Sat. Aug 15th, 2020

Nissan hits former Chairman Carlos Ghosn with $91 million lawsuit

3 min read
The Japanese automaker is set to report its latest earnings on Thursday, with analysts expecting the first quarterly decline since 2009.
Image: Former Renault-Nissan boss Carlos Ghosn addresses a large crowd of journalists on his reasons for dodging trial in Japan where he is accused of financial misconduct, at the Lebanese Press Syndicate in Beirut

Nissan filed a $91 million lawsuit against former Chairman Carlos Ghosn on Wednesday in a Japanese court, adding to the flurry of issues stemming from the executive’s November 2018 arrest on allegations of financial fraud.

The new lawsuit attempts to recover damages Nissan said it suffered “as a result of years of misconduct and fraudulent activity” by Ghosn, the man once credited with saving the second-largest Japanese automaker from bankruptcy.

Following an internal investigation, Nissan laid out a series of charges against the Brazilian-born executive that led to his arrest 15 months ago. Ghosn spent four months in detention in Tokyo before being released on bail. He subsequently escaped from Japan and now remains in Lebanon, where he holds citizenship.

The case has kicked off a broadside of claims and counterclaims, with Ghosn filing both an $18 million damage suit against Nissan in the Netherlands and another claim in France for $273,000 against Renault over pension payments. His lawyers last month signaled additional legal action could be filed against the French automaker. Ghosn was fired by Renault after the Nissan scandal erupted.

The two automakers teamed up two decades ago following Renault’s bid to save then-floundering Nissan. With Ghosn in charge, they formed the Renault-Nissan Alliance that was long hailed as one of the auto industry’s most successful collaborations. In 2016, Nissan rescued another struggling Japanese automaker which then joined what became the Renault-Nissan-Mitsubishi Alliance.

Behind the scenes, however, the partnership faced mounting strife and a growing divide between the French and Japanese manufacturers. At the time of Ghosn’s arrest, Hiroto Saikawa, then Nissan’s CEO, said it was triggered by revelations of extensive financial misconduct uncovered by a lengthy internal inquiry.

Over the following months, Nissan and Japanese prosecutors laid out a series of allegations including claims Ghosn concealed millions of dollars in pay. Last September, the automaker also alleged Ghosn had either received or was intending to pay himself $300 million.

For his part, the 65-year-old executive has repeatedly proclaimed his innocence, insisting he was the victim of a conspiracy aimed, among other things, at limiting Renault’s domination of the automotive alliance. The French automaker holds a controlling stake as a result of its bailout of Nissan.

At a Jan. 8, 2020 news conference in Lebanon, Ghosn claimed his escape from Japan was “the most difficult decision of my life,” but contended he had to leave because of his belief he would never get a fair trial. Japan has a conviction rate of over 90 percent.

The lawsuit Nissan filed on Wednesday seeks to recover, among other things, legal and other costs connected with the long probe into alleged misconduct by Ghosn.

Nissan itself has faced a series of troubles related to the scandal. It paid fines in both the U.S. and Japan related to alleged overpayments to Ghosn. Nissan itself has suffered a sharp drop in sales and earnings that some industry analysts link to the ongoing Ghosn affair.

The company is set to report its latest earnings on Thursday, with analysts expecting the first quarterly decline since 2009.

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