Renault/Nissan Chief Carlos Ghosn arrested for financial fraud.

mmcartalk

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Carlos Ghosn has been arrested in Japan for (supposedly) trying to hide part of his income.....this, from a guy who is probably making a nine-figure salary and compensation. If one cannot afford to pay his or her on taxes on that kind of income......come on, give me a break. :rolleyes:

Also keep in mind, though, that Japanese authorities have arrested auto executives before, and have sometimes wound up quite embarrassed in the process. Remember when they arrested Toyota's Julie Hamp for allegedly bringing in some medications in her suitcase (which she had valid American prescriptions for) and that they claimed were against Japanese law? There were a lot of jokes, at the time, on the Internet, about Julie "Hemp", but the fact was that it not only caused Toyota a lot of unnecessary embarrassment, but the authorities ended up releasing her after THEY also went through a major embarrassment.

Even John DeLorean, who got arrested in Los Angeles with a suitcase full of cocaine, eventually managed to have the charges overturned, and claimed, to his last day, that the cocaine was planted.

So, we'll see what happens with this Ghosn case.


https://www.nytimes.com/2018/11/19/business/nissan-carlos-ghosn-misconduct.html

Carlos Ghosn, Nissan’s Chairman, Is Arrested Over Financial Misconduct

Carlos Ghosn arrived at Nissan in 1999, and was credited with saving the company from financial collapse. CreditEric Piermont/Agence France-Presse — Getty Images



By Motoko Rich

  • Nov. 19, 2018
TOKYO — The Nissan chairman, Carlos Ghosn, was arrested on Monday after an internal company investigation found that he had underreported his compensation to the Japanese financial authorities for several years.

Nissan said it was cooperating with Japanese prosecutors. It also said that it had opened its inquiry after a whistle-blower alleged that Mr. Ghosn had been misrepresenting his salary as well as using company assets for personal use. Both he and a director, Greg Kelly, who was also accused of misconduct, were taken in by authorities, the company said.

It is a remarkable tumble for Mr. Ghosn, who arrived at Nissan in 1999 after Renault, the French carmaker, bought a large stake in the Japanese company. It may prove to be an ignominious final chapter in the career of one of the most powerful and highly regarded executives in the automotive industry.

Earlier in the day, Nissan said in a statement that Mr. Ghosn and Mr. Kelly had been involved in misconduct and recommended that both be removed from their positions. Neither Mr. Ghosn nor Mr. Kelly could be reached for comment.

Mr. Kelly, who spent years working in Nissan’s human resources department, was appointed to the automaker’s board in 2012, the first American to hold the role.

According to Nissan’s securities filings, Mr. Ghosn was paid 735 million yen, about $6.5 million, in cash in 2017, down 33 percent from the ¥1.1 billion he was paid in 2016.


The disclosure raised questions about Mr. Ghosn’s role as chief executive of the Renault-Nissan-Mitsubishi Alliance. Although he stepped down from the top job at Nissan last year, Mr. Ghosn, 64, has remained at the top of the world’s largest automotive alliance and told reporters as recently as last month that he planned to stay in that post until 2020. Mr. Ghosn was paid ¥227 million in cash and stock options by Mitsubishi Motors last year.

Renault shares tumbled 10 percent on the Paris Stock Exchange, while Nissan shares in Düsseldorf, Germany, fell 9 percent.

“Nissan deeply apologizes for causing great concern to our shareholders and stakeholders,” the company said.

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After he was sent to Japan by Renault, Mr. Ghosn was credited with saving Nissan from financial collapse. He made sweeping changes at the automaker, closing five domestic factories and cutting 21,000 jobs. He was widely celebrated as a powerful change agent in Japan: His life story was even made into a manga comic, although critics noted that he earned his French nickname, “Le cost killer.”

In insular Japan, where foreign leadership of Japanese companies is rare, Mr. Ghosn’s downfall could be taken as a referendum on the perils of working with outsiders. “He’s always the go-to when people say foreigners can never succeed in Japan,” said Pernille Rudlin, managing director of Rudlin Consulting, which specializes in intercultural consulting with Japanese companies. “Now there are no good examples left.”

Nissan had already stumbled of late. Last October, the company suspended production at all of its Japanese factories after discovering that uncertified technicians had conducted vehicle inspections. In July, the company admitted to falsifying emissions and fuel economy tests.

The disclosures about Mr. Ghosn’s misconduct is of another order, analysts said. “For Nissan, Mr. Ghosn is a big hero,” said Shin Ushijima, a lawyer who specializes in corporate governance. “This news is so embarrassing.”

Mr. Ushijima said that Mr. Ghosn had been treated as untouchable at Nissan and that the revelations suggested serious problems with the corporate culture and oversight by the board of directors.

