Business / Corporate

Carlos Ghosn's escape proves to be a fresh headache for ailing Nissan

AFP-JIJI

Out of Japan and free to speak to the media, a fugitive Carlos Ghosn is proving to be a fresh headache for his old firm Nissan Motor Co. as it struggles to rebuild its reputation.

The tycoon who once headed the automaker jumped bail and fled Japan last month while awaiting trial on financial misconduct charges. And he has not pulled any punches when it comes to the company he saved.

He accuses executives there of effectively setting him up, in a bid to block his plans for further integration with Nissan’s French partner Renault.

And in a news conference on Wednesday in Lebanon, where he emerged after his audacious escape, he slammed its executives, accusing them of losing shareholder value and pursuing a vendetta.

Nissan has remained largely silent, waiting until Tuesday to release a statement calling his decision to flee “extremely regrettable” and insisting it had uncovered “numerous acts of misconduct.”

The firm faces its own legal proceedings linked to the case, which limits what it can say, a source close to Nissan said.

“We have responsibilities, we must respect the law, we have obligations. It will be painful, but we have to do it.”

Ghosn meanwhile, in Lebanon and apparently beyond the reach of Japanese prosecutors, “can say what he wants, he has no more constraints,” the source said.

In a lengthy and at times combative news conference on Wednesday, the former auto magnate once again accused Nissan executives of plotting his downfall and sought to rebut the charges against him.

“For the moment there is nothing new in Mr. Ghosn’s allegations against Nissan,” said Koji Endo, an automotive analyst at SBI Securities.

“But if Ghosn continues with his negative campaign … the market will get more skeptical about Nissan’s fundamental recovery and its brand image,” he said.

And internally there is “no doubt” that seeing the company slammed so publicly is hitting morale, Endo said.

“I’ve been told that lots of people continue to resign from Nissan, young engineers” in particular, he added.

The Ghosn scandal has already cost Nissan dearly. Its market cap has fallen more than $10 billion (¥1.1 trillion) since his arrest.

“They lost more than $40 million a day,” Ghosn said on Wednesday.

The losses coincide with an overall crisis in the auto industry, but Ghosn argues that Nissan’s desire to push him out has damaged profits and shareholder value.

Bloomberg News reported that Nissan spent $200 million on lawyers, investigators and private detectives during the scandal, a claim that insiders dismiss.

“The figure is ridiculously exaggerated. You probably need to take one zero off,” one source at Nissan said.

But there have been other costs related to the case.

Nissan was forced to pay a $15 million fine in September to settle an investigation by U.S. securities regulators, who charged that it hid more than $140 million in Ghosn’s expected retirement income from investors.

And in December, it said it would not contest a ¥2.4 billion fine levied by Japan’s Securities and Exchange Commission for filing documents that also underreported Ghosn’s compensation.

It still faces questions from the Tokyo Stock Exchange to avoid being delisted, and is the subject of legal action by shareholders in the United States.

Internally, the firm says it has tried to clean up shop by implementing governance reforms and conducting internal investigations.

Among those caught up in that were former CEO Hiroto Saikawa, who stepped down last year after admitting he had received more pay than he was entitled to.

Nissan’s current executives meanwhile have remained free but largely tight-lipped about their former colleague’s broadsides.

“I don’t have time to deal with a one-man show by someone who fled the country in violation of the law,” Masakazu Toyoda, an external administrator, told reporters acidly when asked for comment.

And Nissan’s new management likely has more pressing things on its mind: Profits have fallen to their lowest level in 10 years and sources say a strategy will be presented to the board next week to reverse the slide.