Illustration: Woshibai for Bloomberg Businessweek

Inside the Takedown That Put Carlos Ghosn in Jail

(Bloomberg Businessweek) -- One morning last November, several hundred businesspeople filed into an auditorium on the third floor of a skyscraper in Tokyo’s financial district. The occasion was a forum marking the centenary of the French Chamber of Commerce and Industry in Japan. Among the keynote speakers was an exemplar of the two countries’ warm relationship: Hiroto Saikawa, the chief executive officer of Nissan Motor Co. and a linchpin of its almost 20-year alliance with France’s Renault SA.

In his address, Saikawa extolled the partnership, a confection of cross-shareholdings and joint production whose durability had consistently surprised skeptics. “The alliance allowed us to compete with our major rivals,” said Saikawa, who’s 65, thin, and fairly tall, with a mostly unlined face and cheeks lightly mottled by freckles. He wore rimless glasses, a purple tie, and a dark navy suit with a gold pin in the shape of Nissan’s all-caps logo at the left lapel. Rarely one for elegant rhetoric, he instead boasted of Renault-Nissan’s accomplishments: combined operations that had generated billions in savings, a strong position in electric vehicles, more than 10 million cars sold in 2017.

To those present, the speech was unremarkable, even boring. But as he spoke, Saikawa was harboring a secret known only to a tiny number of Nissan managers and a team of prosecutors in the Special Investigations Unit, an elite arm of Japanese law enforcement. En route to Tokyo at that moment, aboard a Gulfstream G650 with the registration number N155AN, was Carlos Ghosn, the charismatic executive who’d engineered the Renault-Nissan alliance and now served as chairman of both companies. He’d be landing at Haneda airport in less than six hours, prepared for a busy week: a board meeting, discussions with important Japanese officials, then a trip to China. Saikawa knew none of that would take place.

Inside the Takedown That Put Carlos Ghosn in Jail

When the plane touched down, at about 3:30 p.m. that Monday, Nov. 19, Ghosn prepared to hand over his passport for inspection, a procedure performed hundreds of times since he’d arrived at Nissan in 1999. This time, though, a group of black-suited prosecutors filed up the jet’s stairs to tell Ghosn he was being arrested for violating Japanese financial law. Furious and confused, he refused at first to surrender, according to two people familiar with the events, demanding to know the charges and the evidence behind them. A lengthy argument followed, but it eventually became clear the men weren’t making a request. More than an hour after they boarded, Ghosn agreed to go.

As Ghosn was debating the prosecutors, another member of Nissan’s board, a dour American lawyer named Greg Kelly, was in a car heading into town from Tokyo’s other airport, Narita. He’d just landed on another company plane, scheduled by Nissan to coincide with Ghosn’s arrival. The plan was to surprise Kelly, who’d run Ghosn’s office before shifting to an advisory role, at his hotel in central Tokyo, bringing him into custody almost simultaneously with Ghosn in case one of them tried to warn the other, destroy documents, or flee. Traffic, according to three people familiar with the matter, intervened. As the risk grew that Kelly would learn of Ghosn’s detention, word went out to the team of prosecutors tailing behind: Pull him over. Kelly was soon arrested at a highway rest stop.

That night, Ghosn and Kelly slept in bare cells at the Tokyo Detention House, a place no executive of Ghosn’s stature had ever been held. Kelly was released on bail, but Ghosn remains confined there more than two months later, with little prospect of release. He’s been indicted for concealing his true compensation in regulatory filings by deferring as much as $80 million of pay to his retirement, and of a more serious “breach of trust” offense stemming from a 2008 decision to move personal trading losses temporarily onto Nissan’s books. The charges carry decade-long prison terms, and Ghosn, who’s 64, is fighting them in a country where prosecutors boast a conviction rate, rounded to the nearest integer, of 100 percent. Meanwhile Nissan, which fired Ghosn as chairman almost immediately after his arrest, has accused him of a wide range of further misconduct, essentially claiming he used the company as a personal piggy bank. He vehemently denies all the allegations. Kelly, who’s been charged in the deferred-compensation case, does as well.

Inside the Takedown That Put Carlos Ghosn in Jail

Ghosn’s descent is the most vertiginous in the recent history of global business; during an age when corporate scandals often end with a CEO enjoying a generous severance and a lucrative second or third act, the prospect of a top executive facing incarceration is genuinely shocking. Yet while Ghosn (whose name rhymes with “lone”) may have exceeded the boundaries of acceptable corporate behavior, it’s increasingly clear that his downfall had multiple authors. The arrests were the culmination of a torrid power struggle at Nissan, one with far dearer stakes than Ghosn could have known. Riding on the outcome, in addition to his personal position, were the future of the unprecedented partnership between two of the world’s largest automotive companies and a principle the Brazilian-French-Lebanese executive viewed as sacred: that in a global economy, the bigger-is-better logic of 21st century capitalism supersedes national differences.

