Report Nissan's Carlos Ghosn to be arrested by Japan authorities for alleged financial violations

[Soup]

Nissan's Carlos Ghosn to be arrested by Japan authorities for alleged financial violations: Asahi - ET Auto

Nissan moving to fire Ghosn for financial misconduct | Reuters

TOKYO - Nissan Motor Co Ltd Chairman Carlos Ghosn is to be arrested by Tokyo prosecutors for alleged violation of Japan's financial instruments and exchange act, the Asahi newspaper reported on Monday on its website.

The newspaper reported that Ghosn, who is also chairman and chief executive of France's Renault, was suspected of having understated his own income on financial statements and had agreed to voluntarily speak to prosecutors.

A Nissan spokesman said the company was making checks on the report.

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TOKYO (Reuters) - Nissan Motor Co Ltd (7201.T) said on Monday it was moving to terminate Carlos Ghosn from his chairman’s post after finding that he had used company money for personal use and committed several other serious acts of misconduct.

The Japanese automaker said that based on a whistleblower report, it had been investigating possible improper practices of Ghosn and Representative Director Greg Kelly for several months, and that it was fully cooperating with investigators.

“The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation,” Nissan said in a statement.

It said CEO Hiroto Saikawa would propose to the Nissan board to remove Ghosn and Kelly.

The Yomiuri newspaper reported that Ghosn had been arrested by Tokyo prosecutors on suspicion of under-reporting his salary. Earlier, several outlets had reported he was being questioned.

The news comes as a shock in Japan where Ghosn, a rare foreign top executive, is well regarded for having turned Nissan around from near bankruptcy. Ghosn is also chairman and chief executive of France’s Renault (RENA.PA).

The Asahi newspaper reported on its website that prosecutors had begun searching the offices of Nissan’s headquarters and other locations on Monday evening.

The Tokyo District Public Prosecutors Office declined to comment.

Nissan said it would brief reporters on Monday evening. Spokesmen for Renault and the Renault-Nissan-Mitsubishi Motors (7211.T) alliance did not immediately return calls and messages seeking comment on the arrest reports.

An ouster of Ghosn, 64, is bound to raise questions about the future of the alliance that he personally shaped and had pledged to consolidate with a deeper tie-up, before eventually stepping back from its operational leadership.

Renault shares tumbled 13 percent in Paris to be among the worst performing stocks in Europe .

Nissan’s German-listed securities 7201.TG plunged 12 percent.

Brazilian-born, of Lebanese descent and a French citizen, he began his career at Michelin in France, moving on to Renault. He joined Nissan in 1999 after Renault bought a controlling stake and became its CEO in 2001. Ghosn remained in that post till last year.

In June, Renault shareholders approved Ghosn’s 7.4 million euro ($8.45 million) compensation for 2017. In addition to this, he received 9.2 million euros in his final year as Nissan chief executive.

 

[Centurion]

Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation,” Nissan said in a statement.

That's very bad. Both are lucky that that it's an NYSE or NASDAQ listed company or else they SEC and FBI would have them locked up with a sky high bail.

 

[Matski]

From the BBC;

According to the same reports, which have not been confirmed, he under-reported an amount totalling 5bn yen ($44m; £34m) over a five-year period from 2011.

 

[klier]

Holy crap, LOL.

A warrant is out for his arrest!

 

[hoffmeister_fan]

Wow, that's a giant fall from grace.

 

[Deleted member 25]

Seems to me the Nissan guy is really wanting his scalp. What a change, Ghosn was considered as a semi god in Japan.

 

[DjordjeC63]

In addition, after an internal investigation, the builder discovered "many other malpractices", such as "the use of company property for personal purposes." Like many, he would have used the photocopier X : / nis / 56_29 / color-01 / HR_dir / 01 to print the coloring drawings for his children, we found the 132 page A3 print for this purpose only!
Many Nissan business bics have been found at his home and the stapler on his desk in Paris is suspected to be from his Kobe office (jp).

