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Arrest of Ghosn and another top exec sends shockwaves through Nissan

70 Comments
By Yuri Kageyama

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So Nissan was willing to smear its own name to get rid of him.... I highly doubt that Ghosn was doing anything more than most Japanese CEO's do. Do you know how much money never gets reported to the tax man in Japan.... massive numbers. This was Nissan getting rid of Ghosn plain and simple.

16 ( +31 / -15 )

So when is the big press conference full of cameras and microphones with apologies and promises to regain consumer confidence and trust going to take place?

4 ( +7 / -3 )

Power gets corrupt. No exception.

6 ( +10 / -4 )

He isn't going to do any time, perhaps he wanted to retire or something, Nissan was eager to throw the book at him so quickly.

2 ( +7 / -5 )

His salary might have been high by Japanese standards but still low by international ones.....

7 ( +13 / -6 )

@mu-da... excellent comment! Paints the reality of Japan and corruption!

5 ( +11 / -6 )

As he isn’t a local lad, the deep bow, sheepish look, followed by the obligatory apology ain’t gonna do no good.

See ya.

13 ( +13 / -0 )

I would be interested to see more specifics.

If he under reported his remuneration the company should know about this due to the way taxes are handled in Japan. This I find a bit suspicious. Also if he knowingly allowed his remuneration to be under reported then he is stupid, especially considering the amount and his position.

On the other hand, the one issue where he may have trouble if he was not reporting remuneration from overseas (i.e. if he was taking money out of the overseas operation). This would be monumentally foolish for him to do and based on his compensation is an act of pure greed on his part.

I would like more details as to what he used the company funds for and again; are these funds for overseas operations or domestic?

This is an interesting case and there are way too many unknowns now to draw any conclusion.

By the way I also agree with the other posters: What about the other executives who were in charge of companies falsifying data (could to much more harm)?

This pales in comparison to the Olympus scandal. In that case the Japanese executives were sentenced to prison but all sentences were suspended and they never were incarcerated.

8 ( +11 / -3 )

Nissan is still getting over a scandal in which it admitted altering the results of emission and fuel economy tests on vehicles sold in Japan.

Anyone get arrested for that?

14 ( +15 / -1 )

SaikoPhysco:

Do you know how much money never gets reported to the tax man in Japan.... massive numbers.

I don't and I am interested in knowing. What's the numbers?

5 ( +7 / -2 )

So when is the big press conference full of cameras and microphones with apologies and promises to regain consumer confidence and trust going to take place?

That is what the photograph shows.

The Sankei Shinbun commented it was more than a bit odd for Saikawa to be waxing indignant about Ghosn because Ghosn had appointed Saikawa and they had had a joint position meaning that it was impossible for Saikawa not to have known what Ghosn was up to.

According to the morning NHK news, Ghosn has admitted the charges against him.

Among these is one that he had Nissan pay for personal luxury residences in four countries off the books.

One probable factor in this is that Renault and Nissan were both paying him a salary an order of magnitude more than a Japanese would get in the same position, even more than the head of Toyota, a more profitable company, gets.

So far the debate on "equal pay for equal work" in Japan has been focused only on the pay disparity between regular and contract workers. Perhaps it is time for "equal pay for equal work" to be extended to both the badly paid foreign labourers in Japan and the grossly overpaid foreign executives.

It is also interesting that comments to English language articles in foreign media are almost entirely in praise of the Japanese government for doing something that their own governments would never do.

4 ( +8 / -4 )

I wonder who he ticked off within the company and just what he did to them.

4 ( +6 / -2 )

Could someone explain how a person who has more riches than any one person could possibly need resort to criminal behavior -- risking it all -- for more of what he or she doesn't need?

8 ( +10 / -2 )

NHK said Japanese authorities had been ready to arrest him some months ago but waited for him to return to Japan. The fact that he returned to Japan means that he thought he was above the law or he had no friends Japanese or foreign within Nissan who could tip him off that he faced arrest.

