Nissan Probe Finds Ghosn Funneled Payments to Sister for Consulting Work She Didn't Perform

By Sean McLain

YOKOHAMA, Japan -- Nissan Motor Co.'s board voted unanimously to oust Chairman Carlos Ghosn from his post, and allegations emerged that Mr. Ghosn used company money to buy personal residences and enrich his sister.

A person familiar with Nissan's investigation into Mr. Ghosn said the company found he used a subsidiary in the Netherlands to spend some $18 million buying and renovating personal homes including a condominium in Rio de Janeiro and a house in Beirut.

In addition, this person said, Mr. Ghosn used the Netherlands subsidiary to make multiple payments to his older sister for consulting. In one instance, she received a $60,000 commission for advising on the housing in Rio, but Nissan found no evidence the sister actually performed such work, the person said. Mr. Ghosn's sister couldn't be reached for comment.

Mr. Ghosn was arrested Monday by Japanese prosecutors on suspicion of conspiring to lower his reported compensation on Nissan's securities filings by around $44 million over a five-year period. He remains in custody and couldn't be reached for comment. Public broadcaster NHK said former prosecutor Motonari Otsuru, now in private practice, is representing Mr. Ghosn. The lawyer's office declined to comment.

The detailed allegations come amid pressure on Nissan from its alliance partner, Renault SA of France, and the French government to justify the ouster of Mr. Ghosn, who led the Japanese auto maker's revival in the 2000s.

Nissan Chief Executive Hiroto Saikawa has said that if people knew what he knew about Mr. Ghosn's actions, they would support the company's moves. At Thursday's board meeting, which lasted about four hours, directors received a briefing about the allegations. "If even a tenth of this is true, it would be grounds for dismissal," said one director upon learning all the details, according to a person briefed on the deliberations.

A person familiar with Renault's board said it had asked Nissan to postpone the decision on Mr. Ghosn until more information was available from Tokyo authorities.

But in a sign of frictions between the French and Japanese partners, Nissan's board ignored the request and went ahead with stripping Mr. Ghosn of his chairman's title.

Nissan made a separate snub of its partner over the issue of a replacement chairman. In a letter to Renault's board that was reviewed by The Wall Street Journal, Nissan's board said it wouldn't allow Renault to name a replacement because Mr. Ghosn remains a Nissan director and, in Nissan's view, Renault isn't entitled to any further representation on the Nissan board. A Nissan spokesman said removing Mr. Ghosn as a director would require a shareholder vote.

Renault's request to Nissan for more information about the allegations against Mr. Ghosn also hit a brick wall. The Nissan board letter said it couldn't give information because it might be perceived as interfering with the separate probe by Tokyo prosecutors.

A Renault spokesman declined to comment.

A Nissan statement after the board meeting Thursday said Mr. Ghosn committed serious misconduct in three areas: incorrectly reporting his compensation over many years, using a company investment fund for personal purposes and inappropriately filing expenses. It alleged that Greg Kelly, a longtime lieutenant to Mr. Ghosn, was the "mastermind of this matter."

Mr. Kelly was stripped of his title of representative director. He is also in custody and couldn't be reached for comment. It isn't known whether he has a lawyer.

The person familiar with Nissan's investigation said it had extensive documentation of Mr. Ghosn's activities. In one email, Mr. Ghosn allegedly urged a Nissan employee to move faster in transferring money from the Nissan subsidiary in the Netherlands, called Zi-A Capital BV, so that his house in Beirut could move ahead with renovations, this person said.

A Tokyo court on Wednesday approved the detention of Mr. Ghosn for 10 further days. On Thursday, a Journal reporter who visited the jail was told by an official there that Messrs. Ghosn and Kelly were prohibited from receiving visitors.

--Nick Kostov and Megumi Fujikawa contributed to this article.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

November 22, 2018 12:46 ET (17:46 GMT)

Nissan Motor (PK) (USOTC:NSANY)
Historical Stock Chart
From Jun 2024 to Jul 2024