Carlos Ghosn always said he was set up and now there seems to be evidence to back up his claims. Sources from people familiar with the situation state that the campaign by top Nissan Motor Co. executives to overthrow one of the most popular leaders in the automobile industry started almost a year before Ghosn’s arrest in late 2018 for alleged financial misconduct.
The effort was motivated in part by opposition to the former chairman’s push for greater integration between the Japanese carmaker and long-time alliance partner Renault SA, the new information reveals.
While Nissan has long maintained that the decision to oust Ghosn turned on allegations of underreporting his income and other financial transgressions leveled by Tokyo prosecutors, the documents and recollections of people familiar with what transpired show that a powerful group of insiders viewed his detention and prosecution as an opportunity to revamp the global automaker’s relationship with top shareholder Renault on terms more favorable to Nissan.
A chain of email correspondence dating as far back to February 2018, corroborated by people who asked not to be identified discussing sensitive information, paints a picture of a methodical campaign to remove a powerful executive. The information comes to light as another former Nissan executive and the company itself face a looming trial in Tokyo, and as Japan seeks the extradition of Ghosn, 66, who fled to Lebanon in a daring escape last year.
Puzzled by Ghosn’s pledge in early 2018 to make the alliance between the companies irreversible, senior managers at Nissan discussed their concern at how the chairman of both Nissan and Renault were taking steps toward further convergence, according to people familiar with discussions at the time.
In the middle of all this discussion was Hari Nada who ran Nissan’s chief executive’s office and later hopped into a cooperation agreement with prosecutors to testify against Ghosn. Nissan should act to “neutralize his initiatives before it’s too late,” Nada wrote in mid-2018 to Hitoshi Kawaguchi, a senior manager at Nissan responsible for government relations, according to the correspondence.
Ghosn has said he was innocent of the four charges of financial misconduct and breach of trust. Considered an international fugitive by Japan, Ghosn declined to comment via a representative for this story.
Lavanya Wadgaonkar, a spokeswoman for Nissan, also declined to comment for this story. Nada didn’t respond to an email and voicemail seeking comment, while Kawaguchi, who left Nissan in December, declined to comment, as did the Tokyo Prosecutor’s Office and a representative for Renault.
Sources from Japan Times say that on Nov. 18, 2018, the day before Ghosn was seized on a private jet at Tokyo’s Haneda Airport, Nada circulated a memo to then-Chief Executive Officer Hiroto Saikawa, according to people familiar with the document. Nada called for termination of the agreement governing the alliance and the restoration of the company’s right to buy shares in Renault, or even take it over. Nissan also would seek to abolish the French automaker’s right to nominate Nissan’s chief operating officer or other more senior positions, people familiar with the memo said.
Ghosn’s removal would be a drastic change to the world’s biggest car alliance, requiring new governance, Nada is said to have written in the document to Saikawa. Nada said Nissan should be quick to press its position after Ghosn’s arrest. Renault was kept in the dark about the criminal investigation, Bloomberg reported in January 2019.
The discord between the Japanese and French partners ultimately thwarted Renault’s 2019 bid for greater scale by combining with Fiat Chrysler Automobiles NV, and stymied cooperation over strategy and new models. Nissan’s management became turbulent and profitability was shrinking, hurt by an aging lineup and high costs.
In May, Nissan reported a loss of ¥671 billion ($6.3 billion) for the fiscal year that ended in March, the first loss in a decade and the biggest in 20 years. With the coronavirus pandemic weighing on an already-sputtering business, the stock has erased more than half of its value since the arrest of Ghosn, who also led Renault and the alliance that includes Mitsubishi Motors Corp.
Conversations between Nada and Saikawa as well as other senior executives showed deep concern about Ghosn’s plans to further integrate the alliance, which gives the French automaker greater sway over Nissan via a 43 percent stake. Renault had saved Nissan from bankruptcy with an emergency cash injection in 1999. That’s when the French automaker dispatched Ghosn to Nissan, who pulled off one of the most dramatic salvage jobs in auto industry history.
Yet, after two decades, with Ghosn dividing his time between the companies as CEO of Renault and chairman of the alliance, Nissan began to stumble.
Nada told CEO Saikawa in April 2018 that Ghosn was becoming increasingly agitated about Nissan’s performance and comments by his handpicked successor, who said he saw “no merit” in a merger between Renault and Nissan. “He can create a major disruption and you may become a victim of it,” Nada wrote to Saikawa. The following month, Nissan issued a profit outlook well below analysts’ estimates.
Ghosn was charged in Japan with underreporting about $80 million in income and funneling money from Nissan without the automaker’s knowledge into entities that he controlled. Calling the Japanese legal system a sham, Ghosn escaped late last year by sneaking aboard a private jet inside an audio-equipment box, making his way to Lebanon via Turkey.
Two Americans who allegedly helped smuggle Ghosn out of Kansai International Airport, ex-Green Beret Michael Taylor and his son, Peter Taylor, were arrested outside Boston last month at the request of Japanese authorities. Japan’s government is taking steps to request their extradition, while the two have denied that any crimes were committed.
Former Nissan executive and board member Greg Kelly was arrested the same day as Ghosn and remains free on bail in Japan. He’s awaiting trial on charges that he helped the former chairman under report his income. Prosecutors have also charged Nissan in the first round of indictments.
The company said “the cause of this chain of events is the misconduct led by Ghosn and Kelly,” for which it found “substantial and convincing evidence” after investigating a whistleblower’s report. Both Ghosn and Kelly repeatedly denied those allegations.
Nada, a Malaysia-born lawyer who oversaw many of Ghosn’s affairs at Nissan and joined the automaker in the 1990s, led the internal probe and was implicated in some of the alleged conduct being investigated by the Tokyo prosecutor. At the same time, emails show how Nada worked to gather information, traveling to Brazil and Lebanon to investigate Ghosn’s use of company-provided homes.
Days before Ghosn’s arrest, Nada sought to broaden the allegations against Ghosn, telling Saikawa that Nissan should push for more serious breach-of-trust charges, according to correspondence at the time and people familiar with the discussions. There was concern that the initial allegations of underreporting compensation would be harder to explain to the public, the people said.
The effort should be “supported by a media campaign for insurance of destroying CG reputation hard enough,” Nada wrote, using Ghosn’s initials, as he had done several times in internal communications stretching back years.
Saikawa referred to his prior public statements rejecting the existence of a plot to oust Ghosn when asked for a statement. “There was no effort to remove Renault’s influence” by removing Ghosn, Saikawa told reporters in January after the former chairman accused Nissan executives of conspiring against him during a news conference in Beirut. “There’s a huge difference between that and his crimes,” Saikawa said then.
Saikawa stepped down as CEO in September after a Nissan investigation found he had been paid excess compensation. Nada, and other executives, were also overpaid, an internal probe found last year, people with knowledge of the matter have said.
As the date neared for the planned arrests of Ghosn and Kelly, preparations were made to assess how Renault’s board would react and how to respond if the French company were to assert its position.
Nissan should make it clear to Renault that the French automaker had no right to involve itself in the operations of its alliance partner, and that Nissan wasn’t obliged to offer positions within the company to candidates selected by Renault, Nada said, according to people familiar with the memo.
The contract binding the partnership, called RAMA, as well as a Netherlands-based entity called Renault-Nissan BV that was created to oversee its governance, should both be abolished as a result of Ghosn’s arrest, Nada asserted. That would give Nissan the right to acquire Renault shares in order to disenfranchise Renault or take it over, he is said to have written in the memo.