1 ( +2 / -1 )

This is a trick to get rid of Ghosn.

No, it's just a typical behavior of a money-grabbing member of the globalized elite, it appears at this point. Remember the Panama Papers? Greed is what propels the global 1% to their positions of corporate power.

But we'll find out more as more details come out.

6 ( +12 / -6 )

Too bad he got the axe, but, when in Rome, do as the Romans do.

There are very few (if any) major Japanese corporations who have not been involved in some kind of fraud in the last decade or so. Corporate Japan is full of liars and thieves.

0 ( +4 / -4 )

This is a trick to get rid of Ghosn. The Japanese do not tolerate their companies being run by foreigners. And much less by non-Asian. And it is even more humiliating for them to succeed. It's something they can't stand.

He has been in that position for almost 20 years, if that was the reason I doubt he qould have lasted that long.

His salary might have been high by Japanese standards but still low by international ones.....

He remuneration was not low by international comparisons, only the most egregiously overpaid American executives earned more than he did, and US executive pay practices are not something any country should try to emulate.

6 ( +8 / -2 )

There’s something else than personal benefit here. Another article stated “He faces allegations of understating his salary in reports submitted to the Tokyo Stock Exchange”. TSE is not a tax office!

His compensation package was considered high for Japanese standard. Could he have underreported his compensation to TSE in order to avoid share owner’s criticism? So not a tax fraud but misleading owners - and breaking TSE rules - in order to keep his compensation level?

Misusing company assets for personal use is obviously theft - likely caused by too long term as the king, making it difficult to separate own and corporate assets.

5 ( +6 / -1 )

So far the debate on "equal pay for equal work" in Japan has been focused only on the pay disparity between regular and contract workers. Perhaps it is time for "equal pay for equal work" to be extended to both the badly paid foreign labourers in Japan and the grossly overpaid foreign executives.

I agree with this. The international market for executive “talent” is really just a rip off for companies that exacerbates income inequality.

9 ( +9 / -0 )

Sure seems a result of a power struggle at Nissan...2 top foreign executives arrested but nobody amongst the hordes of Japanese managment ranks fudged their taxes.....yeah right.

7 ( +12 / -5 )

Nissan stock price quotation at 8: 07 a.m. is around 830 yen before Tokyo Stock Exchange opening at 9 a.m. It was 1,005 yen yesterday closing.

-1 ( +0 / -1 )

Sigh, either you die a hero or live long enough to turn into a villain...

0 ( +0 / -0 )

I doubt that Ghosn did his taxes by himself. He is a full time employee of Nissan, so his taxes will be handled by the accounting department. So we should look forward to the arrest of the accountants who actually calculated, filled out, and filed his taxes, right?

-1 ( +5 / -6 )

Lets see what comes out in the wash? Hopefully what Ghosn is accused of will have cross-border implications which would then involve investigations outside of Japan. Truthfully, when you do come down to it... if he and Kelly intentionally tried to hide income, then yes, they should be prosecuted. However, if they were "set up" by Nissan as a way to get rid of them, well then I'd want some outside investigators in on this too. It could be a simple open and close case of dodging taxes or it could be a case worthy of a very interesting movie years from now.

1 ( +2 / -1 )

It sounds to me Hiroto Saikawa just wanted full control out of jealousy, which he'll most likely send the companies back to bankruptcy.

The companies are nothing without Carlos, read his books to get a better idea of the man.

0 ( +5 / -5 )

As a Japanese I'm deeply shocked by the idiocy of our older generation

5 ( +8 / -3 )

Back to bankruptcy for Nissan and Co, third times a charm

0 ( +5 / -5 )

Saikawa said the scandal was a "negative outcome of the long regime of Mr Ghosn."

Cleary it was a setup by Saikawa

Juse analyzing his wording, sounds suspicious, why isn't the CFO investigated and the accountants?

