Nissan investigates claims CEO put COO Gupta under surveillance

TOKYO -- Nissan Motor Co. has started an investigation into claims by a senior adviser that CEO Makoto Uchida carried out surveillance of his deputy Ashwani Gupta, four people with direct knowledge of the matter said.

The surveillance claims, first reported by the Financial Times, were made by Hari Nada, 58, a senior adviser at Nissan, in a letter dated April 19 to the independent directors on the Japanese automaker's board.

Gupta is resigning as COO effective June 27, Nissan said earlier this month.

Reuters, which has reviewed the letter, is the first to disclose its specific details. They relate to the surveillance claims, a stark split in senior management over Nissan's relationship with Renault and concerns about transfers of intellectual property to the French automaker.

In the letter, Nada said Uchida carried out surveillance over a long period. Nada said it was an effort to acquire leverage to remove an executive and board member the Nissan CEO regarded as an obstacle to reaching a new deal with alliance partner Renault.

Gupta, appointed chief operating officer in 2019, had questioned the terms of the revised agreement Uchida is looking to finalize with Renault, according to Nada's letter and the four people with knowledge of the matter.

Asked to comment on the surveillance investigation, Nissan said in response to Reuters: "Independent third parties have been retained to verify facts and carry out appropriate actions." Nissan declined any further comment for this story.

Reuters was unable to determine who was conducting the investigation for Nissan. It started in late May, one person with direct knowledge of the matter said.

Nada did not detail in the letter how he knew of the alleged surveillance of Gupta. Reuters was unable to confirm independently that any surveillance took place.

Harassment allegation

Under Japanese law, a company can monitor communications on corporate phones and computers and investigate an employee's conduct outside work in protecting its business interests, said Akira Takeuchi, a lawyer and certified fraud examiner in Tokyo.

"In other cases, actions outside the company could be considered private and investigation there could be viewed as excessive," he said, emphasising that he was speaking in general and not about Nissan.

Gupta and Nada did not comment in response to requests from Reuters. Nissan declined to make Uchida, its board directors, or other recipients of Nada's letter available for comment.

Other recipients included Nissan's chief human resources officer, its global general counsel, and head of intellectual property.

Nissan said on May 12 that Gupta, 52, who had been widely seen as a candidate to become chief executive, would not be reappointed to the board when his term expired. The announcement about his departure from the company came a month later.

Nada said in the letter that Nissan reviewed allegations about Gupta's conduct in the week of April 10 and that he had been asked to resign. He said he understood Japanese law firm Anderson Mori & Tomotsune had led an investigation into the allegations against Gupta.

Three sources with direct knowledge of the matter said the investigation was into an allegation of harassment against Gupta from a female employee. The allegation was made in March and the investigation had not been concluded at the time Gupta's resignation was announced, one person said.

Reuters was unable to confirm independently the nature of the harassment complaint, or any findings of the investigation.

Anderson Mori & Tomotsune declined to comment.

Nissan divided

The previously unreported details of the letter underscore how five years after the arrest of Nissan's former chief executive Carlos Ghosn for allegedly hiding his income, among other financial charges, Nissan remains divided over its ties to Renault.

Ghosn was dispatched by Renault in 1999 to turn Nissan around after the French company bailed it out and became the driving force behind a strategic alliance struck later that year, in which both companies took stakes in each other.

More recently, after months of tense talks, Nissan and Renault announced new partnership terms in February under which the Japanese automaker would take a stake of up to 15 percent in Ampere, an electric vehicle unit Renault is spinning off, and Renault would reduce its 43 percent stake in Nissan.

The automaker aimed to have a final deal approved by their boards by the middle of the year, but that target has slipped to the end of 2023, two people with knowledge of the talks said.

Senior executives at the French automaker, such as Chairman Jean-Dominique Senard and CEO Luca de Meo, had viewed Gupta as slowing down or blocking the completion of the deal, a person with knowledge of Renault's position said.

A Renault spokesperson declined to comment and said both executives declined to comment.

Nada said in his April letter that he believed Nissan CEO Uchida had overstepped his authority by making concessions and commitments in what he called backroom deals with de Meo. Nada cited two cases, both involving provisions relating to Nissan's intellectual property.

A Renault spokesperson declined to comment and said de Meo also declined to comment.

Anything Uchida discussed with his Renault counterpart would be subject to review by Nissan's board with input from executive committees, one person with knowledge of the deliberations said.

Anti-Renault

In his letter, Nada also criticized Uchida for pressing ahead with the decision to buy a stake in Ampere without establishing a strategic rationale and called for an independent financial adviser to review the deal.

Reuters was unable to determine if the directors had acted on Nada's call for a review.

Nada's letter marks the second time he has squared off against Nissan's top boss over the Japanese automaker's dealing with Renault.

Ghosn had been considering a full merger of the companies before his arrest in 2018. After fleeing to Lebanon to avoid trial in Japan, he has repeatedly described the case against him as a coup by Nissan executives, including Nada, who were alarmed by the prospect of a merger.

Nada, who had cooperated with prosecutors in exchange for avoiding prosecution in the Ghosn case, testified in the related prosecution of former Nissan director Greg Kelly that he believed a merger with Renault had to be stopped to protect Nissan's interests.

Nada is a member of two executive committees established by Nissan in 2019 as part of a governance reform after the Ghosn scandal. He said in his letter that one of those committees had been trying to develop a rationale for Nissan's agreed Ampere investment, but had been unable to provide anything credible.

Reuters was unable to confirm independently Nada's characterization of the Ampere investment review.

Gupta's sudden removal would serve as a warning to others perceived as being difficult or anti-Renault, Nada also wrote.