What's going on with Nissan's former CEO Carlos Ghosn?

Jan 31, 2019 at 10:00 am by Michelle Willard

Nissan's former CEO Carlos Ghosn

You may not recognize his name but Carlos Ghosn has had a tremendous impact on Rutherford County.

That's why I've been following news of his downfall rather closely. And the more I read, the crazier it gets.

The Brazilian-born Ghosn is known for having piloted Nissan through a tough time in the late 1990s and then the Great Recession as chairman and CEO of the Renault–Nissan–Mitsubishi Alliance.

He has a long history in the auto industry, starting at Renault in 1996 and moving to Nissan in 1999. He is credited as the reason why Nissan is as successful as it is today. In his post, he increased Nissan's market share considerably and created jobs right here in Smyrna.

But, he is accused of bilking the company of more than $80 million in the process. 

All this makes you wonder why the starting salary at the Smyrna plant is so low. 

In November, he was arrested in Japan and charged with under-reporting his earnings to the Japanese government and misusing company assets. 

But Carlos didn't go out without pointing fingers and blaming a conspiracy for taking him down.

What are the allegations?

Ghosn is accused of what we in Tennessee call embezzlement. According to media reports, Ghosn may have hidden more than $80 million in compensation since 2010 using a shell company and company funds that are left up to the CEO's discretion.

It came to light back in November, when Ghosn and his aide Greg Kelly were charged with under-reporting their compensation and using company assets for personal use.

This is very illegal in Japan and a violation of securities law.

Media reported that Nissan had paid for all or some Ghosn's international homes, which are valued at more than $20 million, in Rio de Janeiro, Beirut, Paris and Amsterdam. After Ghosn was arrested, Nissan repossessed the Rio and Beirut properties and changed the locks. Good on them.

The payments for the homes were made through a shell company that Ghosn reportedly had Kelly set up in 2010 under the auspices creating a venture capital fund. This also happened to be the same time when Ghosn was divorcing his first wife, a coincidence, I'm sure he wasn't trying to hide assets from the divorce court.

Ghosn also allegedly charged family vacation expenses to Nissan through the shell company. 

The shell company was set up and Nissan compliance auditors had a hard time tracking just where the money was going.

Then, additional charges were filed in late December that alleged in October 2008 Ghosn paid $16.6 million to Sheikh Khaled al-Juffali, the vice chairman of one of Saudi Arabia's largest conglomerates. Juffali is also a majority owner of a company that owns half of Nissan Gulf, a regional joint venture with the Japanese company.

The charges allege Ghosn used $14.7 million from a fund called "the CEO Reserve" (a.k.a, Nissan's money) to pay a company owned by Juffali.

In exchange for the money, Ghosn got a personal letter of credit from Juffali, which served as bank-demanded collateral to cover his personal trading losses he incurred during the recession.

Then on Jan. 11, Ghosn was indicted on two more charges – aggravated breach of trust and understating his income – based on an internal investigation by Nissan that found Ghosn had paid himself a previously undisclosed $8 million in 2018 from a Netherlands-based joint venture owned by Nissan and Mitsubishi. The payment was made without the knowledge of either company's directors because Ghosn had the sole authority to dispense cash from the venture.

On the same day, José Muñoz, Nissan's chief performance officer and head of its China operations, resigned from the company. He had been named as a "person of interest" in Nissan's internal investigation.

What does Carlos say?

This is where it gets a little crazy.

In an exclusive interview with Japan's Nikkei published Wednesday, Jan. 30, Ghosn said the charges were part of a "plot and treason" by Nissan executives who didn't like the direction Ghosn was taking the company.

Specifically, Ghosn claimed the executives opposed more integration between Nissan, Mitsubishi and Renault that included "autonomy under one holding company."

This move would have consolidated power under Ghosn, and he said the executives made the allegations for the "purpose of getting rid of me."

As for the accusations that he paid Juffali with Nissan's money, Ghosn said the payment was approved by Nissan's "executive in charge of the region." In fact, he said the CEO reserve needs four officers to sign before a payment can be made.

He called the other unreported payments "a distortion of reality" and the homes he purchased were approved by Nissan's legal department.

"[Have I] done [something] inappropriate? I am not a lawyer, I don't know the interpretation of [such] facts," Ghosn said in the interview. 

What's next?

A few days after his first arrest Nissan's board voted to remove him from his chairmanship. This move was quickly followed by Mitsubishi. He resigned Jan. 24 from Renault.

Thus ended his career in the auto industry. 

Ghosn is likely to remain imprisoned until March when his case is up for review. No court date has been set yet.

Michelle Willard is a freelance journalist who fills her days with social media marketing, politics, her blog Middle Tennessee Mysteries, and taking complaints. You can complain to her on Twitter @MichWillard or by email michelle(at)murfreesborovoice.com. 


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