Based on information from additional interviews and newly obtained documents, Roger Schreffler has expanded his latest series (begun in September) on Nissan and the Carlos Ghosn case. This is part 11. Read part 1 here, part 2 here, part 3 here, part 4 here, part 5 here, part 6 here, part 7 here, part 8 here, part 9 here and part 10 here. Stay tuned for additional parts to follow.
The May 29, July 3 and July 5, 2019, documents presented in Part 10 of this series are only the tip of the iceberg.
The involvement of Michael Yoshii and Hiroki Kobayashi, the two top lawyers in the Tokyo office of Latham & Watkins LLP, was extensive – from helping a small group of rogue executives plan the removal of Carlos Ghosn and Greg Kelly from Nissan’s management (known now as “the coup”) to carrying out the operation and then helping to build a criminal case against both Ghosn and Kelly based on faulty evidence.
In spring 2018, the Latham firm was part of a secret undertaking led by Senior Vice President Hari Nada and involving lawyers in Nissan’s legal department to plan contingencies for removing Ghosn and his allies from management (to be discussed in part 12, in which we will focus on motive).
The scenario charts that Nada’s team created were discussed thoroughly in the Kelly trial both during cross-examination of Nada and in the closing argument by Kelly’s lead lawyer, Yoichi Kitamura.
This photo from TV Tokyo shows a surreptitiously taken photo of one of the charts. When they are eventually made available to see outside the courtroom, they will show quite extensive and detailed planning. The charts are the first proof of formal planning for Ghosn’s ouster. Nada shared his plans with other conspirators, we have been told.
Thus, an outside law firm with a personal connection to the chief accuser was part of the effort to remove the former CEO (at the time chairman) of a major corporation on the basis of little more than suspicions involving his alleged misuse of travel perks. That’s what Hidetoshi Imazu, Nissan’s lead statutory auditor, had uncovered as of May 2018.
And it appears that no one on the boards of Nissan, Renault and Mitsubishi, the three “Alliance” partners, knew anything about the plan. Masakazu Toyoda, the ex-trade ministry man and coup member, would join the board in June.
It is revealing that one of the first big leaks following Ghosn’s November 2018 arrest was that he allegedly had used the CEO Reserve fund “to pay for family vacation trips, utilities and even potato chips.” The idea that potato chip purchases were considered evidence of a financial scandal speaks volumes about the validity of the charges.
Punishment in search of a crime
Throughout the summer of 2018, Latham lawyers didn’t merely have front-row seats as Imazu, Senior Vice President Hitoshi Kawaguchi, Nada and others in the anti-Ghosn faction began to build their criminal case; the lawyers were directing from backstage.
Imazu went to the prosecutors’ office on June 16, 2018, having waited until the day after Renault renewed Ghosn’s contract and four months after he, Nada and others had begun meeting in secret to try to block the French government’s plans to make Nissan part of Renault, Nissan’s largest shareholder.
The prosecutors, according to testimony in the Kelly trial, said they needed more incriminating evidence against Ghosn before pursuing the case. We were told they had no evidence against Kelly.
Imazu then took the next step. In late June 2018, still with no hard evidence that Ghosn and Kelly had broken any laws, he informed Nada and Kawaguchi that he planned to launch an internal investigation. Shortly after in July, the three retained the Latham firm to lead the investigation, which came to be known as Kali 10 with “Kali” standing for the Hindu goddess of “death, time and change.” (Hari Nada is an ethnic Indian native of Malaysia.)
Latham built its case out of view of the board and in secret from Nissan’s compliance and legal departments. Not until mid-September 2018 did Nada inform Christina Murray and Ravinder Passi, the executives in charge of those two departments, respectively, along with Hideaki Kubo, who headed the governance department.
When he did inform them, the information was accompanied by a threat of “severe consequences” if they leaked anything outside the company.
As we reported in part 5 of the series Murray’s task force began formal preparations for the criminal case against Ghosn and Kelly in mid-October 2018, in absolute secrecy in “the war room,” a converted 21st-floor conference room at Nissan’s headquarters building in Yokohama.
Separately, Nada began cooperating in earnest with the prosecutors’ office in September 2018. Aware that he himself was at the center of alleged crimes he had accused Ghosn and Kelly of committing, in particular involving property transactions by Ghosn through a subsidiary in the Netherlands, Zi-A Capital BV, Nada instructed his personal lawyer, Akihide Kumada, to begin negotiations for a plea deal.
(We haven’t mentioned Zi-A Capital previously. It has little to do with the Greg Kelly case but Zi-A Capital was part of the case Nada built against Ghosn. Nada was the main source behind allegations that Ghosn had misappropriated company funds for his residences in Paris, Amsterdam, Beirut and Rio de Janeiro.)
Again, we have requested interviews with Nada, all members of the audit committee and three Latham lawyers. Those requests have been denied.
