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Former NIssan-Renault-Mitsubishi Alliance Chairman Carlos Ghosn Escapes Japan


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Japan's goal was to smear Ghosn in order to prevent the auto executive from further integrating Nissan and France’s Renault, a plan that threatened the Japanese carmaker’s autonomy and was vehemently opposed in the highest echelons of Tokyo officialdom.

Ghosn effected an escape from Japan by hiding inside a musical instrument box, which was transferred to the airport and onto a private plane. A paramilitary group came to Ghosn's house disguised as a band for Christmas dinner. They hid Ghosn inside one of their equipment boxes when they left the home at the end of the evening.

“I am now in Lebanon and will no longer be held hostage by a rigged Japanese justice system where guilt is presumed, discrimination is rampant, and basic human rights are denied, in flagrant disregard of Japan’s legal obligations under international law and treaties it is bound to uphold. I have not fled justice — I have escaped injustice and political persecution. I can now finally communicate freely with the media, and look forward to starting next week."

Carlos Ghosn

https://www.bloomberg.com/news/articles/2020-01-01/ghosn-is-a-free-man-with-tales-to-tell-and-scores-to-settle?srnd=markets-vp

https://www.bloomberg.com/news/articles/2019-12-30/carlos-ghosn-left-japan-arrived-in-beirut-reports-say?srnd=markets-vp

https://www.theguardian.com/business/2019/dec/31/carlos-ghosn-escaped-japan-hiding-in-a-musical-instrument-case

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Nissan’s shock turns to dread as Ghosn readies media blitz

Bloomberg  /  December 2, 2019

TOKYO -- News this week that Carlos Ghosn, facing two trials and under heavy surveillance, pulled off a stunning escape from Japan left Nissan Motor Co. executives with jaws agape reaching for their messaging apps.

Just as astonished was CEO Makoto Uchida, who heard about his former boss’s getaway from media reports, according to a person familiar with the matter. Ghosn’s vanishing act throws up a distraction just when the new CEO needs to be laser focused.

With profits at decade lows and its stock tanking, Nissan is rife with internal divisions over the ouster of its former leader and the way forward. Now Ghosn is free to talk, armed with potentially damaging details about current Nissan executives.

“There must be many people at Nissan and Renault who think this could really be dangerous for them if Ghosn speaks,” said Koji Endo, a senior analyst at SBI Securities in Tokyo.

Uchida, who became CEO last month, has a long list of challenges. A top deputy abruptly quit, some 12,500 jobs are on the chopping block, and he needs to refresh an aging lineup of models like the Skyline sedan and GT-R sports car to reinvigorate sales. Then there’s the matter of fixing the rocky relationship with French partner Renault SA as autonomous vehicles and electrification threaten to disrupt the industry.

Ghosn has said the charges of financial impropriety brought against him are false, trumped up by Nissan executives, Japanese prosecutors and government officials who opposed his plans to more deeply integrate the two carmakers.

On Thursday, he issued a second statement about his escape to deny reports that his wife was involved in the plot.

“I alone organized my departure,” the 65-year-old said. “My family had no role whatsoever.”

Ironically, it was in a previous crisis two decades ago that Nissan, on the verge of bankruptcy, was rescued by Renault, which took a stake in the Japanese carmaker and sent in Ghosn to turn it around. Ghosn later added Mitsubishi Motors Corp. to the pact, forming the world’s biggest carmaking alliance.

Ghosn was arrested in November 2018 at Haneda airport, kicking off a legal saga that would result in him being released on bail, re-arrested and bailed out again. He was facing trial for financial crimes when on Dec. 31, as Japan entered a week-long holiday, Ghosn revealed that he had fled to Lebanon to escape what he described as a “rigged Japanese justice system.”

Hollywood thriller

It’s still a mystery how Ghosn, one of the most recognizable foreigners in Japan, snuck out of the country despite being under round-the-clock surveillance -- an escape befitting a Hollywood thriller.

