Juffali are joint owners of Al-Dahana which, in turn, owns 50 percent of Nissan Gulf, the regional distributor for Nissan and Infiniti in several Middle Eastern countries.

Japanese prosecutors allege that Ghosn arranged payment of $14.7 million from a Nissan subsidiary to a company owned by Juffali to help Ghosn settle millions of dollars of personal losses on currency swap contracts concerning his executive compensation.

Ghosn and Juffali have denied any misconduct or kickback scheme.

The plaintiffs’ lawsuit alleges that “Nissan had a corrupt relationship” with al-Juffali and Watar, saying they became Nissan insiders when al-Juffali bailed out Ghosn.

“They were rewarded by Ghosn with illicit payments from Nissan’s CEO reserve fund,” the filing says. “In addition, Nissan entered into a joint venture with their company, Al-Dahana, to distribute Nissan products in Kuwait, Bahrain, Saudi Arabia, and Abu-Dhabi.”

The suit alleges that, in 2017, Nissan’s finance arm stopped backing Sage Group’s vehicle purchases, drying up inventory at the group’s dealerships. Nissan North America then allegedly paraded Trophy Automotive as a potential buyer of Sage’s Universal City and West Covina Nissan dealerships, without disclosing the link between the automaker and the Watar-owned group. The sale eventually went through for a sum far more meager than Sage had anticipated.

The suit also claims Nissan withheld $3 million from Sage, forcing it to sell two other dealerships to another supposed insider, Dennis Lin, for zero dollars in franchise value.

The man who looms large over the lawsuit — and, to this day, the automaker — remains in Japan awaiting trial. Ghosn stands charged with two counts each of misreporting income and breach of trust.

[Image: rmcarvalhobsb/Shutterstock]

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15 Comments on “No Christmas Wishes Granted Here: Nissan Hit With Lawsuit, Executive Departure...”

  • avatar
    87 Morgan

    Their has to be way more to this than what we have read here. Why did the selling dealer have to sell to the people that Nissan put in front of them? Private equity groups and ‘family offices’ as they are now called have been gobbling up small and mid-size dealer groups for the past several years; what made these stores so unattractive to those groups?

  • avatar

    Among stockholders of public companies, there is the “cockroach theory”: see one operational problem, thee are probably more that will come to light.

    I noticed worrisome deterioration of Boeing’s balance sheet a couple years ago. Then 2 737 Maxes augered in. Now it’s becoming apparent the Max’s problems are a lot deeper than the MCAS. Once stopped, it will cost Boeing Millions, maybe Billions, to get the 737 supply chain going again. Earlier 737’s are developing cracks in the bracket that holds the wing onto the fuselage.

    So it is with Nissan. Ghosn’s arrest was the first cockroach, that exposed weaknesses throughout the company. Some may argue the first cockroach was decline of Nissan reliability. If that was the first cockroach, what does that say about Honda?

    • 0 avatar

      Thanks for the concept it makes sense. I was just discussing the Boeing thing with my mother last night, I explained it started with a combination of the McDonnell Douglas buyout/bailout and 787 in the 90s which put Boeing in a poor position by the mid 00s. So then they decide to cheap out and extend the life of the 1967 737, again, and then shortly thereafter fire all of the experienced engineers to be replaced with $9/hr Third World “engineers” as Bloomberg exposed and look at the result. Death by MBA.

      I predict Boeing should go bankrupt but will not be allowed to fail by Fedgov between the economic impact and fact it is a major military contractor. Whether it is a stealth bailout in the form of increased defense spending or a public bailout, Boeing is TBTF and it will continue to rot from the inside because *no one* will be held accountable.

      FWIW I read a prediction a year ago which was the 737 MAX will never fly commercially again [as configured] and all of the planes will eventually be scrapped. I agree with this but I won’t discount the planes can’t be flown again if they could switch out the engines and put the previous generation engines on it again. From everything I’ve read, the AoA is thrown off because of the increased power of the newer engines and their position on the wing and the MCAS is supposed to compensate. The issue is ultimately a structural problem which cannot be “fixed”, and the fact the fake news never seems to touch on this and emphasizes “software” which tells me all I need to know.

      Anyone remember this one? You paid for it, and you’ll be paying for Boeing too.