 

[LaArtist]

He always looked like a crook. My spider sense is rearly wrong.

 

[sako97]

Wow.... he's down and out for the count. Being that he's not Japanese (just saying), he be under the prison.

He always looked like a crook. My spider sense is rearly wrong.

Yeah, he always looked like some sort of villan

 

[Centurion]

More details from Bloomberg

• Nissan paid “huge sums” to provide Ghosn with residences outside Japan, according to a report by NHK, citing unidentified people.

• Nissan didn’t disclose that it had provided Ghosn with the homes in its official securities reports to the Tokyo Stock Exchange; the residences, located in Rio de Janeiro, Beirut, Paris and Amsterdam, had “no legitimate business reason” and Ghosn wasn’t paying at least some of the rent.

• NHK later reported that Ghosn may have kept some compensation approved by shareholders and intended for other executives.

• The Nikkei newspaper, citing unidentified people, said that Ghosn may have used money meant for investment purposes to buy real estate for himself via overseas units. Nissan CEO Saikawa said Monday that Ghosn had both understated his income and misused company funds, including expenses and investment funds.

From the BBC;

According to the same reports, which have not been confirmed, he under-reported an amount totalling 5bn yen ($44m; £34m) over a five-year period from 2011.

This wouldn't have been possible in some publicly listed companies as they have a Remuneration committee which the CEO is not a member.

As always with these scandals, how the f*** did the overpaid auditors let this happen????

 

[Rolf]

Shocking news. This has to be the biggest scandal since the Dieselgate issue with VWAG.

 

[Deleted member 25]

Why shocking ? You think other CEOs are nice taxe paying citiziens ? I think this is probably the japanese wanting to reclaim leadership of the alliance, this is a coup d etat.

 

[Centurion]

Why shocking ? You think other CEOs are nice taxe paying citiziens ? I think this is probably the japanese wanting to reclaim leadership of the alliance, this is a coup d etat.

Olympus CEO was publically hanged in the press when his scandal unfolded in Japan.

 

[Wunderkind]

I think the Japanese business establishment is using Ghosn's alleged misdeeds to purge Ghosn and the rest of the 'gaijins' from Nissan's senior management. US$44 million amount to a rounding error in the overall scheme of things and pales into insignificance when you consider Olympus' multi-billion dollar accounting fraud. There are plenty of such cases in corporate Japan that resulted in mea culpa by the CEO and some top executives, but no criminal investigations.

If I were an institutional investor and a substantial shareholder of Nissan, I'd move for a motion at the next AGM of EGM to reward Ghosn all those perks retrospectively and give him a golden retirement package. He fixed Nissan and has been underpaid compared to most of his US and European peers.

Daimler jettisoned its Mitsubishi alliance while they could and salvaged some pride, but only after top-level political intervention from Berlin, and much manuevoring behind the scenes.

This case shows you the perils of an outsider/foreigner faces when doing business in Japan.

Corporate France has been taking it up the backside recently haven't they? No disrespect intended. They had their banks screwed with heavy fines by US regulators, Sanofi is still working through its troubles abroad, Alstom was taken by GE, and now Renault.

Phew......

 

[Wunderkind]

More details from Bloomberg


Nissan paid “huge sums” to provide Ghosn with residences outside Japan, according to a report by NHK, citing unidentified people.


Nissan didn’t disclose that it had provided Ghosn with the homes in its official securities repo...

A lot of the alleged misdeeds are not that illegal in Japan. For example, a lot of Japanese corporations own houses and retreats for the use of their senior executives. It's whether they were purchased without the knowledge and/or approval from the Board of Directors (misappropriation of funds), or if the purchases were made to understate the cash component of Ghosn's total compensation that are in question (tax evasion).
Lavish parties are also commonplace. I bet many of Ghosn's Japanese colleagues attended those parties.
If there is going to be an impartial investigation and not a witch-hunt, I'd bet many of Ghosn's Japanese colleagues would be in trouble too.
I think Ghosn would be get off lightly if he chooses not to fight the charges and leave. A bout of collective amnesia among the Nissan Board members would help, Japan Inc is very good at this.