Theories abound, but it appears that Ghosn flew to Lebanon on a private jet operated by a subsidiary of Turkey’s MNG Holding, according to a senior Turkish official with direct knowledge of the matter. That’s after the former automotive executive apparently flew to Istanbul on another MNG aircraft on Monday morning, before being transferred between the two airplanes inside a box, the official said, asking not to be identified because of the sensitivity of the matter.

Meanwhile, prosecutors on Thursday began a search of Ghosn’s residence near Tokyo’s Roppongi district, a three-story building with four surveillance cameras around the entrance, local media reported. By early evening, prosecutors remained inside the house, while a gaggle of reporters trained their cameras on the front door.

Though Ghosn hasn’t been involved in running either company since his arrest more than a year ago, his shadow still looms large. That’s why when the news first broke Tuesday about his escape, it didn’t take long for the shock to ripple through the upper echelons of the two automotive giants he long led.

Aside from Uchida, top Nissan managers scrambled to find out details by messaging each other, the person said, asking not to be identified because of the sensitivity of the matter. In France, executives were stupefied and some initially questioned whether France was behind the extraction of one of its citizens in any way, according to another person familiar with the matter. France later denied having any involvement.

Representatives for Nissan and Renault declined to comment.

Settling scores

Ghosn, who has said he’ll “finally communicate freely with the media” next week, is a man on a mission to clear his name and has scores to settle.

He could create a stir by identifying Nissan executives whom he claims turned on him to advance their own interests. In April, Ghosn’s camp released a pre-recorded video that edited out the identities of those people.

Some of Ghosn’s targets aren’t hard to guess. Ghosn’s successor -- protege-turned-accuser Hiroto Saikawa -- blamed his former mentor for many of Nissan’s woes before being ousted himself last year in a scandal involving excess compensation. Then there’s Hari Nada, the former head of the CEO’s office, who became a key whistleblower against Ghosn.

In his video, Ghosn also blasted Nissan’s management for the company’s poor performance, saying it lost sight of the need to move the alliance with Renault forward.

“I’m worried because obviously the performance of Nissan is declining, but also I’m worried because I don’t think there is any vision for the alliance being built,” Ghosn said in the video.

As for Uchida, he’s vowed to try to heal some of the wounds with its French partner, while restoring growth in profit and sales at Nissan. Ghosn on the loose looks likely to complicate those tasks.

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Per WSJ editorial today....."A trial was expected in 2020 though more than 99% of defendants in Japan are convicted."

Sounds like a very good reason to..."get outta Dodge"

Another interesting comment, was that the guy who was key in getting Ghosn out-Hiroto Saikawa, was himself dumped by the Nissan board in September as they discovered he had taken "improper stock-based performance compensation in 2013".

Have to wonder if this issue and the attention it will receive will lead to some big changes in Japan.

 

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Ghosn details 'plot' to oust him, condemns Nissan executives, Japan

Hans Greimel, Automotive News  /  January 8, 2019

BEIRUT -- Indicted former Nissan Chairman Carlos Ghosn, now an international fugitive on the loose in Lebanon after bolting bail in Japan, lashed out at the carmaker and the Japanese justice system in his first press conference since his wild legal odyssey began in 2018.

Facing some 100 reporters at Wednesday’s invitation-only event, an animated Ghosn – looking businesslike in a dark suit and red tie – spoke for nearly two-and-a-half hours, unleashing a point-by-point attack on the validity of the investigation that culminated in his shocking arrest in Japan. 

Ghosn named names of those behind what he alleged was a plot to oust him, singling out former CEO Hiroto Saikawa, and said he had evidence backing his claims of innocence.

“I am here to clear my name," Ghosn said at the conference, held here in the Lebanese capital. "These allegations are untrue, and I should never have been arrested in the first place."

Ghosn also said he would be willing to stand trial in any country, except Japan, where he spent nearly 130 days in solitary confinement as prosecutors repeatedly arrested him on different counts. He blasted Japanese justice, with its 99 percent conviction rate, as a rigged system in which guilt is presumed, discrimination is rampant and basic human rights are denied.

