Nissan CEO Hiroto Saikawa
Nissan
In an interview Sunday with the Japanese magazine Bungei Shunju, former senior Nissan executive Greg Kelly gave his account of the circumstances behind the Carlos Ghosn case and questioned why Nissan CEO Hiroto Saikawa was spared by Japanese prosecutors despite being intimately involved through the entire process.
Kelly was also a board member and ally of Ghosn, who was chairman of Nissan and CEO of the Renault-Nissan Alliance. Kelly, who has been silent since also facing charges from Japanese prosecutors, also says that Nissan is at risk under Saikawa, citing the company’s rapidly declining performance over the last two years under his leadership.
Kelly stated in the interview: “I declare that I am completely innocent. When I was in solitary confinement I thought to myself, ‘Why am I not in the same place as Saikawa?’ Because Saikawa and I made that document [employment and remuneration. contract] for the exact same reason. If Saikawa wasn’t arrested, I shouldn’t have been arrested.”
“If there were suspicions concerning the employment agreement for after Ghosn’s resignation, then it should have been dealt with within the company and solved. How come Ghosn and I were suddenly arrested without one instance of being asked to explain and no discussions or meetings on the subject? If you think about how Ghosn and I were not the only ones involved in this investigation, then you can see that it is unusual that only the two of us were suddenly arrested.”
Ghosn was arrested and is being charged with financial crimes including using Nissan assets to securitize some of Ghosn’s personal investments, as well as channeling funds to a Saudi individual with whom he had personal business, but who was also alleged to be developing the Saudi market for the automaker. Ghosn is also charged with misstating his Nissan income to the Japanese Treasury for purposes of avoiding paying taxes in Japan.
Ghosn has maintained his innocence, and his defense has stated that he had approvals from Nissan governance officers for at least some of the transactions in question. But Japanese prosecutors will say that the executives, including CEO Saikawa, had approved transactions because of the power Ghosn wielded at Nissan.
“Company performance is important for shareholders and to maintain the employment of staff but if we look back on the last two years of Nissan’s performance, it is clear that the business is stagnating…I am very proud to have worked for this amazing company, Nissan, for over 30 years,” said Kelly. “I have been involved with Nissan for a long time and I hope for the company to continue to develop and prosper, however when I think about the performance under Saikawa as he continues as CEO, Nissan can only be at risk. For Nissan to return to a normal trajectory it needs strong leadership, but I am worried that Saikawa does not have it in him.”
Greg Kelly, then-Representative Director and third-in-charge behind Ghosn and Saikawa at Nissan, was arrested by the Tokyo District Public Prosecutor’s Office’s Special Investigation Bureau in November of last year on allegations that he was involved in doctoring Nissan’s securities report to cover up Carlos Ghosn’s remuneration. Since receiving bail in December, Kelly has been preparing for court while receiving treatment for problems with his cervical vertebra.
At the core of the Ghosn case is the cultural friction between Ghosn, a Lebanese-born executive from France, and the Japanese Nissan. Japanese companies and executives are fiercely proud and have resented, according to multiple accounts, the rock-star status of Ghosn in the financial press and the narrative of the Western company having to rescue Nissan, which Renault did 20 years ago by taking a large stake in Nissan. Nissan, as part of that deal, took a 15% stake in Renault so both companies would have skin in the game to help one another.
The result, though, has been an almost complete lack of cultural identity at Nissan. In Japan, the workforce, which actually broke into applause upon finding out Ghosn was arrested, is completely over-shadowed by Toyota and Honda. In North America, Nissan is known throughout the industry for having a lack of work culture, political in-fighting and executive turnover. It’s Infiniti luxury brand is seen as adrift globally, and pales in comparison to Toyota’s Lexus success.
Ghosn’s trials will no doubt continue the rest of this year and into 2020, over-shadowing whatever Nissan might do in the marketplace.