Renault-Nissan Considered Secret Ghosn Payment Plan, Email Shows
Carlos Ghosn, chairman of Nissan Motor Co., pauses during an interview in Yokohama, Japan. (Photographer: Akio Kon/Bloomberg)

Renault-Nissan Considered Secret Ghosn Payment Plan, Email Shows

(Bloomberg) -- As a power struggle between Renault SA and Nissan Motor Co. intensifies over governance at the car-making alliance, new information is emerging about how jailed leader Carlos Ghosn allegedly tried to shield the scale of his compensation from the public eye.

Executives at the French and Japanese automakers considered a plan in 2010 to pay some of Ghosn’s compensation through Renault-Nissan BV, the Dutch holding company that runs their alliance, “without disclosing it publicly,” according to an email seen by Bloomberg News. In the message from Nissan director Greg Kelly, who is being held alongside Ghosn in a Tokyo prison, he said the method carried “some legal risk.”

Ghosn and Kelly were indicted in Japan last week on allegations the car titan under-reported his income at Nissan over a number of years. A Tokyo court on Thursday refused a bid by prosecutors to prolong their detention, raising the chances that both could be released on bail as soon as Friday to await trial.

Ghosn’s arrest came after a months-long investigation by Nissan that it didn’t share with its French partner in the world’s biggest auto alliance. His downfall has thrown the two-decade partnership into disarray, creating a climate of suspicion between the companies and fueling uncertainty over how they can continue to work together.

The scuppered 2010 plan and the correspondence around it was first reported by French newspaper Les Echos. A spokesman for Renault said that Kelly consulted Renault and Nissan executives on the legality of paying Ghosn through Renault-Nissan BV and that Renault told Kelly any remuneration from the company would have to be made public in France. The plan was never implemented, to the company’s knowledge, the spokesman said.

Nissan and a lawyer for Ghosn declined to comment. The email in question was part of a discussion in which other individuals were considering payment to Ghosn through Renault-Nissan BV in a way that was legally appropriate, a lawyer for Kelly said. A spokesman for RNBV declined to comment.

Understating Income

Ghosn, Kelly and Nissan have been indicted over understating the high-flying car executive’s income by $43 million during the five years to March 2015. Ghosn was also arrested for allegedly under-reporting income from Nissan by 4.2 billion yen ($40 million) for the three years until March 2018. Ghosn’s lawyers have said the Japanese prosecutor’s case is flawed because any agreement on converting compensation to deferred pay wasn’t properly ratified.

The email seen by Bloomberg describes how Kelly sought legal advice in April 2010 from Mouna Sepehri, a Renault board member and top executive, and at least one other person about the implications for Ghosn and the carmakers of paying the executive through the Renault-Nissan alliance company known as RNBV -- which is run from Amsterdam and is separate from the two carmakers -- partly because Ghosn “wanted to make sure” the method would be legal.

Questions posed by Kelly also included whether the practice could be challenged and if so, could there be criminal sanctions or civil penalties. “The CEO spends a significant amount of time working for RNBV to optimize synergies for the Alliance and the time spent working for RNBV can be documented,” according to the email from Kelly in which he asked for “absolute confidentiality.”

‘Power Grab’

Kelly’s wife, Dee Kelly, said the arrests of her husband and Ghosn were the result of a coup by Nissan executives, including Chief Executive Officer Hiroto Saikawa. Her husband has been wrongly accused “as part of a power grab,” she said in a video released Dec. 19 through an attorney.

The plan to pay Ghosn through RNBV, which was eventually dropped, was considered following the implementation of new rules in Japan in 2009 requiring greater disclosure of executive compensation, according to a person familiar with the matter who asked not to be named.

Another email sent to Kelly and seen by Bloomberg describes donations made by the carmakers to universities in Lebanon, in “exchange” for the naming of a library and floor after Ghosn, who has Lebanese citizenship. Plans were made for a naming ceremony, while instructions were given to keep the level of the contributions confidential.

Frosty Relations

Since Ghosn and Kelly’s Nov. 19 arrests, relations between Renault and Nissan have grown frostier amid signs the Japanese carmaker may use Ghosn’s absence to try and agitate for greater control within their alliance.

Renault and Nissan have complicated cross-shareholdings. The French carmaker has a 43 percent holding in Nissan with voting rights, while the Japanese company is the second-largest shareholder in Renault, with no votes. Nissan is keen to achieve a more equal power balance but its demands have been stonewalled by Renault and the French state.

In a sign of tension between the two, Nissan is pushing back at Renault’s request for a shareholders’ meeting, Bloomberg News has reported. The French company has asked for such a meeting and would need one to appoint a new board member at Nissan to replace Ghosn.

©2018 Bloomberg L.P.

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