Show biz was certain to be interested. Carlos Ghosn is pictured as royalty in an ad for the new Netflix documentary 'Fugitive: The Curious Case of Carlos Ghosn.'

Four years ago this past weekend Nissan assembled global news media representatives at its headquarters in Yokohama to announce the arrests of two of its top executives, Carlos Ghosn and Greg Kelly.

An industry legend for his role in saving the Japanese automaker from bankruptcy 19 years earlier, then building what came to be known as the Renault-Nissan-Mitsubishi Alliance into a global automotive powerhouse, Ghosn was arrested shortly after his arrival at Tokyo’s Haneda International Airport.

Following a dramatic escape, Ghosn is living today as a fugitive in his native Lebanon, his name still on an Interpol “Red Notice” list.

Kelly, a Ghosn ally on Nissan’s board, was apprehended en route from Tokyo’s eastern airport, Narita, to his hotel in Yokohama. His life, like Ghosn’s, would never be the same. He’s spent the past four years fighting in court to clear his name both in Tokyo and Tennessee, in federal court in Nashville.

Nor is anything the same for Nissan and Renault, the original Alliance partners, which have run up more than US$50 billion in combined market-cap and business losses since Ghosn’s removal, with share prices at both companies having fallen by half.

The Alliance is unraveling in plain sight despite Nissan’s latest upbeat profit forecast for the current fiscal year – a forecast boosted by a 31-year high dollar against the yen.

Renault is looking for new partners. It recently signed a so-called “framework” agreement with China’s Geely to focus on conventional and hybrid cars. Renault needs cash to finance its electric vehicle (EV) business and have a chance to compete in its main market, Europe. Much of the recent European reporting on Renault discusses its potential unloading of a chunk of its 42% stake in Nissan, likely winnowing it down to 15%.

Although Nissan will beat its original forecast for this fiscal year, it is not among the top ten automakers in terms of profits. In sales volumes, it has fallen behind Hyundai and Kia in the US market and is well behind Toyota and Honda. It can no longer claim the leadership position on EVs to which Ghosn had taken it – an unfavorable sign for the future.

Now, new evidence has emerged that clarifies the story of how the mighty have fallen to this point. Meanwhile, new looks at some previously available evidence also clarify the story.

Alleged masterminds

News of Ghosn’s arrest broke at 5 pm Tokyo time on November 19, 2018, a Monday. Kelly’s name would be identified shortly after. Then at a 10 pm news conference Nissan’s CEO, Hiroto Saikawa, accused Ghosn and Kelly of being “masterminds” of a series of financial crimes including underreporting Ghosn’s compensation in the automaker’s annual securities reports to the Tokyo Stock Exchange for a period of “many years.”

In fact, as has been reported earlier, Saikawa himself had been deeply involved in the transactions that he was attempting to cast as crimes committed by Ghosn and Kelly. Saikawa had signed four proposals to award Ghosn post-retirement payments — two proposals in 2011, one in 2013 and a fourth in 2015, the latter two signed jointly by Kelly.

All four proposals involved signing up Ghosn for future advisory and consulting work for the automaker and securing his commitment not to work for a competitor. GM and Ford had both made him offers and it was very much within the realm of possibility that he might take his talents elsewhere.

Asia Times published the 2013 and 2015 proposals in earlier reports. Of the two 2011 proposals — they were the same except the first was denominated in yen, the second in dollars — the first was pictured in a June 2019 Bungei Shunju article. Saikawa’s signature comes through clearly:

Bungei Shunju scan by Roger Schreffler

The 2013 and 2015 proposals in particular were well-crafted contracts, clearly written by lawyers. Both proposals would have required Ghosn’s signature and board approval to go into effect. Ghosn was fully aware that board approval was necessary. So were Saikawa and Kelly.

Initially, the Latham & Watkins LLP lawyers worked with Nissan’s internal investigators to build a case against the two executives. We have previously published evidence that, later, they worked to cover up details of the executive suite coup that felled Ghosn, with which they were directly involved, and to protect eight executives, including three coup members, who had been awarded backdated stock appreciation rights bonuses.