The former head of the Renault-Nissan-Mitsubishi alliance, now sporting thinner, grayer hair than before his Nov. 19, 2018, arrest, also said he was interrogated for as long as eight hours a day without a clear explanation of the charges against him. Prosecutors, the 65-year-old father of four grown children said, pressured him to confess, partly by threatening to go after his family.

“I was brutally taken from my world as I knew it,” Ghosn said. “I was ripped from my family, my friends, from my communities, and from Renault, Nissan and Mitsubishi.”

Jumping bail and fleeing to his childhood home of Lebanon just before New Year, he said, was the only way he could escape what he called the injustice of the Japanese system. 

“You’re going to die in Japan or you’re going to have to get out,” he said. “I felt that I was a hostage in a country that I had served for 17 years... All of a sudden a few prosecutors and a bunch of executives at Nissan said you know what, this guy is a cold, greedy dictator.”

The Tokyo prosecutor, in a statement released after Ghosn's press conference, said the indicted former executive’s comments “failed to justify his acts.”

“Defendant Ghosn has only himself to blame for being arrested and detained,” it said. 

During his press conference, Ghosn said he was ready to retire before June 2018 but was asked to continue. “I, unfortunately, accepted this offer.” He said he was working to integrate Renault and Nissan while respecting the autonomy of both. But he said there was mistrust.

“Some of my Japanese friends thought that the only way to get rid of the influence of Renault on Nissan was to get rid of me,” he said. “Which, unfortunately, they were right.”

He also said he was in the process of negotiating a merger with Fiat Chrysler Automobiles before his arrest, but said he was unable to complete it after prosecutors took him in. Today, FCA is merging with France’s PSA Group instead, and Ghosn blasted the alliance for botching a deal. 

“The alliance missed the unmissable, which is Fiat Chrysler,” Ghosn said.

"That is unbelievable, they go with PSA. How can you miss that huge opportunity to become the dominant player in the industry?”

Ghosn also acknowledged that he was asked in 2009 by Steve Rattner, President Barack Obama's car czar, to run General Motors during the automaker's reorganization amid the Great Recession. He said he turned down the offer out of allegiance to Renault and Nissan -- even though Rattner offered to double his pay.

“I made a mistake. I should have accepted the offer,” Ghosn said in response to criticisms in Japan that he was greedy. 

He declined to say how he would address Nissan’s current ills, which include falling revenue and plunging profits. Nissan has countered with aggressive cost control and job cuts. 

“What I would do is completely different from what is being done,” Ghosn said. 

Regarding his audacious escape from the clutches of Japanese prosecutors, Ghosn said refused to disclose details saying he needed to protect those who assisted his escape. 

Japan's humiliation

The vanishing act humiliated Japan, which has indicted Ghosn, 65, on four counts of financial misconduct during his time at Nissan. Ghosn’s trial was to begin as early as this spring.

Accounts of his escape come straight from a Hollywood thriller.

Japanese media, citing security camera footage pieced together by local authorities, say Ghosn left his court-approved home in central Tokyo around 2:30 p.m. Dec. 29 wearing a hat and face mask commonly worn in Japan as protection from germs, pollen and pollution.

He then met two American private security experts, including a former Green Beret, at a nearby five-star hotel before absconding to Osaka on Japan’s ultrafast bullet train.

Once 300 miles away in that western Japanese metropolis, Ghosn was reportedly loaded into an oversized shipping case for audio equipment and spirited onto a private jet at Osaka’s Kansai International Airport.

The Wall Street Journal was the first to report that holes were drilled in the bottom of the box so Ghosn could breathe and that airport security didn’t screen it because the box was too big to fit through the X-ray machine. The plane then reportedly flew to Turkey, where Ghosn transferred to another jet bound for Beirut.

Unmuzzled

In Lebanon, where Ghosn is a citizen, he is unmuzzled to tell his side of the story without the threat of Japanese authorities rearresting him and sending him back to jail. Lebanon has no extradition treaty with Japan, and officials here have said they have no plans to send him back.

From his base in Beirut, Ghosn is free to fully weave his own narrative.

Ahead of his news conference, Nissan went on the offensive, issuing a statement saying it found “incontrovertible evidence” of misconduct by Ghosn, including misstatement of his compensation and misappropriation of the company’s assets for his personal benefit.