 

[Soup]

Try FT for free | Financial Times

Carlos Ghosn was planning Nissan-Renault merger before arrest

Carlos Ghosn had been planning a merger between Renault and Nissan before his arrest in Tokyo this week, a deal that the Japanese carmaker’s board opposed and was looking for ways to block.

Several Nissan board members expected a bid to materialise in the coming months, according to one person close to the board. Another source said that a merger was likely to happen “within months”, and a third said it was under active consideration.

Renault and Nissan own shares in each other, in a structure designed almost 20 years ago. But Mr Ghosn, as head of the automakers’ alliance and chairman of Nissan, had been planning a merger to render the partnership “irreversible”.

On Monday, Nissan said it would oust Mr Ghosn after accusing him of misleading investors on the amount of his remuneration, using company assets for personal gain and falsification of financial statements.

Nissan said the move followed several months of internal investigation following allegations from a whistleblower. Renault, where Mr Ghosn was chairman and chief executive, was expected to replace him on an interim basis on Tuesday evening.

Mr Ghosn was the driving force behind the merger plans, which met with fierce resistance from Nissan’s board, according to people familiar with the deliberations. Renault’s 43 per cent stake in Nissan gives it unusual levels of control, with the ability to appoint senior executives. Nissan’s 15 per cent stake in Renault comes with no voting rights and gives the business no control over its French counterpart.

“The board [of Nissan] always said they would fight very hard against any reorganisation that entrenched that second-tier status,” said one person close to the board.

Nissan also regarded Renault as the weaker business, the person added, and feared giving the French company access to its cash, which sat at ¥1.2tn ($10.7bn) in its half-year results.

As Nissan braced itself for a full merger proposal, tensions grew between Mr Ghosn and Hiroto Saikawa, the chief executive of Nissan, according to people close to them, in the souring of a relationship that had been warm when Mr Saikawa took over as chief executive from Mr Ghosn last year.

Tokyo prosecutors are investigating real estate that was purchased by Nissan for Mr Ghosn, including residences in Lebanon and Brazil, according to Japanese media.

Mr Ghosn appeared to have been caught off guard late Monday afternoon when he landed at Haneda airport, where Tokyo prosecutors and reporters of Asahi newspaper were waiting.

People who have seen him recently said he appeared unaware of any investigation, and had flown to Japan for a meeting with the governor of Tokyo on Wednesday.

Strains between Mr Ghosn and Mr Saikawa intensified as Mr Ghosn became increasingly displeased with the performance of the Japanese group, which has seen profits fall on declining margins in the US and slowing growth in China, according to several people.

Nissan’s reputation at home was also hurt as Mr Saikawa wrestled with scandals involving improper vehicle inspections and falsified fuel economy data.

At a news conference on Monday, Mr Saikawa highlighted the negative effects of what he called the 19-year Ghosn “regime”, surprising some people close to Nissan who had considered Mr Saikawa one of Mr Ghosn’s most loyal lieutenants and the least likely to undermine the legacy of his boss.

Renault and the alliance declined to comment on the merger plans; Nissan could not be reached for comment.

 

[Centurion]

If I were an institutional investor and a substantial shareholder of Nissan, I'd move for a motion at the next AGM of EGM to reward Ghosn all those perks retrospectively and give him a golden retirement package. He fixed Nissan and has been underpaid compared to most of his US and European peers.

I think the Japanese business establishment is using Ghosn's alleged misdeeds to purge Ghosn and the rest of the 'gaijins' from Nissan's senior management. US$44 million amount to a rounding error in the overall scheme of things and pales into insignificance when you consider Olympus' multi-billion dollar accounting fraud. There are plenty of such cases in corporate Japan that resulted in mea culpa by the CEO and some top executives, but no criminal investigations.