We have learned that in late September 2018 – as the Kali 10 investigation was winding down and still before Christina Murray formed her internal investigation task force – Yoshii and Kobayashi helped Nada write his statement for the Kali-10 investigation.
Latham retained to “support” Murray
On October 11, 2018, according to testimony in the Kelly trial, Imazu finally informed Hiroto Saikawa, then Nissan’s CEO, that he had gone to the prosecutors’ office. At that point, Saikawa took over the internal investigation.
We don’t know exactly when the prosecutors’ office formally launched its criminal inquiry but suspect it was in mid-October 2018.
Several days after Imazu’s disclosure, Saikawa instructed Murray to form a task force to investigate Ghosn and Kelly. Latham was retained, again, despite having been involved with advising Ghosn and Kelly on a range of issues including devising a plan to retain Ghosn as a consultant after his retirement from Nissan. Retaining the firm under such circumstances predictably raised issues of conflict of interest.
Four Ghosn post-retirement “employment” proposals were presented at the trial, including two that had been prepared in 2013 and 2015 by Kobayashi and Yoshii. Having had that involvement, Kobayashi and Yoshii had to know that Kelly was innocent of both charges against him and that Ghosn was innocent of the first two of four charges, which involved allegedly concealing undisclosed income from Japanese regulators.
We previously reported that the Latham firm was involved with the operational planning of the November 19 sting as shown by the fact that Yoshii was present in Nada’s office when Nada handed out to members of Murray’s task force copies of a transcript of his November 13 phone call to Kelly, briefing the in-house investigators on his role in persuading Kelly to travel to Japan and putting the sting in motion.
Yoshii, who knew about the call before the briefing, characterized the call as a “command performance.” An outside lawyer, he clearly was part of the operational planning with Nada and indirectly the Tokyo Public Prosecutors’ Office.
We also know because a Latham lawyer in the firm’s Dubai office, Marc Makary, joined three Nissan lawyers – Fabien Lesort, Jimmy Dawson and Thomas Schriewer – along with Nissan’s head of security for Europe, Africa and the Middle East, Daniel Bernabé, in the November 19 raid on Ghosn’s Beirut residence and removed personal records without a warrant.
There was no mention of any of the above in the May 29, July 3 or July 5, 2019 documents or, two months later, at the September 9, 2019 board meeting – when Christina Murray was supposed to deliver her task force’s findings but, instead, Latham’s two top Tokyo lawyers did (see September 9 summary below.)
Arguably the most damning indictment of Latham came from Thierry Bolloré, Renault’s CEO and outside director on Nissan’s board, in a pointed memo to the board on October 8, 2019, the day before Nissan’s October 9 board meeting. Bolloré demanded answers to more than 50 questions, including Latham’s role in the internal investigation and protecting Nada.
Renault would fire Bolloré four days later on October 12 with his questions never answered. Nada would retain his senior vice president’s title and be given the responsibility to handle the Ghosn lawsuits on October 9 following the automaker’s board meeting. He still holds that senior vice-presidency today.
Often used to designate a power behind the throne, kuromaku, a word meaning black curtain, refers to instructions whispered to actors from behind a stage curtain. As in a Japanese play, we believe the record shows that Yoshii, for sure, and Kobayashi, probably, stage-managed the entire Ghosn case with Nada and other coup members.
Did they cross any legal lines? To be determined. But the record shows they came out from behind the curtain when making Christina Murray’s presentation at Nissan’s September 2019 board meeting. Murray had tendered her resignation under pressure one week before and, in making the presentation in her place, we were told they omitted key facts.
Separately, Kobayashi, as a witness in Kelly’s trial last March, claimed “privilege” when he had information that could have acquitted Kelly on the spot.
Kobayashi on the witness stand
During the week of March 22, 2021, Kobayashi testified twice at the Kelly trial and volunteered details about Latham’s criminal investigation into Ghosn and Kelly. Then, during cross-examination, Kelly’s lawyer, Yoichi Kitamura, confronted him with Latham’s July 3, 2019, interview with Nada. Rather than answer Kitamura’s questions, he repeatedly claimed “privilege.”
Kobayashi and Yoshii, with two other Latham lawyers, had been on the call to Nada. Both had asked questions. Kobayashi, possessing information that would tend to exculpate Kelly, chose not to answer.
We don’t know whether there are any legal consequences for his failure to clear Kelly’s name. Nada had waived most of Nissan’s privilege claims when he turned over his computer to the prosecutors’ office three years earlier and with it nearly a decade of Nissan’s legal files.
But we checked the New York state bar association’s Rules of Professional Conduct (Kobayashi is licensed in New York) and learned that, as in California: “A lawyer or law firm shall not engage in conduct that is prejudicial to the administration of justice.”
A veteran correspondent for Ward’s Automotive, Roger Schreffler is also a former president of the Foreign Correspondents’ Club of Japan. Next in part 12: Motive. Solving most crimes requires finding a motive. Nissan’s motive was to block a Renault takeover.