      • 0 avatar
        Art Vandelay

        They will fly again, but look for Amazon, UPS, and FedEX Livery to be painted on them. I don’t think they will carry passengers again.

      • 0 avatar

        BA bought both McDonnel-Douglas and Rockwell’s aerospace division.

        The first cockroach, as I said, was the balance sheet. I tossed all my old BA annual reports when I sold the stock 2 years ago, so I don’t know how much equity the company had 15 years ago, but, as of Q3 this year, BA shareholder equity stands at a *negative* $4B. Tangible net assets, meaning not including “goodwill” and other intangibles, looks to be around a negative $11B. By conventional measures, BA is bankrupt right now. What happened to all the money? The Jack Welch mantra of “shareholder value”, all the money they earned, and more, went into buying back stock. The only thing keeping BA from defaulting was the cash flow, which mostly came from the 73. My sense is BA did another patch job on the 73, because they don’t have the $30B a new, clean sheet, design would cost, because they spent all their money buying back stock.

        I suspect you are correct on the inevitability of a Boeing bailout, but nothing will change in the corporate culture at BA. The new CEO they just put in place is another Jack Welch water carrier.

        • 0 avatar

          Excellent summation, thank you.

          Maybe Boeing can move to PRC when GM does?

          “BA bought both McDonnel-Douglas and Rockwell’s aerospace division”

          You may be more knowledgeable than I am on this, but I read this was a quasi bailout to MCD shareholders. I read MCD was essentially near bankrupt which is why they had not fielded new commercial designs in many many years at the time. I also read the B717, the renamed MD-90, was actually very popular with airlines and aircrews.

      • 0 avatar

        On the topic of Boeing and corporate accountability, Jim Hackett at Ford can’t be thrilled that Boeing CEO Dennis Muilenburg just got booted.

      • 0 avatar

        28 Cars, you were making complete sense until you threw in “fake news.” I don’t know about TV news, I don’t touch that garbage, but long-format print news has explained the problems in quite good depth from all angles: engineering, management, regulatory capture, etc. — showing that while “software” is key to this fiasco it’s also just the tip of the iceberg.

  • avatar

    Boeing will be okay – they will continue to build passenger planes and continue to compete with Airbus. There are too many reasons why. First they have excellent record of building planes that commercial markets demands (unlike Concord waste and Airbus A380 taxpayers paid fiasco). They also have excellent record regarding safety. Even more important are national security concerns; And space exploration. Boeing provides jobs to millions of people including suppliers. And so on. 737 Max will continue to fly – it costs considerably less than A320. Even if unimaginable happens and Boeing goes bankrupt – then there will be demands to break Airbus into two independent companies or help Chinese company to replace Boeing ee.g. by buying it and may be even keeping the name. Of course in this case Boeing will be made in China but US military will be screwed. US will lose the war with China.

    • 0 avatar

      >>There are too many reasons why.<<

      So BA goes bust. They cheat the claimants from the two crashes by limiting how much loot there is in "OldCo" to pay claims They cheat their pensioners by dumping their underfunded pension plans onto the PBGC. The holders of BA's $20B in debt will be hosed. Their shareholders will be hosed. BA cheats it's current employees by tearing up the labor contracts and imposing pay and benefit cuts. But McNerney keeps the pile of loot he made by mismanaging the company. Muilenburg gets his $60M severance package for continuing McNerney's misfeasance and violation of fiduciary duty.

      Meanwhile, no-one wants to fly on a Boeing product as their reputation for quality and safety is in tatters.

      Boeing's helo division would be sold off to GenDyne or Northrup-Grumman, since Lockheed already bought Sikorsky. St Louis dries up and blows away as the F-18 is near it's end of life and the F-15 is even older. Seattle dries up and blows away because no-one will ride on their products.

      The Lockheed Electra had a problem with the wings falling off. Lockheed fixed the problem, and the repaired planes flew for years, but not a single passenger Electra was ordered after the flaw was discovered.

      We seem to have gotten off the beam of Nissan's problems, eh?

  • avatar

    With a smile of Christian charity great Casey’s visage shone;
    he stilled the rising tumult; he bade the game go on;
    he signaled to the pitcher, and once more the spheroid flew;
    but Casey still ignored it, and the umpire said: “Strike two.”

  • avatar

    It’s the decade of a New Frontier at Nissan.

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