CARLOS Ghosn, the former chief executive officer of the Renault-Nissan-Mitsubishi Alliance who recently fled house arrest in Japan while facing charges of financial irregularities, has held an extraordinary press conference in which he attempted to clear his name.
Ghosn’s speech was streamed live online and attended by key media organisations from around the world, and focused on four key areas: what led to his arrest; how the arrest took place; what the charges against him and his responses; and what he called the current “declining” fortunes of Nissan, Mitsubishi and Renault.
Japanese officials have issued a statement countering Ghosn’s comments, while Nissan has yet to respond publicly.
The former CEO said he evaded trial in Japan because he wanted justice, which he believes he would not have received due to corruption in the Japanese legal system. “Justice is the only way I can reestablish my reputation,” he said. “If I can’t get it in Japan, I will get it somewhere else.”
He said his time behind bars involved being locked up in solitary confinement in a “tiny” cell with no window. He was allowed outside for 30 minutes a day, he said, except at weekends and on national holidays, when there were not enough wardens to supervise inmates. During a New Year break he claimed he was not allowed outside for six days straight.
He also claimed he was allowed to shower only twice a week, and was interrogated by Japanese prosecutors “night and day” for up to eight hours at a time without the presence of a lawyer.
Ghosn said that he was not allowed to speak with his wife Carole for nine months while in jail, and at the time of his dramatic escape while under house arrest, was facing another year-and-a-half without being able to see her, with an estimated total of five years in Japan awaiting trial.
Ghosn claimed that when he asked his lawyers if he’d receive a fair trial, they told him they “would do their best to make it fair.”
He said that because trials of his type have a 99.4% conviction rate in Japan, and in his view his Japanese prosecutors were proving more powerful than the judge, causing delays and rejecting evidence that Ghosn said could help his case, there was almost no chance of there being anything other than a guilty verdict.
“I thought, ‘You’re either going to die in Japan, or you have to get out.'”
Japanese prosecutors responded in a statement to Mr Ghosn’s allegations, describing his “one sided criticism of the Japanese justice system” as “totally unacceptable”. His bail conditions, they said, reflected the fact that he was “deemed a high flight-risk”.
The reasons for Ghosn’s arrest
Nissan conducted an internal enquiry which alleged that Ghosn underreported his financial compensation for his role as CEO to the Japanese government, declaring only half of the $88m he was paid between 2011 and 2015.
Nissan said a whistle-blower had promoted the investigation, and his accuser had said Ghosn had not only misrepresented his salary but also used company assets for personal purposes, including funding a party at the palace of Versaille.
He disputed all allegations and claimed his arrest was part of a “plot” organised by Nissan executives after the brand’s performance had started to decline after he had stepped down as CEO of Nissan in 2017.
Ghosn was replaced at Nissan by his then-deputy, Hiroto Saikawa, who oversaw a further “tough decline” in 2018.
“I left with him (Saikawa) $20bn in cash, a company which was profitable which was growing, which was respected, a brand which was nowhere in 1999 (when Ghosn joined), which became one of the top 60 brands in the world. That’s what I left with him.”
He added: “Unfortunately a CEO is here [only] as long as he performs … He was the CEO, and he was responsible for it, so he had to find the solutions with his own team.
“There was some nervousness in the ranks of the top management that at a certain point in time, patience would run out and change would come.”
Ghosn said another reason was related to power balance in the Alliance after the French state bought into Groupe Renault and, due to French business laws, Renault board members with more than two years in the role were awarded double voting rights.
“I left Nissan’s new CEO with $20bn in cash, a company which was profitable, which was growing, which was respected”
He said that he had proposed a plan to ensure fairness but that trust had broken down in Japan. “Some of our Japanese colleagues thought the only way to get rid of the influence of Renault was to get rid of me,” said Ghosn.
Driving.co.uk has contacted Nissan for a response to the allegations made by Ghosn today.
Media reports have described his plans as a merger of the three car makers but today Ghosn disputed that. He claimed it could not have been considered a “full merger” as it would have involved three separate headquarters and three distinct executive committees. However, there would have been one management board for the Alliance and shares would be sold for the Alliance as a whole, rather than the individual car makers.
