Carlos Ghosn arrested

[jdbob]

Truly bizarre. Hope they keep the alliance together.

https://www.theguardian.com/business/2018/nov/19/nissan-renault-carlos-ghosn-arrest-shares

 

[gooki]

Something smells ...

 

[gooki]

.. fishy.

 

[gooki]

How can under reporting compensation by 50% for five years straight go unnoticed?

According to Japanese broadcaster NHK and the Kyodo News Service, Nissan paid Ghosn nearly 10 billion yen (£69m) over five years through to March 2015, including salary and other income from the company, but reported as if he only made 5 billion yen, or half of what he had received.

I can’t find any requirement for directors to report their compensation to the Tokyo Stock Exchange. It appears it’s the companies responsibility. Neither Ghosn or Kelly held accounting or auditing roles were they would be inputting these values.

A listed company must disclose certain details of executive compensation in its annual securities report.

Listed companies must disclose more detailed information to the public. This information includes the company policy regarding executive compensation, the names of executives who receive compensation of ¥100 million or above, and the individual amounts received by such executives. Such companies must disclose this information in the company’s annual securities report in the manner prescribed by the FIEA. Also, listed companies must provide similar levels of disclosure in their corporate governance reports, according to the format designated by the applicable stock exchange rules.

If Ghosn and Kelly used their position to force subordinates to manipulate the compensation figures then that would be fraud. But I can’t understand how that wouldn’t be picked up by the auditors, the CFO who sits on the board, or any number of other staff.

Putting my conspiracy hat on. There’s been some conflict between Ghosn and Nissan’s CEO Hiroto Saikawa and wider board members. Ghosan refused to go or demanded a high price to leave. Nissan board didn’t want to pay out the golden handshake. Saw what happened to Audi’s CEO Rupert Stadler (arrested, dismissed, released), and forced the arrest.

Under the Companies Act, however, dismissed executives are allowed to demand damages arising from the dismissal, unless the dismissal was based upon ‘justifiable grounds’. The courts tend to interpret justifiable grounds narrowly. Examples of justifiable grounds are the abolition of the department or division of which the relevant executive was in charge, an act committed by the executive that violates laws and regulations or the company’s articles of incorporation, a mental or physical disorder, or a lack of ability to perform the required duties of the executive’s position.

Source
https://gettingthedealthrough.com/a...ecutive-compensation-employee-benefits-japan/

 

[Domenick]

I'm having a hard time believing Ghosn is dirty like this. Autoline lays out his suspicions in this video (fast forward to 5:08 mark)

 

[gooki]

More details. This is business fraud 101. I find it hard to believe Ghosn would be this greedy and stupid. Equally it raises concerns over Nissan's financial oversight.

TOKYO -- A Nissan Motor affiliate is alleged to have paid $17.8 million for luxury homes in Rio de Janeiro and Beirut for its soon to be ousted chairman Carlos Ghosn, who was arrested on Monday on suspicion of financial misconduct, sources familiar with the situation said.

The transactions were done through a Dutch subsidiary, created around 2010, with 6 billion yen ($53.4 million at current rates) in capital, ostensibly set up for investment purposes. The sources said it was funded entirely by the Japanese automaker. The official line within Nissan was that the unit would invest in startups, though there is little evidence to support this claim.

 

[gooki]

Source
https://asia.nikkei.com/Business/Ni...-spent-18m-on-Ghosn-s-homes-in-Rio-and-Beirut

 

[gooki]

Still sounds odd. The property ownership was never transferred to Ghosn or Kelly.

Unless their families or friends were living in them rent-free, and even then it sounds incredibly silly for very little gain.

 

[gooki]

This is business fraud 101.

I retract that statement, because the ownership of the property remains with Nissan. So it looks like Nissans subsidiary tasked with making investments purchased some investment properties. A silly decision for whomever approved that spending, but not fraudulent.

 

[gooki]

Nissan likely be charged for false disclosure.

Japanese prosecutors are considering charges against Nissan Motor for false disclosure as part of the investigation into alleged misconduct by Carlos Ghosn, the carmaker's disgraced outgoing chairman.

https://asia.nikkei.com/Business/Ni...rges-against-Nissan-over-Ghosn-pay-disclosure

 

[gooki]

Carlos Ghosn had been planning a merger between Renault and Nissan.

Mr Ghosn was the driving force behind the merger plans, which met with fierce resistance from Nissan's board, according to people familiar with the deliberations. Renault's 43% stake in Nissan gives it unusual levels of control, with the ability to appoint senior executives. Nissan's 15% stake in Renault comes with no voting rights and gives the business no control over its French counterpart.

Strains between Mr Ghosn and Mr Saikawa intensified as Mr Ghosn became increasingly displeased with the performance of the Japanese group, which has seen profits fall on declining margins in the US and slowing growth in China, according to several people.

Nissan's reputation at home was also hurt as Mr Saikawa wrestled with scandals involving improper vehicle inspections and falsified fuel economy data.

Source
https://asia.nikkei.com/Business/Ni...-planning-Nissan-Renault-merger-before-arrest

 

[Domenick]

It gets weirder. Now they are holding him for an extra 10 days. Meanwhile, Renault hasn't fired him, though they have named an acting CEO.

The Japanese justice system has a reputation for an extremely high conviction rate, even if they are seen as soft on white-collar crime by Japanese nationals. A lot of this stinks of a power struggle within the Alliance and may possibly destroy it. Feels like some within Nissan (and possibly the government) would prefer the company stay more "Japanese" than successful. Or, possibly, didn't realize the jeopardy they were putting the company in with this move.

 

[gooki]

Reports indicate Ghosn may have taken ownership of at least one of the properties in question.

