carlos ghosn i
Michael Taylor11 Dec 2018
NEWS

Nissan and Carlos Ghosn both charged

Former Renault-Nissan boss charged by Japan over undeclared income

Carlos Ghosn once strode the world’s motor shows as perhaps the most powerful single man in the auto industry.

Now Japanese prosecutors have charged the deposed head of the Renault-Nissan-Mitsubishi alliance with financial misconduct for allegedly under-reporting his salary.

The man who orchestrated Renault’s takeover-without-a-takeover of Nissan in 1999 was initially arrested without charge last month for using Nissan’s assets for his own use and under-reporting his salary and pension.

The 64-year-old Lebanese-Frenchman, who was born in Brazil, remains the CEO of Renault, though he has been replaced as its Chairman and that of the Alliance, which regularly arm-wrestles the Volkswagen Group and Toyota to claim the title of the world’s biggest car-maker.

Nissan has rejected Renault’s proposals for a replacement Chairman, though Nissan itself has also been charged for allegedly filing false securities documentation. The only other person charged at this point is former Nissan director Greg Kelly, who had been Ghosn’s right-hand man in Japan.

While Nissan documented Ghosn’s salary in its annual reports, prosecutors believe that Ghosn had organised for the Japanese car-maker to top up a pre-arranged amount, believed to be $US88 million, after its boss’s retirement.

The maximum penalty for both Ghosn and Kelly is 10 years in prison, plus a $US88,750 fine, while the maximum fine for Nissan is $US6.2 million.

Ghosn is said in Japanese reports to have denied the allegations against him, but has yet to make a public statement. He has been locked up in a detention centre in Tokyo since November 19, allowed to speak only with his legal team.

“Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company expresses its deepest regret,” Nissan said in a statement.

“Nissan will continue its efforts to strengthen its governance and compliance, including making accurate disclosures of corporate information.”

carlos ghosn ii

Ghosn rescued Nissan from seemingly inevitable bankruptcy nearly 20 years ago, but at least part of the motivation for Nissan “outing” its own leader seems routed in boardroom politics.

Nissan CEO Hiroto Saikawa went to Japanese prosecutors accusing Ghosn of hiding almost $US80 million in deferred payments over eight years, to be paid in the form of consultancy fees.

That was despite Saikawa signing off the payment documents.

Yet, the plot thickened when it became clear that Nissan had been chafing at Renault’s push to change the Alliance into a merger, with some Japanese and French business media outlets insisting Ghosn had been planning to fire Saikawa.

French outlets insisted Ghosn was unhappy with the way Saikawa had handled Nissan’s US sales slump (its sales have fallen in six out of the last eight years) and quality issues in the Japanese market.

They insisted Ghosn had planned to oust Saikawa in a board meeting set for late November, though it was Ghosn himself who was voted out as Chairman on November 22.

Renault owns a 43 per cent stake in Nissan and holds three board seats at the company, while friction has been building between the two because Nissan has been far more profitable while having less management influence.

Despite being hand-picked by the Brazilian as his successor in 2017, Saikawa had publicly said that Ghosn had too much power at Nissan.

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Written byMichael Taylor
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