Carlos Ghosn under escort by Japanese authorities. Photo: Agencies

Roger Schreffler is expanding his series on the post-Carlos Ghosn Nissan board of directors based on information from more interviews and newly obtained documents, of which four installments were published in September. This is part 6. Read part 1 herepart 2 here, part 3 here, part 4 here and part 5 here.

Christina Murray, chief of the Nissan investigative task force, was an early and strong critic of Carlos Ghosn, according to a former colleague who said: “She was excited by ‘the chase.’”

In the beginning, we were told, she became so engaged in carrying out the sting planned by Hari Nada to lure Ghosn and Greg Kelly to their arrests and incarcerations that she ordered Brian Delauter, a former vice-president at Nissan North America, Inc, to make provisions to remove Ghosn’s safe from his Rio de Janeiro apartment.

Delauter refused, our source said. Delauter, who left Nissan in October 2019, is now suing the automaker over a dispute involving his pension. He didn’t reply to a request for comment.

We were told that Nada did not succeed in securing the contents of Ghosn’s safe: The family managed to block Nissan’s efforts. But we have a graphic account of what happened on November 19, from Ghosn’s book, Broken Alliances: Inside the Rise and Fall of a Global Automotive Empire, which he co-wrote with French journalist Philippe Ries.

At 6:00 in the morning in Rio de Janeiro on November 19, 2018 (6:00 in the evening in Tokyo), Ghosn’s personal assistant … received an email from Christina Murray telling her to go immediately to the Nissan office with her phone and laptop. In vain, she tried to contact Carlos Ghosn, who had already been arrested at Haneda International Airport in Tokyo …

She went to the office, where she would be locked in a room and prohibited from speaking to colleagues [and] was interrogated for three hours by Salvador Dahan, the regional head of risk, governance, compliance and internal audit … Dahan accompanied her to the apartment to take possession of the keys and documents found there.

“They later asked me to go to Japan to be questioned by the prosecutors,” the assistant recalled. “I refused and got fired.”

(Dahan, who reported to Murray, has since left the company.)

Carlos Ghosn kept close ties to his native Brazil. Photo: VEJA

Investigation shifts focus

On November 22, three days after Ghosn’s and Kelly’s arrests and while both were incommunicado, still not having been charged, Murray delivered a scathing report telling the other seven directors (at the time Nissan had a nine-member board) that the accusations against the two executives were damning.

Her report, according to our source, was prepared by Latham & Watkins lawyer Michael Yoshii and Nissan officials Hidetoshi Imazu, Hari Nada and Hitoshi Kawaguchi. The latter three were members of the coup.

Murray’s team immediately shifted gears, its mandate having changed to helping the Tokyo prosecutors’ office build its criminal case against Ghosn and Kelly.

In December the task force learned from media reports that Nada, six weeks earlier in late October, had entered into a plea agreement with the prosecutors. Despite the revelation, Nada continued to run the investigation. According to our source, Yoshii operated as if he were Nada’s personal attorney.

The task force also learned that in 2011, Hiroto Saikawa, who had just been promoted to representative director, had signed four proposals, the latter two with Kelly, to find means to retain Ghosn after his retirement from Nissan. The team became aware of the proposals in December 2018. When they sought to interview Saikawa, he refused.

Saikawa became the public face of Ghosn’s and Kelly’s alleged criminality when, during a highly charged news conference at Nissan headquarters on the evening of November 19, 2018, he not only announced Ghosn and Kelly’s arrests to the world but characterized them as “masterminds” (shubō-sha) of still unspecified financial crimes. 

Yet here he had been, signing not one but four post-retirement compensation proposals, to try to keep Ghosn from going to a competitor after his eventual retirement from Nissan.

The public still hasn’t seen them, but we have been told that the June 2015 proposal, the most recent, clearly identifies “non-compete” and “consulting” fees as part of the package and comes with a forward-looking payment schedule. The 15-page document makes no mention of “undisclosed” compensation from the past.