-2 ( +3 / -5 )

Reign?? What an idiot to even say that, without Carlos the company would.be dead!

If I was him, he should have never hired Saikawa in the first place.

-1 ( +2 / -3 )

I hope there is a tell all book deal in the offing. Would love to see the dirty side of Japan inc exposed from the inside.

1 ( +3 / -2 )

I’m watiting for Chapter 2 in this thriller.

5 ( +5 / -0 )

all other things being equal (e.g. no stock market crash) this makes Nissan a screaming buy.

1 ( +1 / -0 )

Nissan stock opened at 940 yen down about 5.5% from yesterday. Not so big.

1 ( +1 / -0 )

Nissan said Ghosn, 64, and another senior executive, Greg Kelly, were accused of offenses involving millions of dollars that were discovered during a monthslong investigation set off by a whistleblower. Kelly was also arrested.

The above is pure BS! Given what little we know there is no way in hell this would only take a month to figure out!

Him being arrested upon arrival is rare, I don't ever recall this sort of thing happening, likely has but again SUPER RARE!

The tax office will surely be digging a minimum 5yrs back in time & they only pursue their prey when they KNOW they will get $$$$ when done, if not sure they will likely leave you alone & check you again in a years time to see if it makes financial sense to go after the person/company.

I am still waiting for more info, if he was stupid enough to underreport  basic income & was indeed getting company to buy him stuff then I say toss him in the clink.

THEN do the same to the 1000's of J-bosses doing the same.

I have a feeling even if guilty that Japan is going to ALSO make itself look real bad when the dust settles, will be interesting for sure!

-1 ( +3 / -4 )

Foreign executives in senior positions and Japanese companies don't seem to work well. Toyota had a similar issue with a senior female executive getting arrested a few years ago and now Ghosn.

The details should be interesting, does 'underreporting income' means he had other sources of income which were not made public?

'Misusing company funds' is pretty broad term and can mean just about anything.

Most senior management people I know 'misuse funds' in one way or the other.

3 ( +5 / -2 )

No, it's just a typical behavior of a money-grabbing member of the globalized elite, it appears at this point. Remember the Panama Papers? Greed is what propels the global 1% to their positions of corporate power.

Start jailing them, regardless of their passport. If the bankers who wrecked the global economy or the architects of the Iraq debacle were sitting in jail right now, we probably wouldn't have neocons plotting the next arse-inine war or Goldman Sachs execs celebrating the recent easing of banking regulations.

As Glenn Greenwald put it, the law, when abused, "becomes a tool—both domestically and internationally—by which the powerful can coerce and control the powerless, rather than a system for ensuring that all are subjected to common rules."

6 ( +7 / -1 )

The above is pure BS! Given what little we know there is no way in hell this would only take a month to figure out!

"monthslong" = plural. More than one month.

The tax office will surely be digging a minimum 5yrs back in time & they only pursue their prey when they KNOW they will get $$ when done, if not sure they will likely leave you alone & check you again in a years time to see if it makes financial sense to go after the person/company.

He has not been charged with any tax related offenses so the tax office has nothing to do with this.

-2 ( +1 / -3 )

Motivated by a palace coup? Hard to imagine he was culpable, guys like him don't usually do their own taxes, and he's got too far much to lose to do something stupid.

1 ( +3 / -2 )

Sounds like there was some bad blood somewhere, seriously the only thing missing from the article is some sexual misconduct accusation, there is more under the cover of the current story.

0 ( +2 / -2 )

Overseas press reports (NY, France) are saying that because Renault (French govt & taxpayers) owns over 40% of Nissan stock and France is in the process of reviewing its corporate laws that Nissan insiders saw one way to blunt the impact of this was to get rid of Ghosn, and buy back their stock to reduce their number of votes. There has also been controversy in both Japan and France for years over his wearing 2 hats and drawing 2 salaries, one from Nissan and the other from Renault. He makes about 4x as much as the president of Toyota - and he still makes peanuts compared to his EU and US counterparts.

https://www.nytimes.com/2018/11/19/business/nissan-carlos-ghosn-misconduct.html?action=click&module=Top%20Stories&pgtype=Homepage

5 ( +5 / -0 )

Foreign executives in senior positions and Japanese companies don't seem to work well. Toyota had a similar issue with a senior female executive getting arrested a few years ago

If that's the case I'm remembering, she got caught smuggling illegal drugs into Japan. Not really the same issue at all, in fact, quite different.

