You are here

Nissan panel: Facts point to legal violations by ousted Ghosn

Carlos Ghosn (left) is described in the report as one who brooked no dissent in Nissan. The role Nissan CEO Hiroto Saikawa (right) played in Ghosn's salary arrangement is acknowledged as the heart of the scandal.


AN external committee reviewing governance at Nissan Motor Co said on Wednesday that there were enough facts to support the charges of violations of laws and the private use of company funds by ousted chairman Carlos Ghosn.

Following a three-month audit of Nissan's governance after the scandal that shook the global auto industry, the committee put the blame squarely on what it called Ghosn's concentration of power; it also acknowledged Nissan chief executive Hiroto Saikawa's role in Ghosn's salary arrangement at the heart of the scandal.

Twenty years since French auto-maker Renault agreed to rescue Nissan, the committee described a corporate culture at Nissan "in which no one can make any objections to Mr Ghosn", who was "in a way deified within Nissan as a saviour who had redeemed Nissan from collapse".

Market voices on:

A representative for Ghosn replied in a statement that the allegations made against the former Nissan chairman "will be revealed for what they are: part of an unsubstantiated smear campaign against him to prevent the integration of the alliance and conceal Nissan's deteriorating performance".

The group issued 38 recommendations to bolster Nissan's governance, including the barring of people serving in executive positions at Renault or junior partner Mitsubishi Motors Corp from top executive positions at the Japanese car maker.

It also proposed that the majority of directors, including the chairman of the board, be independent outside directors and that the role of company chairman be abolished.

Responding to the committee's comments, Mr Saikawa told reporters on Thursday that Nissan would seriously consider the committee's recommendations, which he characterised as "tough".

He did not specifically address his responsibility in the scandal, but has previously said that top management, including himself, were responsible for the weak governance that led to the misconduct.

The recommendations from the external, seven-member committee came weeks after Nissan and Renault said they would retool their alliance, one of the world's biggest auto-making groupings, to break up the all-powerful chairmanship previously held by Ghosn.

The committee said in its report: "There are facts sufficient to suspect violations of laws and regulations, violation of internal rules and private use of company funds and expenses ... by Mr Ghosn."

It also singled out Nissan director Greg Kelly, who has also been indicted, for his alleged role in helping Ghosn avoid oversight, and said that Mr Saikawa had signed documents regarding compensation Ghosn would receive after retirement.

"It's clear there are issues requiring improvement with respect to Nissan's governance as it could not prevent the misconduct," the report said.

Ghosn, who this month was released on US$9 million bail after more than 100 days in a Tokyo detention centre, has called the charges against him "meritless". Kelly has also denied the charges.

Committee co-chair Seiichiro Nishioka told a briefing on Wednesday: "We expect Nissan will take these recommendations seriously and execute them swiftly to build the best possible governance structure.

At the briefing, the committee declined to comment on whether other individual directors should be held responsible for failing to prevent the alleged actions by Ghosn.

Mr Nishioka also told the briefing that the capital structure between Nissan and Renault was a matter for the companies, and it was not appropriate for the committee to get involved.

The Financial Times reported on Wednesday that Renault intends to restart merger talks with Nissan within a year, after which it will set its sights on buying Fiat Chrysler Automobiles.

The plans signal a return to the strategies supported by Ghosn, who held talks about merging Renault with Fiat Chrysler two to three years ago, The Financial Times said, citing sources familiar with the matter. It added that the French government had opposed the move.

Mr Saikawa said on Thursday he was unaware of talks about any possible bid by Renault for Fiat Chrysler.

At the time of his arrest in Tokyo in November on financial misconduct allegations, Ghosn held the chairmanship at Nissan, Renault and Mitsubishi Motors, while also serving as Renault CEO. The auto-makers together sell roughly 10 million vehicles a year.

Nissan's board now comprises nine directors including the chairman, three of whom are categorised as outside, independent directors. Two directors, including one outside director, formerly served senior vice-president roles at Renault. REUTERS