Nissan crisis deepens as ‘charges loom’ over Ghosn case

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TOKYO, Nov 21, 2018 (BSS/AFP) – The crisis at Nissan deepened Wednesday as
it emerged the Japanese car giant could itself face charges over the alleged
financial misconduct that led to the stunning arrest of its chairman Carlos
Ghosn.

Monday’s arrest of the millionaire auto tycoon, who is credited with
turning around the Nissan-Renault-Mitsubishi Motors alliance, sent shockwaves
through the global car sector and corporate Japan.

The Asahi Shimbun daily said Wednesday that Tokyo prosecutors believe
Nissan also has a case to answer in the under-reporting of Ghosn’s package by
about five billion yen ($44.5 million) over four years. Both Nissan and
authorities declined to comment on the report.

Nissan’s board will decide on Thursday whether to remove the 64-year-old
tycoon as chairman, a staggering reversal of fortune for the Brazil-born
businessman credited with creating the three-way alliance which together
sells more cars worldwide than any other automaker.

Ghosn’s fate appears all but sealed after his hand-picked replacement as
CEO, Hiroto Saikawa, launched an astonishing broadside at his mentor, saying
“too much authority” had been placed in his hands and lamenting the “dark
side of the Ghosn era.”

He pointedly refused to offer the deep “apology bow” that usually
accompanies corporate scandals in Japan and played down the role Ghosn had
personally played in reviving the firm’s fortunes.

However, in France, Renault said it was sticking with the fallen manager as
chief executive although it named chief operating officer Thierry Bollore as
deputy CEO, handing him the “same powers” as the “temporarily incapacitated”
Ghosn.

After an emergency board meeting, Renault urged its sister company Nissan
to share “evidence seemingly gathered” against Ghosn from a months-long
internal investigation, saying it was unable to comment on the charges
without this information.

Paris and Tokyo have been scrambling to contain the fall-out from the
arrest, with the finance ministers of both countries declaring strong support
for “one of the greatest symbols of Franco-Japanese industrial cooperation.”

The scandal — the latest in a string to affect Japan Inc. — wiped
millions off the stock value of all three companies but Nissan bounced back
marginally in opening Tokyo trade, climbing more than half a percentage point
in a falling market.

– ‘Flamboyant glory-hogging ways’ –

Ghosn was once the darling of corporate and even popular Japan — even
having a manga comic inspired by him — and has been the glue holding the
auto tie-up together since 1999.

“Ghosn is likely the most successful foreign chairman in Japan,” said
Kosuke Sato, a senior economist at the Japan Research Institute.

“What he did was unprecedented in Japanese corporate history.”

He had a reputation as a workaholic and won the nickname “Le Cost Cutter”
in France for his slash-and-burn approach to corporate restructuring.

Under his stewardship, Nissan and Renault became deeply entwined.

Renault owns 43 percent of Nissan while in turn the Japanese firm has a 15-
percent stake in Renault.

Nissan has become the alliance’s key player however, posting sales of 12
trillion yen ($106 billion) last year compared with Renault’s 59 billion
euros ($67 billion).

According to the Financial Times, Ghosn was working on a merger of the two
carmakers that Nissan opposed because it feared the Japanese company could be
relegated to a secondary role.

Jeff Kingston, director of Asian Studies at Temple University Japan, told
AFP that Ghosn was “a victim of his own hubris and success.”

“He trampled on Japanese cultural norms with his flamboyant glory-hogging
ways, and his massive compensation incited jealousies and invited
retaliation,” he told AFP.

– ‘Greedy’ –

Local media reported that Nissan’s representative director Greg Kelly, who
was arrested along with Ghosn, ordered other executives to “hide salaries.”

Some compensation due to other executives reportedly ended up going to
Ghosn, although it is not clear how the scheme worked.

Public broadcaster NHK reported that Nissan had paid “huge sums” to provide
Ghosn with luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam
“without any legitimate business reason.”

Even when his reputation was sky-high, he attracted criticism for a flashy
lifestyle at odds with traditional Japanese corporate culture and his salary
— an estimated 13 million euros in total last year.

Media reports also spoke of a lavish Marie Antoinette-themed party in 2016
for Ghosn’s second wedding, at the grandiose palace of Versailles.

The Yomiuri Shimbun on Tuesday quoted Nissan executives slamming Ghosn as
“greedy”.

“He says the right things, but in the end it’s all about money,” the daily
quoted an unnamed senior employee as saying.

His arrest has also raised alarms among Renault’s French workers about what
lies ahead.

“What worries us is the alliance with Nissan,” said Ghislaine, a production
line worker at the Flins plant outside Paris — where Nissan’s popular Micra
hatchback accounts for half its output.

“I hope our future isn’t at risk.”