Both Saikawa and Greg Kelly signed it; Ghosn didn’t. And both Saikawa and Kelly were aware that the board would have had to approve the agreement for it to become effective.

Nada and Yoshii were aware as well, according to our sources. They drew up the document.

Gradually, over the next two to three months from December 2018, Murray’s team shifted focus, coming to realize that, regarding offenses listed in the charge sheet from the prosecutors’ office, Ghosn and Kelly couldn’t have acted alone.

Cases in point:

  • Ghosn’s alleged misuse of the CEO Reserve fund to receive millions of dollars in kickbacks from Khaled Juffali and Suhail Bahwan, two wealthy Middle Eastern businessmen, couldn’t have happened without someone below him in the organization violating company authorization guidelines on his behalf.
  • Regarding the undisclosed compensation charges against Ghosn and Kelly – the first charges obtained by the Tokyo prosecutors’ office – the Nissan investigators realized that without obtaining board approval, “Ghosn couldn’t have awarded himself eight years of back pay,” as one source with knowledge of the situation puts it. “Members of Nissan’s legal department knew that,” the source says.

Nada also knew that Ghosn couldn’t reclaim back pay based on a 2014 meeting that Nada attended with Ghosn’s lawyer. Ghosn had been informed in 2010 when he took his nearly 50% pay cut that he couldn’t reclaim lost income.

The 2014 meeting was set up to discuss the value of a “non-compete” agreement of precisely the sort that Kelly and Saikawa proposed – and signed – 15 months later in June 2015. Saikawa would later say he didn’t understand what he had signed. There were similar problems with other charges.

We’ve reached out to Murray for comment and received no response. It’s not publicly known whether she signed a non-disclosure agreement upon leaving Nissan. But even if she’s now silent to the outside world, as we’ll see in this article, the record shows she ended up having plenty to say internally about funny business at the automaker when it was all happening.

For starters, with the realization that Ghosn and Kelly couldn’t have acted alone, Murray identified 59 Nissan executives in senior and middle management who, to the extent the charges against Ghosn and Kelly were valid (at that point the team was acting on the assumption they were), must have “enabled” Ghosn.

On her list were Hari Nada, who with Yoshii advised Ghosn and Kelly on all aspects of Ghosn’s retirement compensation; former global controller Hiroshi Karube; and former and then-current CFOs Joseph Peter and Stephen Ma.

In March 2019, Murray proposed and management approved the establishment of a special Committee on Employment Action and Remediation. The committee’s mandate was to investigate and determine if any corporate guidelines had been breached and, if so, who the “enablers” had been.

The beginning of the end for Murray

Also in March, Saikawa finally agreed to be interviewed by Murray’s team, but only after she confronted him about his role in signing the four agreements. He feared, according to a Murray memo, that disclosure of his collaboration with Kelly would give Ghosn, Kelly and the press a chance “to attack him.”

He then mentioned, again according to her memo, that he felt she had been “underpaid and under-recognized” and that he wanted her to “put him in a good light.”

The controversy may have been the beginning of the end for the investigation for she had to either target CEO Saikawa, for complicity in the main charges against Ghosn and Kelly, or exonerate the two Western executives.

Problematically from the standpoints of Nissan and the Tokyo prosecutors’ office (the aftershocks are felt even now, nearly three years after Nissan’s internal investigation uncovered the “Saikawa” and then “Saikawa-Kelly” proposals), Murray reported the development to the board – to all seven remaining members including Saikawa.

Other board members who were informed were Hideyuki Sakamoto, Toshiyuki Shiga, Bernard Ray, Jean-Baptiste Duzon, Masakazu Toyoda and Keiko Ihara – the latter three outside directors.

Auditor Christina Murray. Photo: Pinterest

She also reported the development to the external auditors including both Hidetoshi Imazu and Motoo Nagai and to a Latham & Watkins lawyer in Los Angeles.

Hari Nada’s personal lawyer, who was in contact with the Tokyo prosecutors’ office because of Nada’s guilty plea in October, got wind of the development and accused the legal and compliance departments of “planning a coup.”