“Such misconduct cannot be done by Mr. Ghosn alone,” said Mr. Ushijima. “His subordinates must have been involved. And I really wonder how well the outside independent board members watched Nissan.”

Mr. Ghosn is given credit for overcoming differences in corporate and national cultures that have often doomed megamergers of car companies, such as the ill-fated marriage between Daimler and Chrysler, which was dissolved in 2007.

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The alliance of Renault, Nissan and Mitsubishi sold 10.6 million cars last year, more than Volkswagen, Toyota or General Motors. Based on sales in the first half of 2018, the alliance could sell 11 million cars this year.

Nissan and Renault own substantial stakes in each other, while Nissan owns 34 percent of Mitsubishi. Under Mr. Ghosn’s supervision, the companies retain their independence while sharing costs of developing new models and technologies, and purchasing components together.

Executive compensation has been a sticking point for Mr. Ghosn in France. He has been in a bitter fight over his salary with the Renault board and the French government, which owns a 15 percent stake in Renault.

Mr. Ghosn insisted on a pay package of 7.4 million euros, about $8.5 million, for 2017, stoking controversy among shareholders and Renault board members. The French government, which has been trying to improve the image of a divide between the nation’s wealthy executives and working people, had insisted that Mr. Ghosn’s compensation be more limited.

At a news conference with the Belgian prime minister on Monday, President Emmanuel Macron of France said it was too early to comment. But he added that the French state, as a major Renault shareholder, would be “extremely vigilant about the stability of the alliance” between Renault and Nissan.

As the company’s share price tumbled, Mr. Macron added that the French government would also seek to maintain stability and “full support” for Renault’s workers. The company employs more than 47,000 people in France.

Proxinvest, a Paris-based shareholder advisory firm, had also recommended voting against Mr. Ghosn’s 2017 salary, citing what it said was a lack of transparency over how the compensation was calculated as well as high bonuses.

Renault shareholders ultimately approved his 2017 payout. But Mr. Ghosn reluctantly agreed to cut his 2018 salary by 30 percent to secure the French government’s backing for another four-year term as chief executive.

A similar fight over Mr. Ghosn’s pay broke out in 2016, when Mr. Macron, who was France’s finance minister at the time, pressured Renault to rein in the chief executive’s pay. Shareholders ultimately voted against giving Mr. Ghosn a €7.2 million pay package for the previous year.

In Japan, Mr. Ghosn’s pay made him an outlier. Japanese executives typically earn far less than their American or European counterparts. Takeshi Uchiyamada, chairman of Toyota, for example, was paid ¥181 million in 2017, compared to Mr. Ghosn’s reported ¥735 million.

Foreign investors tend to criticize Japanese companies as not paying executives enough. “For the Japanese market, the main concern from foreign institutional investors is the question of whether compensation will be less incentive driven,” said Hideaki Miyajima, professor of commerce at Waseda University in Tokyo. “The criticism of Japanese firms is that compensation is not related to performance, and Japanese leaders are less likely to take risks.”
 

ssun30

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I hate to say this, but immoral practices by execs are pretty commonplace in large Japanese corporations. Usually people get away with these practices (they are usually pretty limited in scope to begin with) and if somebody blow the whistle, all they need is to pay a fine and make a public apology. Unfortunately Mr. Ghosn is a foreigner, which makes it convenient to oust him using misconduct as an excuse, although Mr. Ghosn also went a bit too far. He is a great executive who saved Nissan, although making its reputation suffer in the process ("Le Cost Killer"). I switched from Nissan to Toyota for that exact reason.

Can't say for TMC. It's a family business so maybe Akio can afford to be harsher on internal fraud and corruption. But there are people in the family who are more than happy to make some 'friends' and take that position away.
 

mmcartalk

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ssun30 said:
I hate to say this, but immoral practices by execs are pretty commonplace in large Japanese corporations. Usually people get away with these practices (they are usually pretty limited in scope to begin with) and if somebody blow the whistle, all they need is to pay a fine and make a public apology. Unfortunately Mr. Ghosn is a foreigner, which makes it convenient to oust him using misconduct as an excuse, although Mr. Ghosn also went a bit too far. He is a great executive who saved Nissan, although making its reputation suffer in the process ("Le Cost Killer"). I switched from Nissan to Toyota for that exact reason.
You make some good points. I agree that, in the early-mid 2000s, Nissan interiors, primarily from cost-cutting, became a joke, with Cracker-Jack materials. Toyota's cost-cutting, though, later on, in itself, was not insignificant.


