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)
Copyright (c) 2019 Dow Jones & Company, Inc.
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