Important players who were not informed of the development were Ghosn, Kelly and their lawyers.

In our interviews, we have speculated that the only reason the investigation wasn’t shut down right then and there is because Nissan was in the process of reforming its management structure. To have shut down the investigation to cover up possible criminal misconduct by the CEO would have created problems and possibly undermined the official narrative that Ghosn and Kelly were guilty.

But there is little doubt from correspondence we’ve reviewed that Murray thought Saikawa had tried to influence the outcome of her investigation.

Murray’s own words: “He thinks I have been underpaid and under-recognized … The CEO also mentioned that he would like the report to put him in a good light, at least not a bad light. I said the report would be factual. He said: ‘Without breaking any of the rules, please look out for me.'”

In a separate conversation, she reported, Saikawa told her that “he was in charge of what findings related to his conduct will go to the board.”

Kelly throws a curve to the investigation

In early June 2019, her investigation was turned on its head when incarcerated former board member Greg Kelly in an interview with a respected Japanese magazine revealed that Saikawa and others in senior management had received unauthorized bonuses. Saikawa had received a 47 million yen ($411,000) windfall resulting from Toshiaki Ohnuma’s backdating of the execution dates.

Ohnuma ran the Secretariat office, thus had access to all records involving executive compensation. Like Nada, he also had broken the law and entered into a plea agreement with the Tokyo prosecutors office to avoid prosecution.

Reacting to the Kelly interview, Murray engaged Anderson, Mori & Tomotsune LPC, one of Japan’s big four law firms, to investigate the Kelly allegations. The firm found that a total of eight Nissan executives, including Saikawa, had received unauthorized bonuses linked to shareholder appreciation rights. Among the others were Nada and Imazu. In Nada’s case, the windfall was 30 million yen ($262,000).

Yasuhiro Yamauchi, Nissan’s chief operating officer who would become interim CEO in September 2019 with Saikawa’s resignation, shut down the company’s Committee on Employment Action and Remediation in July while Murray was on vacation. Nevertheless, Murray’s preliminary findings identifying 59 “enablers” exists.

Christina Murray’s big day                    

September 9 was supposed to be Christina Murray’s big day. She was scheduled to deliver the findings of her nearly year-long investigation to the board.

She was never given a chance as she was relieved of her duties on August 28, 12 days before the board’s scheduled meeting. She reportedly offered her resignation on August 30, to take effect on September 10, the day after the meeting.

A summary report prepared and presented by Michael Yoshii of Latham & Watkins – and unanimously approved by the board – does not accurately reflect what Murray’s team had uncovered, according to our source. “All outside directors with one possible exception” – Renault’s CEO, Thierry Bolloré – “had to know they weren’t acting in good faith.”

The biggest misrepresentation, according to our source, involved the following passage:

With the exception of Ghosn and Kelly, the audit committee is not planning to treat individuals benefiting from improper handling of compensation from share appreciation rights as responsible for misconduct. There is no reason to believe that any of these individuals were complicit in misconduct since they were unaware of the improper methods used by Kelly and others to increase their compensation and did not at any point direct or request that such methods be used.

Facts: Eight executives, including three involved with Ghosn’s ouster (Saikawa, Imazu and Nada), had received windfalls from the backdating of the execution dates of their shareholder appreciation rights. Not among the eight, although regarded by Murray as an “enabler,” was Toshiaki Ohnuma, who did the backdating.

The logo of Nissan Motor Co, Ltd. Photo: AFP / Norikazu Tateishi / The Yomiuri Shimbun

Murray’s investigation determined that nearly 60 individuals in Nissan management had failed to exercise proper oversight of payments including payments from the CEO Reserve Fund.

In addition to Hari Nada and the three above-mentioned senior financial executives, Joseph Peter, Stephen Ma and Hiroshi Karube, others on the list included: Scott Becker, a Nissan general counsel at Nissan North America Inc; Arun Bajaj, vice-president in charge of human resources; Colin Dodge, a former board and executive committee member who was responsible for the Africa, Middle East, India and Europe regions, thus whose signature we learned was on several of the CEO Reserve Fund authorization forms needed for Ghosn’s approval; and Hidetoshi Imazu. Imazu became a statutory auditor in June 2014.