2 ( +3 / -1 )

Not really the same issue at all, in fact, quite different.

My comment was about foreign executives and crime, not the exact nature of the crime.

The question is whether working in a Japanese company has this effect or is it because they are always under the spotlight, they get caught.

I have been here long enough to remember the petty comments, taunts and sometimes downright racist remarks that I had to put up with. There were times when even junior employees would mock their senior foreign managers in meetings. Does that drive people into doing what they end up doing?

3 ( +4 / -1 )

Good to take a read about all his accomplishments:

https://www.japantimes.co.jp/opinion/2017/02/24/commentary/japan-commentary/lessons-japan-inc-must-learn-ghosn/

prior to all this vague negativity no one will ever know the full story internally, but most likely it was Saikawa and the CFO

1 ( +2 / -1 )

His pay was always publicity acknowledged:

https://www.japantimes.co.jp/news/2016/06/22/business/corporate-business/nissan-ceo-ghosns-pay-tops-¥1-billion-second-year/

2 ( +3 / -1 )

Correct link on his achievements:

http://www.achievement.org/achiever/carlos-ghosn/

0 ( +0 / -0 )

So Nissan was willing to smear its own name to get rid of him.... I highly doubt that Ghosn was doing anything more than most Japanese CEO's do. Do you know how much money never gets reported to the tax man in Japan.... massive numbers. This was Nissan getting rid of Ghosn plain and simple.

I'm sure that or similar was the case. My take on this goes back to the "Nail sticking up to be nailed down" saying in Japanese culture, where Ghosn is the nail. I also believe that about CEO's here, too. Just that he's a foreigner in this case and Nissan wanted to move him aside. I'm sure there have been Japanese CEO's who have done worse than him with less media attention. In his case if he's guilty, he might serve some time and later get deported. At least for Ghosn, he seemed to be very goal oriented since he started with Michelin.

1 ( +3 / -2 )

Saikawa said Nissan's board will vote Thursday on dismissing Ghosn and Kelly, whom he described as the mastermind of the alleged abuses.

"This is an act that cannot be tolerated by the company," he said. "This is serious misconduct."

I thought that in Japan one is presumed innocent until proven guilty. After all, Saikawa has used the word "aleged".

5 ( +5 / -0 )

Saikawa said a lot more then mentioned in this article.

Nissan Chief Executive Hiroto Saikawa said "too much authority was given to one person in terms of governance," speaking at the Yokohama headquarters of the firm.

"I have to say that this is a dark side of the Ghosn era which lasted for a long time," Mr Hiroto said adding he was still thinking through whether Mr Ghosn was "a charismatic figure or a tyrant".

Before reading this I thought it was a genuine investigation but it looks like the old boys network is just getting rid of Ghosn. Saikawa was in executive positions since 1999 and Co CEO since 2016, it’s hard to believe he didn’t know if Nissan has paid for something off the books.

2 ( +2 / -0 )

He could try bowing deeply.

2 ( +2 / -0 )

Ghosn-san could not do everything alone. Whistle-blowers must be accomplices. They are other bad executives involved with this crime. This is a perfect plea bargaining. Accomplices must have reported to police prosecutors before big scandal and in return they can get much reduction of this crime.

3 ( +3 / -0 )

Isn't falsifying vehicle performance data much more serious a crime in the scheme of things?