Ghosn said that plans were also already in place to bring the Fiat-Chrysler group into the Alliance, too. This month Fiat-Chrysler announced it is to merge with the rival PSA group, which includes the Peugeot, Citroën and Vauxhall/Opel brands.
Renault was not involved in the alleged plot, Ghosn said today, though the French brand distanced itself from its former boss in April later year, saying certain expenses that Ghosn incurred are a “source of concern, as they involve questionable and concealed practices and violations of the group’s ethical principles.”
It also raised potential issues concerning payments to one of its distributors in the Middle East.
Details of Ghosn’s arrest emerge
Ghosn said his arrest came as a complete surprise, as by that time he was Chairman and not a part of Nissan’s day-to-day management based in Japan.
During the only section of the conference in which Ghosn sounded vaguely emotional, he said he was arrested after getting off a plane. “I arrived to the passport, they told there is a problem with my Visa, they took me into a small room and this is where I found the prosecutor.”
He said he asked to call Nissan so that his company could arrange for a lawyer, unaware about Nissan’s own allegations against him.
Five hours later Ghosn found himself in a cell in Kosuge, Tokyo.
Ghosn claimed he was aware of “collusion between Nissan and the prosecutors” thanks to “witnesses” within his former company.
Ghosn refused to discuss how high up the Japanese chain of command the alleged conspiracy went, though said he did not think President Shinzō Abe of Japan was involved.
Japanese officials described Mr Ghosn’s allegations of a conspiracy as “categorically false and completely contrary to fact”. Nissan have yet to respond.
Ghosn responds to the allegations
Ghosn said that many countries would not have arrested him for underreporting compensation that was “not fixed, not paid and not decided” at board level. “It is not even an offence,” Ghosn said.
An expert who looked at the allegations three weeks ago on behalf of Ghosn’s lawyers, said it “was a shame” he was arrested on that basis, the businessman claimed.
Ghosn was released on bail after five months at the third attempt, at a cost of 1bn yen (£7m), but was re-arrested at his Tokyo apartment a month later. This was an attempt to silence him before a tell-all press conference, according to Ghosn, as all his electronic devices and paperwork were confiscated by police. His wife Carole later told reporters that an official even followed her into the shower and handed her a towel before escorting her out of the flat.
His lengthy separations from Carole, and the inability to even call her, for long periods of time, meant that he “didn’t feel human any more,” he said. During his nine months in jail he was allowed to see his wife for two hours, he said, and during the visits a lawyer was required to be present.
Ghosn said that he has been the subject of “character assassination” and pointed again to the health of Alliance during his time as CEO of Nissan, and the brands’ more recent form. “When all the car makers went up in value by 12% on average, the only companies that went down? Renault, Nissan, Mitsubishi. What a surprise.” He said that as a shareholder, this is what concerns him.
Ghosn said he had been called a greedy dictator by the Japanese media, but claimed that he was once asked to be CEO of General Motors for double his pay at Renault-Nissan.
He claimed he told GM, “The captain of a ship does not leave.
“I made a mistake. But I followed my beliefs.”
Responding to the claims that Renault funded a glamorous 50th birthday party for his wife at Versaille, Ghosn claimed the use of the venue was actually offered for free after Renault agreed to fund the refurbishment of the Palace’s Peace Room to the tune of €1m. This was not an unusual donation for a French giant corporation, he said, due the historical significance of Versaille as a symbol of the “genius” of France.
The donation resulted in an offer for Renault to use Versaille for functions in the future. Ghosn said the party at the centre of the controversy was not conceived as a birthday party, although it did coincide with Carole Ghosn’s birthday, but one to celebrate the 15th anniversary of the Renault-Nissan Alliance. He made a speech to thank the members of the Alliance but cannot prove it, he said, because any record of it had “disappeared”.
No Renault and Nissan members were invited, he admitted, but claimed that was because they had their own party; this one was for the companies’ partners, particularly the foreign partners, who were enticed to fly over due to the Versaille location.
Today Ghosn presented a pro forma invoice that appeared to show a cost of €0 for the room hire, though when the final invoice arrived he “was surprised” to see a charge of €50,000, though claimed it was never paid.
To allegations that Ghosn spent company funds renovating his private houses, the former CEO presented documents from 2013 that he said proved he was allowed “use of company residential accommodation” in a number of locations around the world, and the updates took places when the properties were owned by the Alliance. They ended up being privately owned, he said, because at the end of the agreement the contract allowed the residences in question to be sold to him “at book value”.