In a statement, Nissan said that “the cause of this chain of events is the misconduct led by Ghosn and Kelly,” for which the company found “substantial and convincing evidence” after investigating a whistleblower’s report. Nissan’s focus, it said, “is firmly on addressing the weaknesses in governance that allowed this misconduct to happen.”

Barred until recently from speaking with anyone except consular officials and his lawyers, Ghosn has appeared in public only once since his arrest, at a brief January court hearing where he asserted his innocence. Even his allies don’t know entirely what to make of the allegations against him. But to some of them, his situation looks like more than the comeuppance of an executive who flew his Gulfstream too close to the sun. It looks like a palace coup.

Ghosn and Saikawa’s partnership dates to 2001, two years into a corporate alliance struck when Renault rescued Nissan from the edge of bankruptcy by paying $5.3 billion for about a third of its shares. Installed as Nissan’s chief operating officer with a mandate to ruthlessly cut costs, much as he’d done at Renault, Ghosn chose Saikawa to head a new office that would coordinate purchasing between the two. A Nissan lifer who’d joined the company straight out of university in 1977, Saikawa recounted in an interview with Bloomberg News that he was surprised to be tapped for such a critical function. Nissan was a financial mess, and he’d expected to take direction from French executives rather than the reverse. He began shuttling between Tokyo and Paris, keeping an office at Renault’s headquarters. His colleagues joked, one recalls, that he’d received a transfusion of (tricolor) blue blood.

Supplies and components purchased from third parties can account for more than half of a car’s manufacturing cost. Saikawa’s job was to squeeze better deals out of vendors, including by severing many of Nissan’s ties to its keiretsu, a uniquely Japanese grouping of suppliers that receives preferential access to contracts. He excelled at the task. Brusque, demanding, and seemingly incapable of talking about anything other than business, he worked long hours even by Japanese standards and made few friends, according to several former Nissan executives. During a stint overseeing Nissan’s North American operations, he was seldom seen anywhere but the office he used in Nashville or a nearby conference room; slapping backs on the local factory floor, the sort of thing Ghosn delighted in doing, was practically out of the question.

Inside the Takedown That Put Carlos Ghosn in Jail

The Renault-Nissan relationship evolved in a direction that might charitably be described as awkward. The companies officially came to share engineering resources, but current and former Nissan staffers say French and Japanese teams often worked together uneasily, disagreeing about technical standards and which technologies to prioritize. Obvious opportunities for collaboration were missed as each company stuck to its own plans—to this day, for example, Nissan’s flagship Leaf electric vehicle and Renault’s comparable Zoe share no major components. Yet the financial and strategic overhaul Ghosn imposed gradually restored Nissan to health, if never quite to the point of challenging Toyota Motor Corp. as Japan’s top automaker.

Nissan could be a hard-edged place to work, marked by intense rivalries and pressure to hit numerical targets. One former executive jokes that his time there reminded him of The Firm, the Tom Cruise movie about a law office where professional ambitions reach murderous extremes. The ultimate currency was Ghosn’s confidence, which Saikawa certainly enjoyed. One of a small corps of executives referred to internally as the “Ghosn children,” he was promoted repeatedly, eventually to chief competitive officer, with responsibility for research and development, manufacturing, and a slew of other functions. When, in early 2017, Ghosn announced that he would step down as Nissan CEO to concentrate on running Renault and the broader alliance, Saikawa took his place. “Saikawa-san is somebody I have been grooming for many years,” he said.

As Saikawa settled into the job, however, the tone of their relationship changed. His early tenure was dominated by revelations that for more than three decades, some Nissan cars had been inspected by auditors who weren’t properly certified. More than a million vehicles had to be recalled, and the company took the unprecedented step of shutting down its Japanese production for two weeks to investigate. Although Saikawa had been in the job less than a year, he absorbed the blame, performing the ritual apologies expected of dishonored Japanese bosses. He also took a voluntary pay cut, shrinking a compensation package that was already a small fraction of Ghosn’s. Ghosn, who’d actually been in charge for much of the period at issue, never formally apologized and even, according to a person with knowledge of the matter, chided Saikawa for moving too slowly to address criticism and implement an action plan.

