TodayApril 15, 2022

Carlos Ghosn – corporate greed or a coup?

John Batchelor and Lou Ann Hammond talk about Carlos Ghosn

Last week DrivingtheNation reported that Carlos Ghosn had been charged a second time. The charge was for pretty much the same charge as the first charge; underreporting his salary. The second charge was for a different set of years. At the time I asked why they didn’t lump the years and the charges altogether. Wouldn’t that make the case even more airtight and give Ghosn more time behind bars?

This week I got my answer.

Let’s step back. The first charge was for underreporting for five years, and that put Ghosn in jail, with no indictment for two weeks. Ghosn can be kept in prison in Japan for two weeks without an indictment, and/or a confession. He can also be interrogated without the presence of a lawyer which has sparked serious criticism.

The second charge was for the same thing just different years. This week we learn that Ghosn has been indicted, which means he should be able to request bail. BUT, since he was charged with another crime, albeit the same thing just different years, Japan is allowed to keep him in jail.

The Wall Street Journal reported that “Greg Kelly, Mr. Ghosn’s right-hand man at Nissan and a former representative director there, was indicted on charges of conspiring with Mr. Ghosn to understate his compensation.

Mr. Kelly’s lawyer, Yoichi Kitamura, has said Mr. Kelly believed the future payments weren’t fixed amounts and concluded after seeking advice from outside experts that the money didn’t need to be mentioned in Nissan’s annual financial reports.”

It looks like Nissan is going to get a slap on the financial wrist for false disclosures. Certainly, part of the reason they would go lighter on Nissan is that it was the CEO of Nissan that caused the non-disclosure. It was Carlos Ghosn that had so much power that he was able to hire himself as an independent contractor for years after he retired.

Japan is saying that the CEO of Nissan had the right to give himself a golden parachute after his retirement, but they are charging him with not reporting it.

I know a teacher in California that became an administrator a couple of years before they retired. That granted them a higher retirement rate. It also granted them the right to work as an independent contractor for about $500 a day. Writing golden parachutes as independent contractors are in many businesses and deemed legal. Those people do not pay the revenue until they make the income. The school doesn’t report the expense till they pay it. The independent contractor doesn’t report it and pays taxes till they make the income, even if the budget is set aside.

Here is the question? If Ghosn didn’t receive the income, and it doesn’t look like he will receive the income, is Kelly’s defense accurate that the post-retirement income was only a proposal, not a legally guaranteed plan? It appears that the proposed income won’t be received so has there been any crime committed? Some people are getting confused, thinking that Ghosn under-reported income, and didn’t pay taxes on that income. There is no tax fraud since the income was deferred, taxes weren’t due.

Could the Nissan board legally have voted to fire Ghosn?

Why is this a criminal case and not a securities investigation? Shouldn’t the SEC be involved if so?

Japan Times reported that Saikawa and other executives within Nissan have spoken strongly against a merger. Saikawa, a former protege of Ghosn’s, is now potentially succeeding him as chairman, after taking over as CEO last year.

Lou Ann Hammond

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a founding member of the Women's World Car of the Year #WWCOTY, and board member of the Women in Automotive.

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