Can't say for TMC. It's a family business so maybe Akio can afford to be harsher on internal fraud and corruption.
Akio may (?) have also changed his mind when he had to go bail Julie Hamp, his Communications Chief, out of jail. I still think it was ludicrous that the Japanese authorities actually arrested her for bringing in prescription-drugs in her suitcase that she had a (legal) American prescription for, as an American citizen, but that's how they claimed their laws worked.
 

mmcartalk

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Well, get this, folks.....right out of a TV drama-show. Ghosn just fled the country, and is reportedly in Beirut, his original homeland. Lebanon apparently does not have an extradition treaty with Japan.

 

Joaquin Ruhi

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Just when it seemed that l'affaire Ghosn couldn't have any more unexpected twists and turns...this happens. A Reuters story suggests that his lawyers were still holding his Brazilian, Lebanese and French passports, and that his escape was "inexcusable". I like this Reuters Breakingviews opinion piece, though:

DECEMBER 31, 2019
Breakingviews - Carlos Ghosn jailbreak is all-purpose face saver
Pete Sweeney - Reuters

HONG KONG (Reuters Breakingviews) - It’s a face-saving escape. Carlos Ghosn’s Tokyo jailbreak will spare many embarrassments. The former boss of the Nissan-Renault automotive alliance, awaiting trial on charges of financial misconduct, skipped a $9 million bail bond and popped up in Lebanon. How he evaded his minders is a story still to be told, but his exit lets Tokyo, Paris, and his former employers end a mutually embarrassing diplomatic affair.

Japanese prosecutors will be furious, at least in public. They sought to deny Ghosn’s bail requests, arguing that he posed a flight risk. And yet Ghosn had some success positioning himself as a victim of a legal system with a 99% conviction rate, one which had him locked in an unheated cell for months hoping to extract a confession. If he had been found guilty, Ghosn – who turns 66 in March – might have died in prison, proclaiming his innocence.

For Nissan Motor, a trial would have cast an ugly light on weak corporate governance that let Ghosn get away with alleged infractions. The $25 billion carmaker, still struggling to execute a business turnaround, would have seen its image damaged no matter the trial outcome. For its alliance partner Renault, the ruckus has upended negotiations over mooted mergers with Nissan and with Fiat Chrysler.

The case also stung diplomatic relations: Japan and France both see the respective car companies as important components of industrial strategy. And yet Emmanuel Macron’s government, which prefers closer ties between Nissan and Renault, had to allow for the possibility that Japanese prosecutors had a strong case against Ghosn. His lacklustre management of Nissan in recent years made him a dubious advocate for French interests anyway.

Now the man, easily the most recognisable gaijin executive in Japan, has managed to dodge police surveillance and end up in a country without an extradition treaty with Japan. Prosecutors can claim his flight admits guilt. He says he “escaped injustice and political persecution” from a system that denies basic human rights. So long as Ghosn stays out of France, corporate and diplomatic scars can start healing, and everyone can get back to work.


 

CT200h

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Glad he is Ghosn , maybe now Nissan can get back to actual business and stop persecuting their execs.
Nuts they basically almost destroyed their company and brand . And who would step up now to help them fix the mess?
Make a wrong move..... upset the wrong people .....
 

mmcartalk

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Crazy but it looks like he had his hired guards pose as a band and he snuck out in a box the band carried for instruments.

I see a movie coming!
Agree with the (eventual) movie prediction, but I'm not sure I buy that instrument-case story, as he would probably not have not been able to breathe inside of the case very long, even with small air holes.
 

Joaquin Ruhi

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I see a movie coming!
That's even likelier than you'd imagine, even before the great escape. From the Jake Adelstein Daily Beast article I linked to in Post #7 above:

And if his saga sounds like something out of cinematic thriller, well, stay tuned. Roughly a week before Ghosn made it to Beirut, he was cheerfully discussing a possible movie version of his life with a mega-Hollywood producer in his Tokyo home.

A friend of Ghosn says “He was keen on the idea of a documentary or film exposing his unjust treatment by the Japanese criminal-justice system. I asked him, ‘What do you think will be the conclusion?’

“He made a tiny smile and said, ‘Oh, it will be a surprise ending.’”

Surprise, surprise!
Agree with the (eventual) movie prediction, but I'm not sure I buy that instrument-case story, as he would probably not have not been able to breathe inside of the case very long, even with small air holes.
You are correct. Even though something I read yesterday (either in Bloomberg or Forbes - I forget) speculated on the viability of the instrument-case escape, a Reuters story from today confirms your suspicions:

JANUARY 1, 2020
Ghosn met Lebanese president after fleeing Japan-sources
Samia Nakhoul, Laila Bassam

BEIRUT (Reuters) - Fugitive former Nissan chairman Carlos Ghosn met Lebanon’s president after fleeing from Japan, where he was smuggled out of house arrest by a private security company, two sources close to Ghosn said on Wednesday.