Those executives included Saikawa, Nada and Hidetoshi Imazu, the former board member who became a statutory auditor and was either the first or the second accuser to approach the Tokyo prosecutors’ office in June 2018 – just one day after Renault, at its general shareholders’ meeting, had extended Ghosn’s contract for another four years.

Nada also began cooperating with the prosecutors in June.

The story is complex and made more difficult to understand because Nissan and the Tokyo prosecutors’ office lied about many key facts, either by commission or omission. Adding to the confusion are Japanese court rules that in the Kelly trial forbade the release of transcripts, taking photographs and recording the proceedings.

Then there are issues regarding the evidence – some of which appears to have been acquired unlawfully.

Asia Times learned and reported earlier that four Nissan employees, including three Nissan lawyers and the company’s head of European and Middle Eastern security, entered Ghosn’s office and residence in Beruit on November 19 and took 10 binders of hard-copy documents. The raid was coordinated with several other raids in Paris, Amsterdam, Rio de Janeiro and Franklin, Tennessee.

Ghosn has since filed a criminal complaint in Lebanon, having identified the four Nissan employees plus a Latham lawyer from the firm’s Dubai office.

Last piece of the puzzle

Because the newest information is complex and breaks new ground with respect to document disclosure, we will spare no effort in telling it in detail.

An investigative report by Latham lawyers Michael Yoshii and Hiroki Kobayashi, which we are able to present to the public for the first time, provides the final piece of a puzzle that, when assembled, supports Ghosn’s and Kelly’s lack of guilt.

Titled “Kali 10 Compensation Investigation Report,” with Kali referring to the Hindu goddess of death, time and change, the name chosen by Nada, an ethnic Indianthe report identifies “L&W” or Latham & Watkins as the author. It confirms the existence of yet another post-retirement proposal, actually the earliest, dated March 28, 2011, by Toshiyuki Shiga and Itaru Koeda, two former top executives. That brings the total number of known proposals to five.

At the time that earliest proposal was prepared, Shiga was chief operating officer, or the number two executive in the organization. More importantly, he was a representative director — daihyo torishimiyaku in Japanese — and only representative directors had the authority to recommend compensation for the CEO.

In early 2011, Nissan had only two representative directors, Ghosn and Shiga. Koeda had previously served in that capacity (he also had served as co-chairman with Ghosn) and was considered a Ghosn confidant. Kelly and Saikawa would become representative directors, but they didn’t yet have that title in March 2011.

The Kali 10 investigation, initially conducted in secret by Nissan’s board and the compliance and legal departments, was winding down in August 2019. The August 22 report, the fruits of more than a year of work dating back to shortly after Imazu’s June 2018 visit to the Tokyo prosecutors’ office, was in the final editing process.

Scan by Roger Schreffler

The report not only confirms the existence of a fifth post-retirement employment proposal; it also confirms that Shiga and Koeda, not Kelly, advised Ghosn that he could keep a record of lost income through Nissan’s secretariat and only had to report the shortfall when he retired and if the board hired him as an advisor.

The lost income was a cut in Ghosn’s compensation that he had reluctantly agreed to in 2010 – in part for public relations purposes but more to keep the French government, part-owner of Renault, off his back after the Financial Services Administration announced new guidelines for executive compensation.

The consensus at Nissan was that it would look better to the government, investors and the general public if Ghosn’s compensation didn’t exceed the “guidelines,” so he took a formal cut in compensation by half. Ghosn nevertheless felt that he had been promised the full amount and sought an arrangement that would eventually repay him the shortfall.

Shiga testified that an employment contract “would have to be approved by the board” and that “conditions would be fixed every year in writing with the representative directors signing the documents.”

Under the Shiga-Koeda proposal, according to court testimony, Toshiaki Ohnuma, the general manager of the secretariat, would “make a calculation and the amount will be informed to the person who would receive the payment” – that person being Ghosn.

The directive from Shiga and Koeda was clear — for Ohnuma to keep a running tally of Ghosn’s cumulative income shortfall. And Ohnuma and Ghosn two weeks later would enter into an agreement, which Ohnuma backdated to March 24.

There was no commitment for Nissan to pay Ghosn. Board approval would always be required, it is clear based on a close reading of the report. But there was no subsequent directive from a representative director — Shiga, Kelly or Saikawa – and no payment was ever made.

