Friday, January 18, 2019

Understanding the case Carlos Ghosn, from his arrest to the suspicions of fictitious jobs

Carlos Ghosn, CEO of the Renault-Nissan Alliance, at a press conference in Paris, September 15, 2017
Carlos Ghosn, CEO of the Renault-Nissan Alliance, at a press conference in Paris, September 15, 2017 PHILIPPE WOJAZER / REUTERS

On the evening of November 19, on the tarmac of the Japanese airport Haneda, the man being arrested by the Tokyo attorney's agents is not anyone. This is Carlos Ghosn, the powerful boss of the world's number one automobile, Renault-Nissan-Mitsubishi. His arrest is the starting point of a scandal with heavy economic repercussions.

Despite multiple bail applications and his wife's appeal to Human Rights Watch, a human rights NGO, denouncing his "Rude" detention conditions, Carlos Ghosn is expected to remain in pre-trial detention until at least March 10 or even the first hearing of his trial, which should not be held before six months.

What is he accused of? What is the risk? Explanations.

Read also (in subscribers edition): Carlos Ghosn: ambition, money and glory, to the point of excess

1. What does he blame for Japanese justice?

More than 60 million euros in undervalued compensation

Ghosn was indicted for the first time on December 10, after a first twenty-two days in police custody, for having reduced his income in the Nissan reports handed over to the stock market authorities between 2011 and 2015. total, over this first period, the president of Nissan would have undervalued its five billion yen (37.7 million euros) compensation, which amounted to nearly 10 billion.

It was again on January 11 for similar events between 2015 and 2018 with a loss of around 4 billion yen (30.1 million euros) and for aggravated breach of trust.

The prosecution accuses him of having transferred to Nissan "losses on personal investments" in autumn 2008. It was the time of the financial crisis and the sharp fall of the dollar against the yen. Ghosn, which had personally contracted foreign exchange swap contracts - which allow it to protect itself or, more often, to speculate on the fluctuation of the currencies - with the Shinsei bank, is then in a perilous position: these contracts have a potential loss of 1.85 billion yen (13.9 million euros) and his bank wants to force him to sell his shares to prevent the losses are even greater. Unless he finds a guarantor, able to mobilize a sum that can cover potential huge losses.

Read also Tokyo prosecutor's office keeps Carlos Ghosn in custody until 11 January

What he would have found in the person of Khaled Al-Juffali, a Saudi businessman, who would have released funds and would have guaranted for the boss of Renault-Nissan. Subsequently, between 2009 and 2012, $ 14.7 million (€ 12.8 million) was drawn from a Nissan "CEO reserve" and transferred three times to a Nissan Gulf bank account. that Mr. Al-Juffali has in part.

Before the judge, on January 8, the 64-year-old leader defended himself, assuring "Wrongly accused and unfairly detained". Regarding all charges, Carlos Ghosn said he acted "With the approval of the leaders of the company". He denies any concealment of income and ensures that the money transferred to the Saudi billionaire has nothing to do with his losses at the time of the financial crisis, but was linked to a fee for services.

2. What does Carlos Ghosn risk for these facts?

According to the Tokyo prosecutor's office, Ghosn faces up to 15 years in prison on all three counts. Nissan is indicted as a legal entity, along with Carlos Ghosn and former Managing Director Greg Kelly, for hiding part of Ghosn's revenue from stock market authorities between 2010 and 2015.

But the Japanese company will be able to obtain reduced sanctions because it is at the origin of the investigation. She was the one who alerted the prosecution by resorting to the new procedure called "guilty plea", which came into force in the summer of 2018. The latter allows for a more lenient punishment, when the accused recognizes the facts. .

3. Could there be other lawsuits?

Carlos Ghosn's troubles might not stop there. Since the announcement of his arrest, the Japanese press reports other illegal behaviors, listed by Nissan in an internal investigation on its former number one.

Suspicions of fictitious employment

Ghosn fictitiously used Claudine Oliveira, one of her sisters, for counseling activities amounting to 755,000 dollars (660,000 euros) from 2003 to 2016. In a letter dated March 2003, do not not mentioning their relationship, the CEO of the Renault-Nissan Alliance informs him of his new title of "advisor" within a "Global donation advisory council" which, according to a source close to the builder, never existed.

The Nissan file also mentions donations to Lebanese universities, or a request for payment, in 2014, of a yacht club subscription in Brazil valued at some $ 63,000 (about 55,000 euros).