One of the sources said Ghosn was greeted warmly by President Michel Aoun on Monday after flying into Beirut via Istanbul and was now in a buoyant and combative mood and felt secure.

The plan to slip Ghosn out of Japan, which marked the latest twist in a year-old saga that has shaken the global auto industry, was crafted over three months, the two sources said.

“It was a very professional operation from start to finish,” one of them said.

In his meeting at the presidency, Ghosn thanked Aoun for the support he had given him and his wife Carole while he was in detention, the sources said. He now needs the protection and security of his government after fleeing Japan, the sources added.

The meeting between Aoun and Ghosn has not been made public and a media adviser to the president’s office denied the two men had met. The two sources said specifics of the meeting were described to them by Ghosn.

Ghosn could not be reached for comment on the meeting and has been silent publicly other than to issue a written statement shortly after his arrival saying he had “escaped injustice and political persecution.”

Lebanese officials have said there would be no need to take legal measures against Ghosn because he entered the country legally on a French passport, although Ghosn’s French, Lebanese and Brazilian passports are with lawyers in Japan.

The French and Lebanese foreign ministries have said they were unaware of the circumstances of his journey.

Lebanon has no extradition agreement with Japan.

Ghosn was first arrested in Tokyo in November 2018 and faces four charges - which he denies - including hiding income and enriching himself through payments to car dealerships in the Middle East.

He has enjoyed an outpouring of support from Lebanon since his 2018 arrest, with billboards proclaiming, “We are all Carlos Ghosn” erected in solidarity with his case.

Under the terms of his bail, he had been confined to his house in Tokyo and had to have cameras installed at the entrance. He was prevented from communicating with his wife, Carole, and had his use of the internet and other communications curtailed.

The sources said the Lebanese ambassador to Japan had visited him daily while he was in detention.

‘FICTION’
While some Lebanese media have floated a Houdini-like account of Ghosn being packed in a wooden container for musical instruments after a private concert in his home, his wife called the account “fiction”
when contacted by Reuters.

She declined to provide details of the exit of one of the most recognised titans of industry. The accounts of the two sources suggest a carefully planned escape known only to a few.

They said a private security firm oversaw the plan, which involved shuttling Ghosn out via a private jet to Istanbul before pushing onward to Beirut, with even the pilot unaware of Ghosn’s presence on board.

An attorney for Ghosn said he would hold a news conference in Beirut on Jan. 8. The sources close to Ghosn, however, said a date for the news conference had yet to be finalised. They said Ghosn was unwilling to share details of his escape so as not to jeopardise those who aided him in Japan.

He is staying at the home of a relative of his wife, but plans to return soon to a gated villa in the upscale Beirut neighbourhood of Achrafieh, one of the sources said.

Nissan sacked Ghosn as chairman, saying internal investigations revealed misconduct including understating his salary while he was its chief executive, and transferring $5 million of Nissan funds to an account in which he had an interest.

In Lebanon, Ghosn is considered a poster boy for success in a country where rampant unemployment pushes young Lebanese abroad to find work and the economy relies heavily on remittances amid a deep financial crisis that has sparked a wave of protests.

Ghosn was born in Brazil of Lebanese descent and lived in Lebanon as a child. He oversaw a turnaround at French carmaker Renault that won him the nickname “Le Cost Killer” and used similar methods to revive Nissan.

 

Levi

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Nothing special, it happens all the time with less publicly famous people.
 

mmcartalk

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You can bet, though, that Interpol is going to be watching him like a hawk.

Well, I just won my own bet, LOL............There it is.


No, seriously, the fact that Interpol is watching for him should surprise no one. Those were pretty good betting odds. 😉

Turkey, BTW, arrested seven aviation workers (four of them pilots) for questioning in the case.

 
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Carmaker1

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This is such a circus. Now Carole has an arrest warrant?

So much to say about all of this, considering my family avoided losing $$$$$$$ in Nissan stock, which I convinced all of my immediate family to sell off last year upon hearing about his arrest and resignation from Renault.

In 2004-05 my dad (as a very successful medical specialist/owner) bought seven figures worth of Nissan shares alongside others. It grew, it fell, it grew over 14-15 years.

I got to learn a hell of a lot about Nissan because of this, via future models.

I feel so sorry for people who held on and lost so much money last year in the massive decline from Q2 2019.

I had criticized his management of certain products, but Nissan badged vehicles are making a turnaround for the 2020s. Infiniti is troubled.

Back to Ghosn, he is guilty of penny pinching, but do I understand his fleeing from Japan? Yes, I do, even as someone affected by his drama financially.
 

mmcartalk

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Bumping this old thread back up to add that accomplices in this case have been arrested in Massachusetts, and that there is an extradition fight going on.

 
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