That didn’t stop Nissan from keeping a running tally — which came to 9.3 billion yen over an eight-year period, including 1.0 billion yen in the first 13 months from the end of fiscal 2009 through fiscal 2010 — and using the figure as evidence against Kelly. (Remember that Saikawa and Kelly didn’t make their first proposal until November 2011.) Here’s the tally:

Scan by Roger Schreffler

As for Ghosn, while the world has been led to believe that he skirted disclosure guidelines and broke the law, if he did so it was on the advice of his second in command at the time – Shiga — in writing and on the understanding that the board would have to approve any contractual arrangements that would follow his retirement.

Buried in the Latham report, and thus never before seen by the public, is Shiga’s statement to the Special Governance Committee at Nissan:

In 2011 … I received directions from Ghosn in a vehement tone to the effect that “There is a big difference between the remuneration I was promised from Yoshikazu Hanawa, the former president, and the amount disclosed last year (2010). I have the right to receive this difference, so find a way for me to receive the amount after resigning from my post as director.”

I consulted Koeda, who was the honorary chairman at the time. Because I believed there would be a legal risk in receiving the amount after resignation, in order to reduce such risk, I made the following two proposals:

(i) Payment of the amount as a special retirement allowance after resignation by resolution of the shareholders’ meeting; or (ii) Payment of the amount as an advisory fee after obtaining the Board’s approval.

Ghosn told me that he preferred (ii) and suggested stating non-competition as the reason. However, I never spoke of this matter with Ghosn again and my understanding was that the matter had faded away.

Key points: Ghosn pressured Shiga to find a way for him to reclaim the 50% pay cut he had taken in March 2010 in order to comply with the Financial Securities Agency’s new disclosure guidelines.

Shiga and Koeda proposed that Ghosn would work as an advisor after his retirement with board approval. There was no guarantee, however, that he would be offered a job.

More haircut details

The Kali 10 investigation then revealed more detail about Shiga’s and Koeda’s involvement. Those two didn’t just propose a payment scheme. They set the scheme – employing a term coined by Nada for the shortfall in payment to Ghosn: “the Haircut” – in motion. According to the report:

Internal documents confirm that there was a discussion between Ohnuma, Shiga and Koeda in March 2011 concerning payment of the Haircut to Ghosn.

A proposal by Shiga and Koeda dated March 16, 2011 titled “Payment for CEO, Proposal by SK’ lists three options for payment of the Haircut: (a) as incentive compensation paid after retirement (without disclosure), (b) as a retirement allowance (with disclosure) and (c) as an advisor fee paid 1-2 years after retirement (without disclosure).

Note the words: “without disclosure.” This was a key element in the charges against Ghosn and Kelly – that they made false statements in Nissan’s annual securities reports by underreporting Ghosn’s income.

Problems with that charge: Kelly wasn’t involved and both Ghosn and Ohnuma had been advised that this was not income and would require future board approval to become income; they had been advised that “disclosure” was not necessary.

The report continues:

On March 18, 2011, Ohnuma prepared a memorandum for Shiga and Koeda to present to Ghosn based on option (c), and on March 23, 2011, Koeda instructed Ohnuma to revise the memorandum. The memorandum, titled “Remuneration Payment Plan,” proposed to pay the Haircut as an advisor or consultant fee after Ghosn’s retirement. The amount of the fee is blank.

The memorandum further states that board approval would be required for payment of the fee. Shiga told us that he insisted on this requirement because he thought that board approval would cure any potential impropriety with the arrangement. The email correspondence indicates that Shiga and Koeda presented the ‘”Remuneration Payment Plan’’ to Ghosn on March 28, 2011.

Itaru Koeda. Photo:

Shiga and Koeda also instructed Ohnuma, as general manager of the secretariat, to make the calculations and inform Ghosn, the report says. Then, on April 14, according to the report, “Ohnuma prepared a spreadsheet for Ghosn that calculated the amount of postponed remuneration for FY2009 and FY2010. He showed the spreadsheet to Ghosn and Ghosn signed off.” Shiga, the report says, explicitly advised Ghosn there would be “no legal problem.”

Ghosn has always asserted that “board approval” was necessary. We now have proof.