Another allegation relates to the employment of his sister Claudine, who he said was brought in “because she was head of the Chamber of Commerce at Rio de Janeiro”, and therefore the best person for the job.
Everyone at Nissan who wired her money and signed-off the documents were aware of the arrangement, Ghosn said.
The Nissan and Renault Alliance today
“Who is the winner?” of all this, Ghosn asked. “In 2017, the Alliance was the no.1 automotive group. Growing, profitable, with a clear vision, were preparing to add Fiat-Chrysler to join. Today, frankly there is no more Alliance.”
Driving.co.uk has approached Nissan for comment. In a statement issued ahead of the press conference, Nissan said:
“As stated by the public prosecutor’s office, former chairman Carlos Ghosn’s escape to the Lebanese Republic without the court’s permission in violation of his bail conditions is an act that defies Japan’s judicial system. Nissan finds it extremely regrettable.
“Nissan discovered numerous acts of misconduct by Ghosn through a robust, thorough internal investigation. The company determined that he was not fit to serve as an executive, and removed him from all offices. The internal investigation found incontrovertible evidence of various acts of misconduct by Ghosn, including misstatement of his compensation and misappropriation of the company’s assets for his personal benefit. The consequences of Ghosn’s misconduct have been significant. In addition to his prosecution in Japan, the U.S. Securities and Exchange Commission concluded that Ghosn’s conduct, including his schemes to underreport his compensation, was fraudulent. Investigations in France concerning possible misconduct are still ongoing. Nissan will continue to do the right thing by cooperating with judicial and regulatory authorities wherever necessary.
“Ghosn’s flight will not affect Nissan’s basic policy of holding him responsible for the serious misconduct uncovered by the internal investigation. The company will continue to take appropriate legal action to hold Ghosn accountable for the harm that his misconduct has caused to Nissan.”
Carlos Ghosn scandal: key dates
November 19, 2018 Ghosn arrested in Tokyo alleged financial crimes, along with Nissan representative director Greg Kelly.
November 22, 2018 Nissan removes Ghosn as chairman
November 26, 2018 Mitsubishi removes Ghosn as chairman
December 21, 2018 Ghosn rearrested on more serious allegations of “financial misconduct”
December 26, 2018 Kelly released from jail
January 18, 2019 Ghosn accused by Nissan of improperly receiving €7.8m from a joint venture with Mitsubishi Motors
January 23, 2019 Ghosn resigns as chairman and CEO of Renault
February 7, 2019 Renault says Ghosn may have made improper use of a Renault sponsorship deal to pay for a party at the Chateau de Versailles, and received a “personal benefit” worth €50,000.
March 5, 2019 Ghosn granted bail at the third attempt, at a cost of 1bn yen (£7m) — the highest amount in Japanese legal history
April 3, 2019 Renault questions certain expenses that Ghosn and raises potential issues concerning payments to one of its distributors in the Middle East.
April 4, 2019 Ghosn rearrested at his Tokyo apartment. Prosecutors claim he diverted Nissan funds to accounts he controlled and that he took a combined $15m on three occasions from in 2015.
April 8, 2019 Nissan shareholders vote to remove Ghosn as a board director, ending his final role at the car maker
April 9, 2019 Ghosn releases a video proclaiming his innocence, in lieu of a press conference stymied by his re-arrest
April 25, 2019 Ghosn’s lawyers post a bond of 500m yen (£3.5m) to obtain his release. A court set the bond on condition he lives at a registered domestic address, doesn’t leave the country, and adheres to requirements meant to prevent the destruction of any evidence.
September 10, 2019 Nissan sacks CEO Saikawa
December 10, 2019 Nissan’s fine for underreporting Ghosn’s compensation set at 2.4bn yen (£16.8m)
December 31, 2019 Ghosn announces he is in Lebanon. Reports claim he evaded authorities in Japan by hiding in a packing case and travelling via two private jets, changing planes in Istanbul, Turkey
January 8, 2020 Ghosn holds press conference in Lebanon to “clear his name” and redress the insinuation that he is a “cold, greedy dictator”; implicates Nissan board members in the “plot” to oust him, and criticises the “unjust” Japanese justice system