NSANY Nissan Motor Company Ltd (PK)

By Sean McLain 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 23, 2018).

YOKOHAMA, Japan -- Nissan Motor Co.'s board voted unanimously on Thursday 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 auto maker 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. Mr. Ghosn was born in Brazil and grew up in Lebanon.

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 de Janeiro, 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. Japanese legal and accounting specialists said it was unusual for an executive to be arrested for an error in financial filings, suggesting that bigger accusations might be in store.

Mr. Ghosn, who hasn't been charged with any crime, remains in custody and couldn't be reached for comment. Public broadcaster NHK said former prosecutor Motonari Otsuru, now in private practice, is representing the 64-year-old businessman. The lawyer's office declined to comment.

Nissan shares an alliance with Mitsubishi Motors Corp., where Mr. Ghosn serves as chairman, and France's Renault SA, where he is chairman and chief executive. Nissan is under pressure from Renault and the French government, which holds a stake in Renault, to justify the ouster of Mr. Ghosn from the Japanese auto maker he helped revive in the 2000s.

"We don't have any evidence at this point justifying the accusations brought against Carlos Ghosn," Bruno Le Maire, France's minister of economy and finance, said on Wednesday.

Mr. Ghosn's family believed that his residences in Rio de Janeiro, Beirut and other locations were corporate housing, and that their purchase went through the normal channels for approval at Nissan, said a person familiar with the Ghosn family.

In a letter to Renault's board that was reviewed by The Wall Street Journal, Nissan's board said it couldn't share information because it might be perceived as interfering with the separate probe by Tokyo prosecutors. Nissan Chief Executive Hiroto Saikawa has said that if people knew what he knows about Mr. Ghosn's actions, they would support the company's moves.

A Renault spokesman declined to comment.

A Nissan statement after the board meeting Thursday cited three areas of misconduct by Mr. Ghosn: 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 a Nissan unit in the Netherlands, called Zi-A Capital BV, so that his house in Beirut could move ahead with renovations, this person said.

Zi-A Capital was founded in 2010 with around $51 million in capital to finance technology startups, according to company filings and a person familiar with the matter. Mr. Kelly is Zi-A Capital's lead director.

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 23, 2018 02:47 ET (07:47 GMT)

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