Lies of omission: what’s not in the Latham report

The Latham report, which runs 173 pages excluding appendices, was circulated to members of Christina Murray’s investigation during the week of August 25, 2019. Murray, who at the time was Nissan’s global compliance chief, had been tabbed by Saikawa to head the investigation on October 15, 2018, several days after Imazu had informed the CEO that he had made an unauthorized visit to the Tokyo prosecutors’ office four months earlier. 

Murray learned about the prosecutor’s involvement in mid-September, Nada having informed her over dinner and then warned her, threateningly, to keep everything secret.

She had planned to deliver the report to the audit committee on September 4 and to the board on September 9. She never was given a chance. She was out before the end of August, submitting her resignation on August 30.

Her sudden resignation prompted widespread media coverage and speculation. Now in her new job with Capitol One in Texas, she has never responded to our messages. 

There have been reports that, on August 28, 2019, Tomoo Nagai, the chair of the audit committee and also a member of the coup, ordered her to stop all investigations of Nada. We’ve confirmed independently that the reports are true.

We also now know what was omitted in the report – this even before Latham’s two lead Tokyo attorneys, Yoshii and Kobayashi, delivered the findings to the board on Monday, September 9, 2019.

They delivered the report in the name of the audit committee whose chair, again, was a member of the coup. Also on the committee was Masakazu Toyoda, the ex-Ministry of Economy, Trade and Industry man on Nissan’s board who was yet another member of the coup.

What is not in the Latham report regarding the first Ghosn compensation proposal? Kelly’s name is not mentioned at all. Nor is the fact that Kelly wouldn’t become a representative director until June 2012, and thus couldn’t have authorized payment to Ghosn even if he had wanted to.

There is also no mention that Yoshii and Kobayashi wrote the 2013 and 2015 agreements with Nada or that, in early October 2018, they reviewed Nada’s statement for the investigation.

Or that one week later, on October 10, 2018, they warned Nada – sharing an internal email from Nissan’s criminal attorney, Takeshi Ohki – that he was likely to be indicted for being an accomplice of Ghosn in the government’s criminal probe.

Note that all of this activity was happening in the shadows before the coup closed its trap and Ghosn and Kelly were arrested on November 19, 2018.

No legal obligation

The chief judge in the Kelly trial decided not to require Latham lawyer Kobayashi to explain a Latham memo in which Nada, who was being interviewed by four Latham lawyers including Kobayashi and Yoshii, quoted Kelly as saying that reimbursing Ghosn for the salary shortfall was not a legal obligation.

“Reimbursing Ghosn for the salary shortfall was a ‘debt of gratitude’ or moral obligation owed by Nissan to Ghosn for his services [but] not a legal obligation,” it said.

“If it wasn’t a legal obligation, then what’s the crime?” asked an attorney familiar with the case. “If it wasn’t a legal obligation, then Nissan wouldn’t have to pay” — and didn’t. Ghosn never received a penny of the 9.3 billion yen.

Yoshii asked Nada during the interview — Kobayashi was on the call and was identified by name in the memo — whether the “non-compete” and “consulting” fees to be paid under the various agreements (two of which were written by Kobayashi, Yoshii and Nada) were for pre-retirement services or post-retirement services.

“Nada confirmed,” according to the Latham report, “that the fees had always been designed to compensate Ghosn for post-retirement services” and that “the services themselves were all to be performed in the future.”

No reference to the July 3 memo summarizing the Nada interview can be found in the Kali 10 report.

Until now, we hadn’t known that the Latham lawyers in their report to the board, written in their firm’s name – a report that was then passed along to and acted upon by the prosecutors – had omitted this most important of all exculpatory documents for proving Kelly’s innocence. His lawyers say they didn’t receive it among the thousands of pages of documents turned over by the prosecutors.

And the same evidentiary materials – especially the Shiga-Koeda proposals – make a compelling case that Ghosn, even if seven years after the fact it was determined that he may have violated Japan’s financial reporting laws (for money he never received), did so on advice from both in-house and outside counsels, both Japanese and foreign, and from all senior executives in charge.

But then the Nissan coup was not really about whether Ghosn had broken any laws. It was always about stopping Renault: another story for another time.

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