5 ( +5 / -0 )

Anyone get arrested for that?

thinking the same thing , Mitsubishi had decades of falsifying data, now Subaru and Nissan having the similar problems, basically ripping off thosand of Japanese consumers, havent heard anything of the Japanese responsible getting arrested for that!? when will this eventuate, or is a deep bow , apologise all round enough to keep you out of jail!? If Ghosn willingly conspired to underdeclare earnings then he can go to jail, but this double standards for both Japaense and Gaijin just makes Japan look like hyporcites

4 ( +5 / -1 )

If that's the case I'm remembering, she got caught smuggling illegal drugs into Japan. Not really the same issue at all, in fact, quite different.

It was the case of a Toyota executive freshly hired in Japan, Julie Hamp. She was accused of having been sent from abroad some oxycodone, a opioid medication which is strictly regulated in Japan. She used this medicine in US and arranged with her father to have 57 oxycodone pills sent by air mail from US. 57 pills do not make her a drug dealer in any shape or form given also that she was not aware of the Japanese regulation. After spending I believe 23 days in custody without formal charges, she was released and was never charged for anything. A Japanese male took her job. In fact the way she was treated was just disgusting.

Now concerning Ghosn, if he had done anything illegal then he will have to take responsibility for it. However, the way foreigners are treated in comparison to Japanese in such cases is absolutely making Japan shameful. As far as I remember, similar press conferences involving scandals with Japanese are not done like that where accusations and judgements towards individuals are pronounced even before any official charge has been established. Nor do I remember Japanese executive involved in bigger scandals being arrested so fast and like that. The people involved in the recent earthquake absorber data falsification scandal were not treated like that nor did many of the others in the countless scandals involving Japanese companies.

3 ( +3 / -0 )

he needs to pay taxes just like we do

0 ( +1 / -1 )

something seems very off here, its impossible Saikawa and the rest of high profile execs and money movers there didnt know all about it... , thus these statements seem very fake.

sounds more like internal coup to remove him or similar back story

1 ( +1 / -0 )

I think his pose in that “photo shoot” tells us all we need to know about Mr Ghosn.

0 ( +0 / -0 )

Funny how the Japanese execs, who engage in the exact same thing and worse, suffer nothing more than a month's salary decrease of 30%, max (but still demand their bonuses), and do a deep bow and apologise. Just look at Saikawa as an example. He for sure knew about this, or he wasn't doing his job. He "takes responsibility and it's regrettable", but is he being arrested? Fired? Nope. He'll likely take over Ghosen's position entirely.

-1 ( +1 / -2 )

Please, let’s not make this about him being a foreigner. He’s just another CEO getting caught avoiding taxes an having sticky fingers.

4 ( +4 / -0 )

Pay your taxes Mr. Goshn. If you don't like the small salary from Nissan change your job, don't go hiding your income and blaming the company for getting peanuts for your salary as a CEO. We appreciate your work for NIssan, you did a remarkable job but stealing is stealing, cheating is cheating.

2 ( +2 / -0 )

Mr. Gosh I'll have to appear before a judge in few hours.

Let's hope that this judge does what judges supposed to do. Look at the police evidence, listen to the defendants plea and their side and then make a balanced judgement as to whether or not the case should proceed.

0 ( +0 / -0 )

Japanese social interest completely had been away from problematic bills and Politics by this news.

-1 ( +0 / -1 )

Regardless whether he is Lebanese, Brazilian (it seems Brazilian elites and leaders have never ending corruption scandals these days) or Japanese, cheating and corruptions should not be tolerated.

1 ( +1 / -0 )

'Misusing company funds' is pretty broad term and can mean just about anything.

This is Japan. There are always alternate way of expression.

Offering a second or third home and other fringe benefits can turn into misuse of company funds once they wanted Ghosn out

Under paying a foreign laborer by ¥100,000 per month is put as “worker left in search of higher paying jobs.”