Again, many of the names on Murray’s list were put there not because the individuals had done something wrong but because a number of the accusations against Ghosn and Kelly couldn’t have occurred unless Ghosn and Kelly had accomplices or enablers inside the organization.

Murray’s team was trying to get to the truth because the Tokyo prosecutors’ office had made certain very specific charges that were problematic. Case in point: Payments made to Khaled Juffali and Suhail Bahwan, the Saudi Arabian and Omani businessmen identified in the charges against Ghosn. 

Did Ghosn break the law and receive illegal kickbacks as the Tokyo prosecutors’ office alleges? Or were the payments for legitimate Nissan business? Dodge should know the answer for he would have had to authorize some of those payments because Ghosn couldn’t have done it by himself.

The investigation never determined that Ghosn and Kelly had committed crimes. The investigation only found apparent irregularities in reporting and authorizing expenditures – apparent because Murray’s team didn’t have an opportunity to interview Ghosn and Kelly, and thus never heard their side of disputed facts.

Meanwhile, Nagai was trying to set conditions for Nada’s “cooperation,” according to documents we’ve reviewed.

Two examples of irregularities uncovered in Murray’s investigation: Ghosn’s late Lebanese lawyer, Fadi Gebran, was paid out of the legal department’s budget. Nada’s personal lawyer, Akihide Kumada, was paid out of the same budget. Murray’s team never received a coherent explanation of how that might have been justified.

And lastly, there was no mention in Yoshii’s presentation of a “conflict of interest” report that Ravinder Passi, Murray’s lieutenant on the task force and head of the legal department, had prepared.

One particularly relevant passage from Passi’s legal department report: “Both Ghosn and Kelly (through counsel) have made clear in public statements that their defenses will center around arguments that they were victims of an internal corporate plot manufactured by some of these same company executives and that their compensation issues were vetted by internal and external counsel, much of which would have been communicated to them through Nada.

“We expect that litigants in future proceedings in Japan, the US and elsewhere likely will also seek to take advantage of the potential conflict and independence issues created by this situation.”

All turned out to be true after Yoshii, Nagai and the audit committee failed to report Passi’s warning, supported by two outside law firms, to the board.

Foxes in the hen house

Whatever Carlos Ghosn did or didn’t do, whatever governance shortcomings typified his tenure as chief executive, it is hard to imagine anything more bewildering than Nissan’s good governance board’s assignment of two individuals involved with plotting Ghosn’s ouster, Toyoda and Nagai, to serve on its statutory committees.

But that is what Nissan did.

Masakazu Toyoda, who heads the outside directors’ group, chairs the board nomination committee while also serving on Nissan’s audit committee. Motoo Nagai, in addition to chairing the audit committee, serves on both the compensation and nomination committees.

It is the audit committee that signed off on the report presented to the board on September 9, 2019.

Nagai is the executive who, on August 28, had ordered Murray to stop investigating Hari Nada and removed her from the task force. Nagai also told the press at a contentious evening news conference shortly after the board met on September 9 that Murray had left the company to pursue other opportunities and that she had been planning to leave for some time.

While that may be true, we were told emphatically that she wasn’t planning to leave the company before presenting the findings of her investigation to the audit committee and board on September 4 and September 9.

“It simply isn’t true that she didn’t intend to deliver her report,” declared our source. “Who else could have done it? This was the biggest undertaking of her career.”

Passi did the unexpected.

Ravinder Passi. Photo:

Just before the start of the meeting in Nissan’s 21st-floor board room, investigative task force member Passi personally handed out copies of his “conflict of interest” memo to four of the five outside directors present – Kimura, Toyoda, Jenifer Rogers and Bernard Delmas. He had given Nagai a copy of the report six weeks earlier but had not received a response.

