Alliance partners turn up the heat on Ghosn

TOKYO — Pressure is mounting on embattled auto czar Carlos Ghosn, now denied bail on three indictments in Japan and facing the possibility of many more months in jail before trial.

Nissan and Mitsubishi are weighing a civil suit seeking damages from the ousted chairman, apart from the potential prison time he faces in his criminal cases. And the French government, which initially stood by Ghosn, is moving to replace him as head of Renault as well, media reports say.

Ghosn's extended detention is one factor forcing France, as Renault's most important shareholder, to abandon the man who once led all three companies in the Renault-Nissan-Mitsubishi alliance. Simply put: Renault needs a top executive free to lead the company.

In an interview last week with France's LCI TV, French Finance Minister Bruno Le Maire called for Ghosn's dismissal.

"We are entering now a new phase," Le Maire said, according to media reports. "In this new phase we need a new and durable governance for Renault."

France was seeking to convene a Renault board meeting as early as Sunday, Jan. 20, to begin appointing a successor to Ghosn, Reuters and Bloomberg reported.

Ghosn was denied bail on Tuesday, Jan. 15, by a Japanese court. That opens the possibility of him remaining jailed for months, if the decision is upheld upon appeal. After defendants in Japan are charged, they are held for two months. After that, judges review the detention monthly.

Ghosn's lead lawyer, Motonari Otsuru, has said it is unusual for a defendant like Ghosn — who maintains his innocence — to be released on bail before trial. Otsuru also said it could take six months for the case to go to trial, given its complexity and the need to translate documents.

Ghosn has been held in a Tokyo detention center since his Nov. 19 arrest. He faces three indictments, two for allegedly hiding tens of millions of dollars in deferred compensation from the 2010-17 fiscal years and one for allegedly temporarily transferring personal losses to Nissan in a breach-of-trust case. Ghosn denies wrongdoing on all counts. If convicted, he faces up to 10 years in prison on each count, but a maximum of 15 years if convicted on all three.

But looming in the background is the fresh threat of a civil suit from Nissan and partner Mitsubishi. Nissan owns a controlling stake in Mitsubishi as part of the three-party auto alliance, and both companies jettisoned Ghosn as chairman after his arrest.

Nissan is conducting an internal investigation of possible misconduct linked to Ghosn. As the picture comes into focus, Nissan intends to seek redress, according to people familiar with the matter.

"After things are ironed out, we are going to claim damages," one person said.

People familiar with Nissan's probe claim the company has evidence of widespread financial misconduct by Ghosn. The accusations focus on issues such as payments for yacht club memberships, home renovations and surreptitious salaries, which Nissan claims violated company procedures.

Headlining the claims is the accusation that Ghosn received about €7.82 million ($8.9 million) in allegedly improper compensation last year from a Netherlands subsidiary jointly owned by Nissan and Mitsubishi.

That finding was an outgrowth of a joint investigation by Mitsubishi and Nissan. Mitsubishi CEO Osamu Masuko outlined the charges publicly Friday, Jan. 18, in Tokyo, saying that his company was consulting with Nissan, their lawyers and prosecutors about next steps.

They are weighing possible civil or criminal charges, a Mitsubishi lawyer said.

Nissan issued a separate news release concurring with the findings.

The entity in question, Nissan-Mitsubishi, or NMBV, was established as a 50-50 venture to reward employees at both companies who find synergies by giving them a share of the savings. But Nissan and Mitsubishi claim that Ghosn used the entity to authorize large payouts to himself.

The $8.9 million, which included a signing bonus and a salary, was allegedly paid without knowledge or the required consultation of the unit's other board members, Masuko and Nissan CEO Hiroto Saikawa. Neither of those men received any payment from NMBV, Nissan said.

Nissan said its probe found that Ghosn and Greg Kelly, the Nissan director indicted as a conspirator, began to explore the possibility of paying undisclosed compensation to Ghosn through an equally owned Netherlands-based unconsolidated joint venture in 2016, shortly after Nissan announced it would take a controlling stake in Mitsubishi.

Separately, Nissan may consider additional redress for some $755,000 paid to Ghosn's sister from 2003 to 2016 in advisory fees for work the company says was nonexistent.

A civil suit may also focus on the use of company funds to pay for Ghosn residences around the world, including properties in Tokyo, Paris, Rio de Janeiro, Amsterdam and Beirut. Nissan claims it ended up footing the bill for tens of millions of dollars to provide those residences — even though the company was aware of paying only the rent on Ghosn's apartment in Tokyo.

Nissan says another Netherlands company, Zi-A Capital, was set up to ostensibly invest in technology startups. But it ended up being a vehicle to pay $5.8 million for Ghosn's condo in Rio and some $16.7 million to buy and renovate the Beirut home.

The Ghosn family believed the residences were corporate housing arranged through appropriate channels, a representative for the family has said.

Naoto Okamura contributed to this report.