0 ( +0 / -0 )

The first details of Ghosn's “significant acts of misconduct” emerge:

Kyodo - Nissan Motor Co. Chairman Carlos Ghosn is suspected of having used multiple residences purchased by the automaker in the Netherlands and three other countries for free without reporting that benefit as part of his income, sources with knowledge of the situation said Tuesday.

Considering that Ghosn certainly doesn't do his taxes himself (he wouldn't now where to put the numbers in the Japanese only form) but by Nissan's accounting department and auditors this not only looks like a coup, but a badly executed charade smearing the legacy of the man who saved and rebuilt the company successfully.

0 ( +1 / -1 )

It seems that good Japanese people have forgotten to be fair. Carlos have saved nissan for 20 years. Japanese car makers. He did , what he dis for Nissan which belongs to the Japanese people & japan.What Carlos earn in japan & from other sources is his own personal issue. We should stay out of his personal money business.

-2 ( +0 / -2 )

Ghosn did good for Nissan for years, but there is a big difference between his accomplishment for company and his own crime. Law can't ignore crime.

1 ( +1 / -0 )

I follow little business news, and do not know much about the automotive industry, but even I’ve been familiar with Mr Ghosn for years. I remember when his four kids were young, people talked about how he spent weekends away from work and playing with them. Just assumed he’s still married to their mother until the TV news mentioned one of those overseas properties is occupied by his ex-wife. That led me to a Forbes article that reports some not-favorable words she posted on social media after his arrest. Then to an article linked on his wiki page about the wedding party he and new wife had. They rented Versailles and had hired actors in period costumes for a Marie Antoinette theme. Two years later and heads are indeed rolling.

0 ( +0 / -0 )

It's Nissan, short for 日本産業 (Nippon Sangyo) which means "Japan" Industries. As trivia as I might say, it's probably an embarassment that "Japan" Industries is headed by a non-Japanese, so this explains why things are moving so fast. Even in NHK news this morning, the group panel brought for live interview repeatedly referred to him as "gaikokujin" and they said that being a foreigner that has a different leadership style, there seems a resentment within the company and an internal coup is likely.

-1 ( +0 / -1 )

Nissan is still getting over a scandal in which it admitted altering the results of emission and fuel economy tests on vehicles sold in Japan.

Anyone get arrested for that?

Why would anyone get arrested for that, they were just trying to make a profit, business is business after all, all that happened is they got caught, next time they'll figure a better way to prevent being caught.

The only reason that they arrested the Ghosn is because the State did not get its cut of the funds.

The other scandals you mentioned just hurt the average citizen not the State, so why would the State care one way or the other, they have not done much with the Fukushima disaster, yet they want to push more Nuclear power. It's a joke that people still believe the State actually cares about the people, where's the profit in that, verbal promises are enough for the masses. It is really high time people stop focusing on what the State says, and focus more on what the State actually does and it's long lasting effect upon the people. I digress, the scandals will just continue, people will continue to stand up on National TV, bow their heads down, and apologize, but the scandals will continue, and no big shots will ever go to jail for those things and basically that is why the scandals will continue, it's similar all over the West, and Japan is no different in that respect. The Banks get a fine for wrong doings, and later on they do the exact same things they were fined for to begin with. Unless you are a complete outsider or an average hard working person, the world is yours for the taking, it's always been about influence, power, and money, for now there will be no change in that respect.

0 ( +0 / -0 )

Braze

The only reason that they arrested the Ghosn is because the State did not get its cut of the funds.

You are mislead. The allegation has nothing to do with tax. The allegation is if he did not disclose some of his remuneration to the shareholders in the financial statements.

I just looked through the financial statements of Japanese firms at EDINET. None of the directors of famous Japanese firms disclosed fringe benefits to in the shareholders. The directors of Toyota did not. Honda did not. Fuji TV, Nippon TV, or TBS did not. Disclosing fringe benefits is NOT generally accepted accounting standards here. Why is it a crime not to disclose the fringe benefits, when it is Ghosn?

0 ( +0 / -0 )

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