“The company will continue to take appropriate legal action to hold Ghosn accountable for the harm that his misconduct has caused to Nissan,” the automaker said.

In September, Ghosn agreed to pay $1 million to settle, without admitting guilt, a separate U.S. Securities and Exchange Commission complaint that he hid some $140 million in future payouts.

Yet, Japanese prosecutors have yet to disclose any evidence backing their indictments. And without an open trial to air it, the dispute risks becoming a he-said-she-said battle.

Indeed, Ghosn’s defense team immediately punched back with its own statement, calling Nissan’s claim of having conducted a robust, thorough investigation a “gross perversion of the truth."

“It was initiated and carried out for the specific, predetermined purpose of taking down Carlos Ghosn to prevent him from further integrating Nissan and Renault, which threatened the independence of Nissan, one of Japan’s iconic, flagship companies,” the statement said.

Conflicts of interest 

The investigation was rife with conflicts of interest that undercut its legitimacy, Ghosn’s team said. Hari Nada, the Nissan executive running the internal investigation, is himself a plea bargainer who had a hand in the alleged crimes Ghosn is accused of, the team said.

Nada, once expected to serve as a key witness against Ghosn at trial, was only relieved of his duties as head of Nissan legal affairs this past October, nearly a year after Ghosn’s arrest.

Furthermore, Ghosn’s defense maintains Nissan’s audit was not truly independent because it was conducted with the law firm Latham & Watkins, one of Nissan’s longtime outside legal counsels. Latham & Watkins gave legal advice on the very matters subject to investigation, it said.

Ghosn’s team also claims that the Nissan probe also never asked to interview Ghosn or share its full results with Ghosn or the public.

Central to Ghosn’s defense is the argument that [Japanese] prosecutors illegally conspired with certain Nissan executives and government officials to frame Ghosn in a coup aimed at removing him from power and preventing further integration of Nissan with its French alliance partner Renault.

Ghosn’s lawyers also say that prosecutors illegally handed prosecutorial and investigative powers to Nissan employees, who then assembled evidence against Ghosn at their behest.

Ghosn's attorneys say Nissan unlawfully dispatched employees to invade Ghosn's residences and illegally seize personal property and attorney-client privileged files, while prosecutors did the same with attorney-client privileged notes and legal documents from Ghosn's wife, Carole Ghosn.

Moreover, prosecutors engaged in unfair bias by charging Ghosn, who is non-Japanese, while ignoring admitted wrongdoing by other Nissan executives who are Japanese, the filings allege. Ghosn’s defense team has accused Nissan of not sharing some 6,000 pieces of digital evidence.

Additionally, Ghosn's counsel had argued, his right to a speedy trial was violated because even more than a year after his arrest, he still has no confirmed start date for a trial.

Indeed, Ghosn’s lawyers have said, the prospect of spending another year or two under strict bail conditions in Japan during a protracted trial is one reason he decided to flee.

The bail restrictions not only prohibited him from leaving Japan but restricted his Internet and phone access, subjected him to video surveillance and forbade him contact with his wife.

Japan's defense

Japanese authorities have defended the country’s legal system as fair [??????] and said Ghosn bolted from Japan to escape punishment.

“Prosecutors indict defendants only when prosecutors conclude that they can establish their case in courts beyond any reasonable doubt,” the Tokyo Public Prosecutor’s Office said in a release. “As a result, Japan has had a history of high conviction rates.”

Ghosn faces four indictments in Japan. The first two are charges of failing to disclose more than $80 million in deferred compensation. The two other counts are breach-of-trust charges that accuse Ghosn of diverting company money for personal gain.

Ghosn, who denies the entire slate of charges, faced up to 15 years in prison and a fine of up to 150 million yen ($1.4 million) if convicted on all four counts.

On the first two charges of millions of dollars in unreported compensation, Ghosn’s lawyers have said Nissan's securities filings accurately disclosed Ghosn's actual compensation. They say Nissan never committed to paying deferred pay and Ghosn never received it.