Over the following months, Ghosn began planning an overhaul of Renault and Nissan’s ties that might have brought the two companies under a single corporate parent or into an outright merger, according to half a dozen people familiar with the ensuing discussions. (They, like other sources interviewed for this story, requested anonymity while discussing sensitive information.) As a larger, more integrated company, the thinking went, Renault-Nissan would be better positioned to pursue emerging technologies such as autonomous vehicles. It would also possess what investment bankers call “deal currency”—shares valuable enough to parlay into a major acquisition should another big carmaker become available. The French government, Renault’s largest shareholder, had made its preference for a tighter alliance clear, seeing an opportunity for the company to become the core of a global industrial giant.

Saikawa hated the idea, arguing internally that Nissan should remain independent or be the dominant force in any deeper union. He was particularly concerned with ensuring that Nissan’s electric vehicle technology wouldn’t be cannibalized to benefit Renault, the smaller and less profitable partner. In late April, Saikawa made his objections public, telling the business newspaper Nikkei that he saw “no merit” in combining Nissan and Renault.

Ghosn was livid. The next time he saw Saikawa at Nissan’s headquarters just outside Tokyo, he dressed his successor down, telling him he’d damaged the company’s credibility, and his own, by questioning the plan, according to a person familiar with the exchange. He also suggested to Saikawa that his days as CEO could be numbered. The conversation wasn’t an isolated incident—the same source says Ghosn had criticized Saikawa for weak performance in the U.S., where Nissan is badly lagging rivals. And at one point, according to a person close to Ghosn’s family, he told his children Saikawa had only until the end of 2018 to turn things around. (In its statement, Nissan said suggestions that Ghosn and Saikawa were divided, whether over the inspections crisis, a potential merger, or Nissan’s performance, are based on “unsubstantiated speculation and hearsay,” and that claims Saikawa’s job was at risk are “baseless.”)

Ghosn enjoyed a significant advantage in both pay and power. He was still Nissan’s chairman, in addition to being Renault’s CEO and chair, and chair of the Amsterdam-based entity that oversees the alliance. Under a structure that’s changed little since the 1999 rescue, Renault also controlled 43 percent of Nissan’s shares, giving it the power to veto major decisions. Regardless of Saikawa’s position, Ghosn could probably make deeper integration happen.

In the months before his arrest, people familiar with the discussions said, tentative plans were made to announce the new structure and a leadership team as soon as early 2019. Ghosn, whose Renault contract had been extended to 2022, would be at the top. Saikawa was at risk of being cast aside, and of seeing the company to which he’d devoted his entire career subsumed into a global conglomerate.

Ghosn’s life has been defined by a cosmopolitanism extreme even among the international business class. He has three passports, speaks four languages, and, until his recent change in circumstances, split time among five or more cities. But while he might be a caricature of the borderless Davos Man, he is by all accounts a true believer in the values of the often mocked Swiss economic forum. Understandably so—a man born in remote western Brazil, raised in Beirut, educated in Paris, and entrusted with an iconic company in insular Japan can be forgiven for assuming that national boundaries no longer bind global commerce.

When Ghosn landed in Tokyo to take charge of Nissan, his prior experience of Japan consisted of brief visits. The Japanese press compared his arrival in 1999 to that of the kurofune, or black ships—the American gunboats that forced the country open to trade in the 19th century. As his efforts at Nissan took hold, he became a living rebuttal to the notion that Japan couldn’t again participate fully in a new global era. His proudest accomplishments included deals to incorporate China’s Dongfeng Motor Co. and AvtoVAZ PJSC of Russia, hulking relics of communist central planning that became modern and well-organized components of the larger alliance.

The longer Ghosn spent traversing the globe, the more fully he inhabited his Davos Man character. In the early 2000s he got Lasik surgery and ditched his Coke-bottle glasses. He bought sharper suits and flattened his already unplaceable accent; his thinning hair became bushy and jet black. Remarkably, he never bothered to learn more than basic Japanese, but he seemed beloved in Tokyo anyway, stopped on the street for photos and courted by politicians looking to inject their campaigns with modern flair.

For all that, Ghosn was well and variously compensated. He had at least three salaries: in 2017 about $6.5 million from Nissan, $8.4 million from Renault, and $2 million from Mitsubishi Motors Corp., the troubled Japanese automaker that’s also now part of the alliance. Nissan and Mitsubishi say Ghosn received an additional $8.9 million from a Dutch joint venture, Nissan-Mitsubishi BV, without approval from either company.

It was over compensation that his troubles began. Relative to U.S. standards, Japanese and French corporate bosses are modestly paid. But Ghosn handled discussions of pay with his habitual combativeness, vigorously rebutting his critics. Often he had help from his steadfast ally Kelly, who commissioned annual tables from a respected consulting firm to demonstrate that Ghosn made less than his counterparts at automakers such as Ford Motor Co. and General Motors Co. That wasn’t quite the full picture, though. Japanese companies generally provide homes for their senior executives, and for Ghosn, Nissan provided five—in Paris, Tokyo, and Amsterdam, but also in Beirut and Rio de Janeiro, where he had negligible business ties but extensive personal ones.