One of the homes that was purchased for Ghosn was a beachfront condominium in the popular Rio de Janeiro resort of Copacabana. The property belonged to an acquaintance of Ghosn, and the chairman himself negotiated the price and terms.

The Dutch subsidiary's Virgin Islands unit paid over $4.5 million for the property in 2011 and for such other expenses as renovation fees. The property was handed to Ghosn free of charge.

https://asia.nikkei.com/Business/Nissan-s-Ghosn-crisis/Ghosn-picked-pricey-homes-himself-sources-say

 

[Pushmi-Pullyu]

A lot of this stinks of a power struggle within the Alliance and may possibly destroy it.

I was shocked to see the news yesterday about Ghosn being arrested. I don't have an informed opinion about his guilt or innocence, and I am firmly in favor of the American ideal that people should be presumed innocent until proven guilty. Being convicted in the "court" of the news media does not count.

But whatever the outcome, it's not going to be good for Nissan.

 

[gooki]

Some more news.

Ghosn denies charges.

Carlos Ghosn, who was recently ousted as Nissan Motor Co. chairman after being arrested for the alleged understatement of his remuneration in securities reports, has denied the charge, sources close to the matter said Sunday.

Details about the under reporting related to future compensation after retirement, and stock appreciation

The sources allege that from fiscal 2010 to fiscal 2017, Ghosn arranged to have about 1 billion yen a year paid to him later on, such as after he retires from the company. Prosecutors apparently think he needed to cite this compensation in securities reports each year if the payments by Nissan were definite, even if he had not received the money yet.

In addition to the alleged underreporting of cash compensation, Ghosn is accused of omitting from securities filings roughly 4 billion yen in stock appreciation rights received in the four years through March. Stock appreciation rights granted to other directors have been included in the securities reports.

Greg Kelly also denying any wrong doing.

Greg Kelly, former Nissan representative director who was arrested for allegedly conspiring to understate Ghosn's remuneration, has also denied the allegation, according to the sources.

Kelly also denies the allegations, arguing that compensation was reported appropriately, according to sources. He claims that Ghosn had not instructed him to take illegal actions.

Greg Kelly, then a representative director, is seen to have orchestrated misconduct including the purchase of overseas real estate using Nissan investment capital on Ghosn's behalf. Kelly has said he consulted internally at the automaker and with external law offices as well as the Financial Services Agency, and claims ignorance of any wrongdoing, sources said.

Nissan preparing to sue Ghosn. Should make things a bit more public.

Meanwhile, Nissan is preparing to file a damages suit against Ghosn over the alleged misappropriation of funds to buy homes abroad for personal use and cover private expenses, other sources familiar with the matter said.

Nissan apparently funded more than the two properties reported earlier.

The Yokohama-based automaker is considering how to recover the funds Ghosn allegedly spent to buy residences in the Netherlands and three other countries as well as $100,000 of annual pay to his sister for an advisory service she never provided, according to the sources.
Nissan also believes Ghosn had the company pay for his family's trips and dining.

Source:
https://asia.nikkei.com/Business/Ni...san-chairman-Ghosn-denies-understating-salary
https://asia.nikkei.com/Business/Nissan-s-Ghosn-crisis/Ex-Nissan-official-says-he-did-nothing-wrong
https://asia.nikkei.com/Business/Ni...-to-report-70m-in-deferred-pay-sources-allege

 

[Pushmi-Pullyu]

The sources allege that from fiscal 2010 to fiscal 2017, Ghosn arranged to have about 1 billion yen a year paid to him later on, such as after he retires from the company. Prosecutors apparently think he needed to cite this compensation in securities reports each year if the payments by Nissan were definite, even if he had not received the money yet.
​

I don't know what the tax laws are in Japan, but not only doesn't this appear to me to be a crime, it's hard for me to understand why anyone would be expected to report future compensation; income which they have not yet received and therefore shouldn't owe any taxes.

In addition to the alleged underreporting of cash compensation, Ghosn is accused of omitting from securities filings roughly 4 billion yen in stock appreciation rights received in the four years through March. Stock appreciation rights granted to other directors have been included in the securities reports.
​

4 billion Yen is about $35.4 million USD.

While this appears to be a real violation of income reporting for tax purposes, it's certainly possible that Ghosn himself wasn't aware of this. I think it would be normal for someone with complex personal finances and a top executive compensation package to leave tax reporting to accountants.

The idea that Ghosn was actually arrested for what seems to be, at worst, tax reporting irregularities, certainly seems to support the assertions of those who say this is merely a power play by Japanese executives against an executive who isn't Japanese-born.

But whatever the truth, it's a black eye for Nissan.

 

[gooki]

From my understanding of Japanese tax law, reporting income for taxes is separate to the securities filing.

 

[gooki]

The big issue for Nissan's current board of directors is the significant stake Renault have (43.4%).

Renault won't need much shareholder support to initiate a clear-out of Nissan's board of directors should Ghosn comes through this innocent, and still have the backing of Renault.

 

[gooki]

Looks like Ghosn will be spending another 10 days in detention.

Tokyo prosecutors plan to seek an extension of the detention period of former Nissan Motor Co. Chairman Carlos Ghosn after arresting him last week for allegedly understating his remuneration in securities reports, sources close to the matter said Thursday.

 

[gooki]

Interesting.

TOKYO -- Former Nissan Chairman Carlos Ghosn considered personally buying overseas residences from a company subsidiary when the legality of their original purchase was questioned by auditors, sources familiar with the matter said on Thursday.

Ghosn, who was arrested on Nov. 19 on suspicion of underreporting his pay, allegedly ordered an overseas subsidiary to buy the properties for his family.

But when auditors questioned the nature of the investment, Ghosn, 64, considered buying them himself, according to the sources. This may have been done in a bid to dispel any suspicions, the sources said.