Read also Real estate purchases, donations ... Carlos Ghosn used Nissan to pamper his loved ones

Finally, in mid-January, a source close to the record revealed that the Franco-Libano-Brazilian would have received remuneration of more than 7 million euros in 2018 from a Dutch subsidiary jointly owned by Nissan and Mitsubishi Motors (NMBV) , without the approval of the bosses of Nissan (Hiroto Saikawa) and Mitsubishi Motors (Osamu Masuko). Originally, these three directors were not to receive bonuses from the new entity. But in February 2018 Carlos Ghosn would have managed, without informing the others, to be hired as an employee of NMBV, which allowed him to apply for a hiring bonus of 1.46 million euros, as well as a annual salary of 5.82 million euros, report The echoes. Friday, January 18, the Japanese automobile groups Nissan and Mitsubishi (NMBV) have announced they want to recover the sum unduly paid, perhaps by the filing of a complaint, told AFP a person familiar with the investigations.

4. What are the immediate consequences of this scandal?

This surprise arrest shook the Renault-Nissan-Mitsubishi Alliance, of which Ghosn was one of the main cement companies. The markets have also strongly accused the coup, the action of Renault losing up to 8% the day of the arrest of his boss.

Read also Carlos Ghosn: the arguments of the defense in three points

Official reactions were not slow in trying to contain the fire. At Nissan, the Franco-Brazilian-Brazilian was sacked in November of the presidency of the board of directors. The two former Renault, Jean-Baptiste Duzan and Bernard Rey, now retired, appointed to represent the interests of the French group, also voted for the dismissal of the former strongman of the Japanese company.

Ditto at Mitsubishi Motors, the smallest group of the trio, with 1.2 million cars sold per year. The dismissal of Ghosn was voted unanimously by the seven directors, including the executive boss of Mitsubishi Motors, Osamu Masuko, who will take the presidency.

For its part, Renault, which had initially argued the presumption of innocence, has officially sought a successor on January 17, the day after a call from the French state, the largest shareholder of Renault with 15.01% of the capital, for a new governance. "I always said, recalling the presumption of innocence of Carlos Ghosn, that if it were to be permanently prevented, we should move to a new stage. Here we are "said Economy Minister Bruno Le Maire on LCI.

Article reserved for our subscribers Read also Renault resolves to prepare the succession of Carlos Ghosn

5. What are the medium-term consequences?

The arrest of Carlos Ghosn took place when he was to present, in the coming months, a project closer closer Renault and Nissan. The scandal marks a stop to this process. And redesign, in fact, the future of the car group.

If the Franco-Japanese automobile alliance resists the departure of its creator, many questions arise on the current balance between the two companies. Longtime, some in the Japanese group, including Nissan boss Hiroto Saikawa, deplore the "Imbalance" history in the alliance between Nissan and Renault. The Japanese group, saved in 1999, owns only 15% of Renault, without voting rights, while Renault holds 43% of Nissan.

Some do not hesitate to see in the fall of Carlos Ghosn a way for the Japanese group to accelerate its rise in power within Renault. But the Mayor has rejected the assumption that the crisis is a coup of leaders of Nissan or other actors to break the alliance or to bring about a rebalancing in favor of the Japanese manufacturer. In spite of the crisis, the French Minister of Economy has thus assured that the presidency of the giant, with 450,000 employees, would remain with a Frenchman.

Read also Ghosn case: Nissan CEO says "absurd" conspiracy theory

Our selection of articles to understand the case Carlos Ghosn

Find the reference contents of the World Dealing with the case of Carlos Ghosn:

  • Carlos Ghosn arrested in Japan after suspicion of tax evasion, our article on the charges that weigh on the boss of Renault-Nissan
  • Real estate purchases, donations ... Carlos Ghosn used Nissan to pamper his loved ones, our article on leaks from Nissan's internal investigation
  • The 24 hours that sealed the fate of Carlos Ghosn, the story of the fall of the boss of Renault-Nissan
  • Four questions about the detention of Carlos Ghosn, our article on the detention system in Japan
  • The arguments of the defense in three points, our article on the "version" of the former president of Nissan
  • Carlos Ghosn: ambition, money and glory, to the point of excess, the portrait of the president of the Renault-Nissan-Mitsubishi alliance
  • "Carlos Ghosn was the keystone of the Renault-Nissan-Mitsubishi Alliance", by our journalist Eric Béziat, in charge of the automotive sector
  • Renault-Nissan: the future of the alliance is posed after the dismissal of Carlos Ghosn, by Philippe Jacqué
  • Who are the protagonists of the spectacular Ghosn affair?, our point about the key characters of the scandal
  • Renault: Thierry Bolloré, a connoisseur of Asia, takes the interim in favor of the disgrace of Ghosn, our zoom on the number two of the automobile group
  • The case Carlos Ghosn turns to diplomatic whips, by Eric Béziat

Laura Motet

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