On the morning of Dec. 4, about 300 people attended a meeting at Nissan Hall at the headquarters of Nissan Motor Co. in Yokohama. The attendees were representatives and sales reps from about 120 Nissan distributors and dealers.
At the meeting’s onset, Nissan President and Chief Executive Officer Hiroto Saikawa suddenly began his address.
“He completely managed the company for his own benefit and abused it for his personal purposes,” Saikawa said. “This is totally unacceptable.”
Saikawa launched a stinging attack on former Nissan Chairman Carlos Ghosn, and his pent-up emotions were laid bare in front of attendees. “The company has been heavily damaged. This isn’t something that can easily be healed,” he said. “My mission is to erase the perception that ‘Ghosn is Nissan and Nissan is Ghosn’ and to move our company forward.”
Saikawa’s speech was met with thunderous applause from attendees.
The back-and-forth between Ghosn and the special investigation squad of the Tokyo District Public Prosecutors Office rumbles on at the Tokyo Detention House in Kosuge, Tokyo.
Ghosn has been arrested and indicted on suspicion of understating his annual executive remuneration of about ¥2 billion in securities reports for several years in a bid to dodge criticism from within Japan and overseas about the huge amount of his income. Ghosn reportedly planned to receive the unreported portion in the form of future payments after he stepped down.
The investigation squad has obtained large volumes of evidence from the Nissan side through the Japanese version of the plea-bargaining system. Among them there are memorandums that stated, to the yen, Ghosn’s actual annual remuneration (about ¥2 billion), how much he had received (about ¥1 billion) and how much had been deferred and would be received later (about ¥1 billion).
There are also tables, in which these figures were summarized and included details such as cumulative amounts, and other documents, which specified the plan for how Ghosn would actually receive the deferred payments. Ghosn’s signature remained on some of these documents, and there were markings indicating Ghosn himself had made corrections and modifications with a fountain pen.
The 59-year-old head of Nissan’s secretarial office, who had served Ghosn for more than 10 years and reached a plea bargain with prosecutors, kept these documents in a safe. “The fact several kinds of documents were drawn up and methods for how the money would be received were seriously considered is, in itself, proof that the amount of Ghosn’s remuneration had been finalized,” a senior prosecutor told The Yomiuri Shimbun.
Ghosn, 64, has no intention of backing down. He insists the figures written on the memos were “nothing more than a suggested amount reflecting my own value,” and that his signature and the corrections “showed only that I had seen the documents, but did not mean the remuneration amount had been finalized.”
Did Nissan suffer loss?
Ghosn’s lawyers are zeroing in on “the method for deciding executive remuneration,” which Nissan releases in the securities reports.
The report says the amount of remuneration for each Nissan director is determined after being discussed “with the representative directors and approved by the chairman.” The English version of the report states “directors” in the plural.
The lawyer insisted Ghosn, who was the chairman, discussed his own remuneration only with former Representative Director Greg Kelly, and that there is no indication the other representative director, Saikawa, was aware of the figures stipulated in the memos.
“It’s unthinkable that a future Nissan CEO would approve payment of remuneration that violated the rules, which backs up the argument that Ghosn’s pay wasn’t finalized,” the lawyer said.
A major headache for Nissan is the viewpoint that Ghosn was arrested on suspicion of violating adjective law, which means he did not create any actual loss for Nissan.
There is no penalty simply for receiving a huge income. Ghosn actually received no more than a portion of his remuneration, and Nissan had not set aside the chunk that was to be paid later. Even among prosecutors, there is a belief that “unless this is handled as a violation of substantive law that created an actual loss for Nissan, the case won’t hold up.”
There are also suspicions Ghosn misappropriated Nissan’s funds for personal use, such as by using a Dutch subsidiary, Zi-A Capital BV, to buy luxury homes. When Nissan provided information on this to the investigation squad, it initially believed these suspicions would lead to the pursuit of Ghosn’s criminal responsibility for special breach of trust under the Companies Law and professional embezzlement.
However, much of the alleged wrongdoing occurred overseas, and Ghosn has denied the allegations. A lawyer who was previously a prosecutor said: “Evidence that Nissan suffered a loss will be essential for building a case of a special breach of trust. There are many high hurdles to doing this, including how to appraise the value of overseas property assets.”
A coup d’etat?
Day after day, high-end vehicles bearing blue number plates — indicating the car is for foreign diplomats — pull into the Tokyo Detention House. These diplomats are from Brazil, Lebanon and France. Ambassadors and other officials from these nations have been meeting with Ghosn, who holds all three nationalities. On Nov. 28, a Lebanese Embassy official who had met with Ghosn caused a scene when they proclaimed to the waiting media horde, “Innocent!”
Nissan has also been indicted as a corporation in connection with the understating of executive remuneration. In court, Nissan’s governance shortcomings will be strictly questioned, and Saikawa, 65, bears a big responsibility for this.
In Japan and overseas, there have been swirling claims that the arrest of Ghosn was “a coup d’etat by a Nissan-originated circle.” A source at the automaker admitted, “If this incident ends like this, it would be a painful result for the company. I hope it can somehow be handled as a violation of substantive law.”
The language used by a Nissan executive was even more blunt. “If the investigation ends halfway while we’re getting criticized with comments like this is a ‘Nissan conspiracy’ and some people think maybe Ghosn wasn’t all that bad, we won’t be able to move forward.”
About three weeks have passed since Nissan’s charismatic boss was arrested. The world is closely watching how the investigation will pan out.Speech