Regarding the first breach-of-trust allegation, they argue that the financial transactions in question never caused financial loss to Nissan and that Ghosn paid the money back per contract.

Meanwhile, Ghosn’s team has tried to undermine the other accusation, that he siphoned money from Nissan and fed it through business associates in the Middle East in a scheme that allegedly circulated millions of dollars back into the pockets of Ghosn or family members.

Ghosn's defense counters that Nissan paid the parties in question because they were legitimate payments for business services, such as reimbursement for expenses.

Additionally, the disbursements were fully vetted and approved by multiple senior Nissan executives, including former CEO Hiroto Saikawa, in one case, they say. Finally, defense filings say, none of those Nissan funds were transferred for the benefit of Ghosn or his family. 

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Japan throws stones at Ghosn from a glass house

Commentary – Philip Nussel, Automotive News  /  January 11, 2020

As the Carlos Ghosn scandal unfolds with Hollywood-level kinds of drama and intrigue, it's refreshing to see the Japanese government launch its resources to rein in this fugitive from justice with all the righteous indignation of a nation that truly values international business ethics.

It's quite an about-face for a business culture that allowed the Takata exploding-airbag scandal that has claimed at least 24 lives, injured some 300 people and generated the largest safety recall in the history of the global auto industry. Another 10 million airbags were recalled in the U.S. last week, in fact.

But even more enlightening is how the prosecution and post-escape pursuit of Ghosn runs contrary to the Japanese practice of protecting its own business fugitives from justice, particularly when they stand accused by other countries of crimes that might not be considered serious in Japan.

Supply chain corruption

In the Takata scandal, the company in January 2017 agreed to pay a $1 billion U.S. criminal fine for its fraudulent conduct stemming from the lethal airbag defect. Three of its executives were charged with crimes in the U.S., but they stayed in Japan and never faced justice here.

"Warrants were issued at the time of the indictment and are still active," a U.S. Justice Department spokeswoman said in an email to Automotive News, declining further comment when asked about extradition efforts.

Perhaps more troubling is that for many years, dozens of Japanese auto suppliers systematically ripped off their customers — including their own affiliated Japanese automakers — in the U.S. and other countries. These suppliers allowed their sales executives to collude with competitors on the price of everything from ball bearings to wire harnesses. This institutional corruption resulted in countless billions of dollars in costs built into the price of light vehicles.

The antitrust arm of the Justice Department spent much of the past decade, during the Obama and Trump administrations, prosecuting these crimes. As of 2018, U.S. antitrust regulators said their work yielded $2.9 billion in fines and convictions of 46 suppliers and 32 executives. The vast majority of them are Japanese.

And while the companies themselves pleaded guilty and ponied up massive U.S. fines, as many as 20 individuals charged with crimes stayed in Japan, where they were protected from extradition. Some even kept their jobs. It's unclear whether the U.S. even attempted extradition — and very unlikely that it did. Japanese officials would have to cooperate in such a process.

To this day, these Japanese executives carry the same international fugitive status as Carlos Ghosn.

Ultimate irony

The ultimate irony here is that Ghosn was blamed, in part, for creating this culture of corruption in the Japanese supply chain when he saved Nissan in 1999. Back then, Ghosn helped cut Nissan's costs by dismantling the automaker's insular supplier "keiretsu". He had the audacity to demand competitive bidding.

As my former Automotive News colleague Dave Guilford suggested during an interview with Ghosn in 2014, suppliers responded to Ghosn's demands by fixing prices.

"So it's my fault?" Ghosn responded, laughing. "That's a most original explanation."

"I had nothing against keiretsu," Ghosn added. "It was working for our competitors. But it wasn't working for us."

For the past year, Ghosn has been accused of a variety of economic crimes that, if true, might have cost Nissan tens of millions of dollars. If true. Yet Japan harbors fugitives who cost the entire auto industry far more, not to mention the loss of 24 lives, most of them in Hondas.

Japanese authorities may have very good reasons for their bitter, relentless pursuit of Ghosn and his family, but they might be wise to take a look in the mirror and stop protecting their own business fugitives from justice.

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