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Abu Dhabi, UAETuesday 23 April 2019

Nissan says Carlos Ghosn was 'deified' in toxic corporate culture

Report released by the Japanese car maker accuses the former chairman of being secretive about director compensation

Nissan governance committee said that former chairman Carlos Ghosn was deified within the company as a saviour who had redeemed it from collapse. AFP Photo
Nissan governance committee said that former chairman Carlos Ghosn was deified within the company as a saviour who had redeemed it from collapse. AFP Photo

Nissan has issued a scathing report on Carlos Ghosn, the company’s arrested former chairman, addressing a toxic company culture where the executive was “deified” as the carmaker's saviour.

The 34-page report, released by the Japanese carmaker’s governance committee said: “Mr Ghosn was in a way deified within Nissan as a saviour who had redeemed Nissan from collapse, and his activities were deemed impenetrable territory within the company. “

The Brazilian-born businessman was arrested in Tokyo over fraud allegations on November 19 and further charges were brought to him in January. His top aid Greg Kelly, a Nissan director and former head of human resources, was also arrested that day.

Mr Ghosn was released on bail earlier this month after being detained for over three months. Mr Kelly was released at the end of December.

The committee’s report said that Mr Ghosn was the only person with the right to determine the human affairs regarding top line management, and some directors, officers and employees were suggested that they would be removed if they expressed dissenting views. Even though some people had doubts about the instructions from Mr Ghosn and Mr Kelly, they were unable to object or report their doubts to anyone else, the report added.

The carmaker looks to improve its governance as it could not prevent the alleged misconduct.

The report added that Mr Ghosn determined amounts of compensation for individual directors and top line managements all on his own. The secretariat function of Nissan was in charge of paying individual compensations which he determined, and no information on the amounts of individual directors' and top line managements' compensations was shared with other departments, the committee claims.

“Mr Ghosn concentrated the authority of so-called administrative departments in Mr. Kelly at the top and a few particular persons,” the report said. “This led to a structure to retain certain information within a few limited persons and not to disclose it to other departments.”

Nissan alleges that in order to reduce the disclosed amount of his director compensation, Mr Ghosn avoided disclosing some part of director compensations which he had granted to himself. As a result, Mr Ghosn’s total disclosed amount of compensation had been "under reported" from the fiscal year ended March 2010 to the fiscal year ended March 2018.

A spokesperson for Mr Ghosn dismissed the committee's findings and questioned the report's impartiality.

"Like the other allegations made since November, those found in this so-called independent 'report' will be revealed for what they are: part of an unsubstantiated smear campaign against Carlos Ghosn," the spokesperson said in a statement.

"Ghosn acted at all times with the full authority of the board and its shareholders, and his paramount goal was achieving value for Nissan's shareholders."

Mr Ghosn has denied any wrongdoing, but if he’s found guilty, he could face up to 10 years in jail, as well as a fine of up to 700 million yen (Dh23 million).

His downfall shocked the car industry and set off tensions between Renault and Nissan. The former executive, who was also the chief executive of Renault, advocated for the French and Japanese car companies to merge.

The Financial Times reported on Thursday that Renault looks to restart merger talks with Nissan within a year and then acquire another carmaker, with Fiat Chrysler among the preferred targets, citing several people familiar with the French company’s plans.

But M&A appetite has dwindled elsewhere in the car industry, with the chief executive of Volkswagen, Herbert Diess, declaring the era of mega-mergers over for them.

"These operations [redemption] require too much energy. And now, our energies are all inward," he said.

The Volkswagen Group, which has planned to invest €44 billion in 'the car of the future' in the next five years, has been imposing cost-cutting for several years, with thousands of lay-offs.

Mr Diess also rejected a possible takeover at FCA of Alfa Romeo or Maserati, pointing out that Volkswagen "already owned luxury brands".

The group, in addition to VW, includes Audi, Porsche, Lamborghini and Bentley.

Updated: March 29, 2019 12:54 AM

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