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Carlos Ghosn Was Too Powerful, Nissan's CEO Says; Mitsubishi Motors follows Nissan's lead by ousting Ghosn as its chairman, the latest fallout from an arrest that has shaken the auto industry McLain, Sean . Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Nov 2018: n/a.

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FULL TEXT TOKYO--Nissan Motor Co.'s chief executive told employees Carlos Ghosn had too much power as chairman,

highlighting the tension that was welling up between the two men before Mr. Ghosn's arrest a week ago .

The fallout from the arrest spread Monday as the former Nissan chairman, who was ousted last week , was

dropped from the same position at alliance partner Mitsubishi Motors Corp.

Nissan CEO Hiroto Saikawa was long seen as a close ally of Mr. Ghosn, but since the arrest Mr. Saikawa has

painted a dark picture of the Brazilian-born executive's reign, saying he was improperly given the lion's share of

credit for Nissan's revival in the 2000s instead of the Japanese auto maker's rank-and-file.

On Monday, Mr. Saikawa addressed employees for the first time since the arrest and said it was a problem that

Nissan executives often communicated with their counterparts at Renault SA through Mr. Ghosn. The French

company, which is also part of the auto alliance, is headed by Mr. Ghosn.

Now that Mr. Ghosn is gone from Nissan's management, executives can communicate directly, which will better

"ensure autonomy," Mr. Saikawa said, according to a partial transcript reviewed by The Wall Street Journal.

Mr. Saikawa didn't touch on the details of the accusations against Mr. Ghosn or propose specific revisions to

Nissan's alliance with Renault , said a person who listened to the discussion.

A Renault spokesman declined to comment.

Prosecutors say they suspect Mr. Ghosn understated his compensation by a total of about ¥5 billion, or $44

million, in five years of Nissan financial reports to regulators through 2015. Separately, a Nissan investigation

alleges Mr. Ghosn used money from a company fund intended for startups to have Nissan purchase homes for his

personal use in Rio de Janeiro and Beirut, according to a person familiar with that investigation.

Mr. Ghosn has been jailed since his arrest and can't be reached for comment.

Colleagues of Mr. Ghosn who were questioned by Nissan told the investigators that the 64-year-old executive

believed he was acting appropriately when he didn't report millions of dollars in deferred compensation, people

familiar with Nissan's investigation said.

The Ghosn family believed the residences in Rio de Janeiro, Beirut and other locations were corporate housing

whose purchase went through the normal channels for Nissan approval, a person familiar with the family has said.

Japanese public broadcaster NHK reported Mr. Ghosn, who hasn't been charged with a crime, has denied the

allegations. A person familiar with the matter said former Japanese prosecutor Motonari Otsuru is representing

Mr. Ghosn. Mr. Otsuru's office declined to comment.

Mr. Ghosn also has hired U.S.-based law firm Paul, Weiss, Rifkind, Wharton &Garrison LLP, this person said. Brad

Karp, the firm's chairman and a defense attorney for major Wall Street banks, will represent Mr. Ghosn along with

another of the firm's partners, Michael E. Gertzman, the person said.

On Sunday, France's finance and economy minister, Bruno Le Maire, said Renault had launched an internal audit to

look into Mr. Ghosn's remuneration and his use of company assets. On Monday, a Renault official said the audit

was being run by Claude Baland, formerly general director of French police and now in charge of ethics and

compliance at the French car maker.

The arrest of Mr. Ghosn has jolted the three-way alliance of Renault, Nissan and Mitsubishi that he forged. The

board of Mitsubishi, which is 34%-owned by Nissan, voted unanimously Monday to strip Mr. Ghosn of the

chairmanship and named Mitsubishi CEO Osamu Masuko to the post for now.

Mr. Saikawa has said his immediate focus is making sure the revelations don't hamper Nissan's operations.

Nissan is working to raise prices in the U.S., which is proving difficult amid slowing sales in that market.

A priority for Mr. Saikawa is the relationship between Renault and Nissan . Renault currently holds a 43.4% stake in

Nissan, while Nissan owns 15% of Renault. The imbalance is the legacy of the circumstances under which the

alliance was created. At the time Renault was the healthier car maker, whereas now Nissan is the bigger and more

profitable of the two. The French government is also a key player in the alliance because it holds a stake of just

over 15% in Renault.

In 2015, the two companies revised their relationship when the French government sought to enforce recently

granted double-voting rights for "long-term" shareholders in French companies. Mr. Saikawa led Nissan's side in

the talks. Ultimately, they agreed to limit the circumstances in which the French government could exercise

double-voting rights in Renault, and Nissan gained the right to increase its stake in Renault if the government

violated the agreement.

At the time, Mr. Saikawa called it "deterrence" and said: "We've been an equal partner based on mutual trust. But at

the core, there were parts where we were not equal partners."

Nick Kostov contributed to this article.

Write to Sean McLain at [email protected]

Related

* Possible Ghosn Defense: He Didn't Think He Needed to Report Deferred Pay (Nov. 25)

* Carlos Ghosn's Arrest Tests Nissan-Renault Relationship (Nov. 22)

* Nissan Probe Alleges Ghosn Used Funds to Buy Homes, Enrich His Sister (Nov. 22)

Credit: By Sean McLain DETAILS

Subject: Automobile industry; Stockholders; Voting rights; Shareholder voting; Executive

compensation

Location: Beirut Lebanon United States--US Rio de Janeiro Brazil

People: Ghosn, Carlos Saikawa, Hiroto

Company / organization: Name: Nissan Motor Co Ltd; NAICS: 336111; Name: Renault SA; NAICS: 336111;

Name: NHK; NAICS: 515120; Name: Mitsubishi Motors Corp; NAICS: 336111; Name:

Wall Street Journal; NAICS: 511110

Publication title: Wall Street Journal (Online); New York, N.Y.

Pages: n/a

Publication year: 2018

Publication date: Nov 26, 2018

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Last updated: 2018-11-27

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