Separately, he sent copies of the memo by email to all five individuals plus another outside board member, Andrew House, a digital game executive who joined the meeting remotely while traveling overseas. At the meeting he asked Rogers, an American lawyer who is currently president of the American Chamber of Commerce in Japan, to forward House his hard copy.

Passi did not share the memo with Thierry Bolloré, who participated remotely from France, because Bolloré, as CEO of Nissan’s sister Alliance member Renault, was by definition not an independent, “outside” director.

Bolloré would offer a response at the subsequent October 8 meeting, demanding answers to issues raised by Passi. That would cost him his job at Renault.

It is not clear what Passi thought at the time. He may not have expected that his act of defiance by blowing the whistle on two individuals, Nada and Ohnuma, both of whom had plea-bargained to avoid prosecution, would prove to be the end of his 16-year career as a loyal Nissan employee.

Regardless of his motive and expectations, he was taking the precaution of establishing a legal record. He turned that over to a news organization (not us) after Nissan terminated his employment and ordered a raid on his home in Yokohama. (His family had been present for the raid; his children were frightened.)

Speaking about the memo, Passi told us: “It was the right thing to do given the governance issues at Nissan, the questions related to illegality and unlawfulness of not having an appropriate internal control system in place, and the potential long-term permanent damage to the reputation of the company, significant loss of shareholder value and miscarriage of or pervasion to justice. Also, many members of the legal department were worried about what they were seeing on a daily basis.”

The gist of Passi’s message is not only that both Nada and Ohnuma had interfered with Murray’s investigation, but that they had been enabled by others in Nissan management, all of whom were involved with Ghosn’s ouster, all operating in secret for months outside the framework of the board.

“Under any reasonable standard,” he said, “the fact that both Nada and Ohnuma had committed unspecified crimes, presumably aggravated breach of trust, should have disqualified them from any involvement in the investigation. One has to ask: Where was the oversight from the board? What were they thinking? How will they answer shareholders who have lost huge amounts of money?”

Passi’s pungently stated views were echoed more formally by two outside law firms he retained, Cleary Gottlieb Steen & Hamilton LLP and Mori, Hamada & Matsumoto: “They had personal interests and obligations to cooperate with the Tokyo Public Prosecutors’ Office in a way that may not always align perfectly with those of the company. The risk becomes particularly more acute where such individuals are senior-level executives who would ordinarily have decision-making authority on behalf of the company.”

Passi also alerted the outside directors to questionable circumstances surrounding the sudden resignation of Christina Murray, only days before she was scheduled to deliver her report to the audit committee and board, having committed to attending both meetings. “Any insinuation that she didn’t intend to present to the board couldn’t be further from the truth,” he said.

According to a statement made in his whistleblowers and unfair dismissal case in the UK, Passi said that Murray, who had just been promoted in May, “commented to me that she was astonished by Nagai’s instruction and felt this had been a deliberate attempt by Nagai to undermine her ability to perform her function as head of compliance.”

The sequence of events and documents in Passi’s lawsuit do not support Nissan’s claim that Murray left voluntarily to pursue new opportunities.

Murray completed her report, all 172 pages, on or slightly before the August 24-25 weekend. At the beginning of the following week on Monday or Tuesday, August 26 or August 27, she gave a copy of the report to Nissan’s legal and compliance departments for review and communicated to Nissan’s board that she planned to present her findings two weeks later at the September 9 board meeting. She also scheduled a meeting with the audit committee on September 4, according to our source.

On August 28, Murray delivered copies of her report and the Anderson, Mori & Tomotsune report to Nagai who, later that day, August 28, ordered her to stop any further investigations involving Nada, ending her inquiry.

Then two days later, on August 30, despite having committed to presenting her report to the audit committee and board, she submitted her resignation with plans to leave the company officially on September 10, the day after the September board meeting. Friday, August 30, would be her last day in the office. She was seen crying at her desk

Next: Nissan board members ‘have dirt on their hands’

A veteran correspondent for Ward’s Automotive, Roger Schreffler is also a former president of the Foreign Correspondents’ Club of Japan.