NSANY Nissan Motor Company Ltd (PK)

By Nick Kostov in Paris and Sean McLain in Tokyo 

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 (May 1, 2019).

Carlos Ghosn ran up millions of dollars in questionable expenses, including the purchase of Cartier watches and a trip to Brazil for the Carnival festival, an audit performed for Nissan Motor Co. and Renault SA found.

The audit of a Renault-Nissan joint venture, a summary of which was viewed by The Wall Street Journal, flagged EUR10.9 million ($12.2 million) in costs incurred by Mr. Ghosn between 2009 and 2018 that possibly were personal expenses.

The findings present fresh peril for Mr. Ghosn, the onetime chief executive and chairman of both Renault and Nissan. He faces criminal charges in Japan related to alleged financial misconduct.

Through a spokesman, Mr. Ghosn disputed that he billed any personal expenses to his employers.

"This is part of a well-orchestrated effort to turn Mr. Ghosn into a caricature and dismantle his reputation for integrity and excellence built over several decades. All of these expenses were both authorized and tied to legitimate business purposes," the spokesman said.

The initial findings by the Paris-based auditing firm Mazars have led Renault's board to withhold a portion of Mr. Ghosn's 2018 pay. Renault is considering filing a complaint with French prosecutors once the audit is completed, said people close to the French car maker.

The audit into the joint venture, which is based in the Netherlands and called Renault-Nissan BV, said it found little internal control over spending, according to the summary of the findings. Mr. Ghosn's expense filings and some legal fees "were approved solely by the CEO without any questioning," it said. Mr. Ghosn was chief executive of Renault-Nissan BV.

In addition to the expenses at the joint venture, Nissan has been investigating payments made on Mr. Ghosn's Nissan corporate credit card. Nissan has flagged charges on the card at Louis Vuitton in 2012 and 2013 totaling nearly $30,000 and suit purchases at a Tokyo branch of Italian luxury brand Ermenegildo Zegna in 2014 and 2015, according to a person briefed on Nissan's findings.

The items, other than the suits, were business gifts given by Mr. Ghosn that represented "the French art of living," said his spokesman. The gifts were in compliance with the corporate code of conduct, he said.

The suit purchases were made at the encouragement of people on Nissan's design team who felt Mr. Ghosn's dress didn't befit his position, the spokesman said.

He said the purchases were business expenditures, and authorized by Nissan. Nissan says those approvals were improper.

Mr. Ghosn led a jet-setting lifestyle, traveling between homes in Tokyo, Paris, Beirut, Amsterdam and Rio de Janeiro. The latest suspicions of improper expenses come on top of allegations by Nissan and Renault that Mr. Ghosn took advantage of his position to fund his lifestyle.

Nissan's investigations previously found the company paid $15 million to buy and renovate a mansion in Beirut used by Mr. Ghosn. A Ghosn spokeswoman has previously said the mansion was owned by Nissan and was corporate housing.

The former Nissan and Renault chairman faces criminal charges in Japan, including allegations that he abused his Nissan position for personal gain. Mr. Ghosn, who was first arrested in November and is now free on bail, has said he is innocent of all the allegations against him.

In a document headed "CEO's personal expenses 2009-2018," auditors from Mazars list items they say may have been improperly paid for by Renault-Nissan BV. These include a roughly EUR15,000 dinner for Mr. Ghosn and his friends at the Marmottan museum in Paris in 2015; a EUR29,200 payment in 2010 for Cartier watches; entertainment for guests at the annual film festival in Cannes; and payments of EUR899,000 to the Lebanese law firm Abou Jaoude & Associates. The law firm's founder, Carlos Abou Jaoude, performs personal legal services for Mr. Ghosn.

The use of the museum for a dinner was suggested by Renault, said Mr. Ghosn's spokesman. The spending for Cannes, which Renault sponsors, and for the law firm were legitimate business expenses, while the watches were gifts for business partners, he said. Mr. Abou Jaoude, the lawyer, said the payments were proper compensation for work he did on behalf of Nissan and the Dutch-based joint venture since 2013.

The audit also flagged a EUR634,000 bill for a March 9, 2014, dinner party -- the day of Mr. Ghosn's 60th birthday -- at the Palace of Versailles. Mr. Ghosn's spokesman said the event for 200 people was to celebrate the anniversary of the Renault-Nissan alliance, and Mr. Ghosn held a separate birthday dinner the next day that was paid for with a family credit card.

The summary also lists more than EUR4 million of travel on corporate jets and over EUR2 million in donations. Many of those donations went to institutions in Lebanon, Mr. Ghosn's ancestral homeland, said people familiar with the audit.

The donations were approved by Renault-Nissan BV and Mr. Ghosn used corporate jets only for business travel, Mr. Ghosn's spokesman said.

In 2018, eight couples received an invitation from "Mr. and Mrs. Ghosn" to fly to Brazil for Carnival, according to a person familiar with the audit. Renault-Nissan BV received a bill for about $260,000, which covered guest expenses except airfare, according to that person and the audit summary. Those expenses included rental of a private cabin to watch the Carnival events, restaurant and hotel bills, and a large security detail, the person said.

Guests were greeted by a Nissan employee holding up a Nissan sign at the airport, the person said. When they reached their hotel, they received a welcome basket containing a shawl called a canga, sunscreen and a pair of Havaianas flip-flops, the person said.

Nissan sponsored a samba school that performed at Carnival, and it is common practice for company executives to invite guests to corporate-sponsored events, Mr. Ghosn's spokesman said.

Nissan's own investigation into Mr. Ghosn's Nissan credit card found he used it to pay a $10,000 bill for a helicopter used at his daughter Caroline's 2018 wedding in Japan. The helicopter ride was recommended by Nissan staff for security reasons, Mr. Ghosn's spokesman said. On the day of the wedding, torrential rains caused widespread flooding in the region of Japan where the wedding was held.

Nissan has said it continues to gather evidence of alleged wrongdoing by Mr. Ghosn and is cooperating with prosecutors.

Write to Nick Kostov at Nick.Kostov@wsj.com and Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

May 01, 2019 02:47 ET (06:47 GMT)

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