$44m over 5 years is less than $10m per year which could very much be equivalent to a rounding error for a $100 billion turnover business. It's nothing compared with understating revenue or free cash by $200-600m. That's the type of accounting fraud that should tank a share price by 20%, not misconduct.

The question is whether shareholders want him to lead Renault and Nissan into the era of electrification or whether they think someone else can do the job better.

It's whether they were purchased without the knowledge and/or approval from the Board of Directors (misappropriation of funds), or if the purchases were made to understate the cash component of Ghosn's total compensation that are in question (tax evasion).

That's what needs establishing. Has there just been misconduct(not always illegal) or fraud and misappropriation of company funds which are punishable by law.

Lavish parties are also commonplace. I bet many of Ghosn's Japanese colleagues attended those parties.

Yeah, Chinese and Japanese corporate parties have been big revenue drivers for western whisky and bourbon producers.

 

[Soup]

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[martinbo]

Ghosn in 60 second helpings...

 

[Soup]

Now we know who jeopardized the GTR's reputation

CVT is next to be ousted.

Nissan board decides to remove Carlos Ghosn as chairman after arrest | The Japan Times

Nissan board decides to remove Carlos Ghosn as chairman after arrest

Nissan Motor Co. decided on the removal of Carlos Ghosn as chairman at a board meeting Thursday following his arrest for alleged financial misconduct, marking an abrupt end of nearly two decades of his charismatic leadership.

His close aide Greg Kelly was also dismissed as representative director after the company’s probe uncovered what it describes as his “deep involvement” in the “significant acts of misconduct” by Ghosn, including using company assets for personal gains and understating salaries in securities reports presented to Japan’s regulators.

Both Ghosn, also chairman of the three-way alliance between Nissan, Renault SA and Mitsubishi Motors Corp., and Kelly will stay on as board members at the Japanese automaker, with the firm needing shareholders’ approval to oust them from the board.

Nissan is set to have CEO Hiroto Saikawa double as interim chairman, company sources said Thursday.

Nissan also decided to set up a committee to enhance governance comprised of outside directors in the field.

Ghosn is suspected of having written emails instructing Kelly to falsify financial documents relating to his pay package, sources close to the matter said Thursday.

The prosecutors are believed to have seized the emails as evidence of Ghosn’s wrongdoing, the sources said.

Following the instructions, Kelly is said to have then ordered two of his immediate subordinates — an executive in charge of legal affairs and a senior employee — to manipulate the content of the documents, according to the sources, adding that only close subordinates were involved in concealing the alleged wrongdoing.

Both the executive and the senior employee reached a plea-bargain agreement with the prosecutors and are likely to have given evidence related to the matter, they said. The prosecutors believe the executive was also involved in the purchase, using company money, of overseas residences to be used by Ghosn.

The Brazilian-born tycoon who holds French citizenship faces a charge of violating Japan’s Financial Instruments and Exchange Law by underreporting his remuneration by a total of about ¥5 billion ($44 million) over five years to March 2015, according to sources.

His understated gains likely included the use of residences bought by the company in the Netherlands, Brazil, France and Lebanon without paying rent, according to different sources.

At a news conference following the two arrests on Monday, Nissan CEO Saikawa said Kelly, a former lawyer who has been a Nissan executive since 2008, “has controlled the company with tremendous influence.”

Ghosn, known as a savage cost-cutter, helped save Nissan from near bankruptcy after he was sent to the company by Renault and became chief operating officer in June 1999, three months after the French and Japanese carmakers forged a capital alliance.

He propelled growth under the alliance after becoming president in 2000 and chief executive the following year. He held the CEO post until 2017 while concurrently serving as chairman beginning in 2008.

Kelly, 62, joined Nissan in the U.S. in 1988, and became a board member in 2012. His background over the years has been in human resources and alliance management.

Analysts say the future of Nissan’s alliance with Renault, and other automakers, must be as closely watched as what happens to the executives. Renault owns 43 percent of Nissan, and Nissan owns 15 percent of Renault.