Last spring, a person with direct knowledge of the events says, Hari Nada, who’d taken over managing many of Ghosn’s affairs from Kelly, began to question the propriety of the housing arrangements. Nada declined interview requests, and it’s unclear what motivated his concerns. A personable Malaysian-born lawyer, he’d worked at Nissan since the 1990s and had long been loyal to Ghosn and Kelly. He and Kelly were friends, part of a clique of senior expatriates who met frequently at Charcoal Grill Green, a burgers-and-beer bar near Nissan’s headquarters. Nada had also been intimately involved with many aspects of the chairman’s compensation. For instance, he was one of three administrators of Zi-A Capital BV, a Dutch subsidiary of Nissan created by Kelly in 2010; it purchased Ghosn’s Beirut house two years later for $8.8 million, then spent $6 million renovating it with opulent touches, including two chandeliers totaling $74,000.

Nada was also aware of documents proposing that payments totaling as much as $80 million be made to Ghosn after his eventual retirement—some related to noncompete agreements, others in advisory fees. He approached a colleague for advice on what he presented as an ethical dilemma: whether he’d abetted improper behavior, and if so what to do about it. The colleague told Nada that what he described seemed questionable and agreed to help him look into it. Nada also got another member of Ghosn’s staff, an administrator named Toshiaki Onuma, to assist with what soon became an investigation.

The group learned that Nissan’s auditors had been curious about Zi-A for more than a year and had at one point sent someone to the Netherlands to try, unsuccessfully, to learn more about it. After comparing findings, they and the auditors began working together, interviewing company staffers and pulling documents. Keeping the group’s efforts from Ghosn wasn’t particularly difficult. He rarely traveled to Japan more than once a month and was increasingly focused on the alliance and Renault, which received no word of the investigation.

When the men became concerned that some of what they found verged on criminal, they consulted with former prosecutors then working in private practice. With Nada and Onuma’s approval, those lawyers passed the information to former colleagues at the Special Investigations Unit, who by August had opened a criminal probe. Given Nada and Onuma’s involvement in Ghosn’s compensation arrangements (Onuma was also a Zi-A administrator), they too risked becoming subjects of interest in the inquiry. Happily for them, Japan had recently introduced its first-ever rules allowing plea bargains; according to local media, both men secured deals in exchange for providing evidence against Ghosn.

Meanwhile, Nada, Onuma, and a Nissan auditor named Hidetoshi Imazu worked on a formal report for Saikawa, laying out what they viewed as extensive misconduct. They presented it in October. Nissan officials say Saikawa knew nothing of the investigation before he received the document—which would mean that Nada and Onuma, moderately senior managers in a hierarchical Japanese company, had taken the decision largely on their own to report Ghosn and Kelly to prosecutors, a step almost certain to plunge Nissan into crisis.

Saikawa might not have been completely in the dark, however. According to two people with direct knowledge of the matter, in August he informed the Ministry of Economy, Trade, and Industry, which keeps a close eye on marquee Japanese companies, that Nissan was likely to face a serious problem later in the year. In its statement, Nissan said Saikawa was “entirely unaware” of the investigation in August and that he communicates regularly with the ministry—including about the ongoing matter of vehicle inspections, for which the company announced an additional recall in December.

Whenever it was that Saikawa learned of the probe, he made no effort to protect his former mentor. A person with direct knowledge of the investigation says Saikawa quickly agreed to cooperate with prosecutors, right down to helping organize the intricate operation to arrest his chairman and another member of the board. He and Nada knew Ghosn’s next trip was scheduled for Nov. 19, and their teams kept in regular contact about his plans to avoid creating the impression anything was amiss. Getting Kelly to Japan on the same day was more complicated. Semiretired, splitting his time between Nashville and Florida, and preparing for surgery to address painful spinal stenosis, he’d planned to join a late-November board meeting by videoconference. But Nada insisted that he be there in person. Nada also made the unusual offer to let Kelly use one of Nissan’s private jets, assuring him he’d be home well in advance of his operation. Kelly agreed to make the trip.

A few hours after the arrests, Saikawa summoned reporters to Nissan headquarters for a press conference in the same room where he’d taken the blame for the inspections scandal a year earlier. This time there were no ritual bows of apology. Instead, Saikawa unloaded on his former ally. “We can only say that the incident that has been discovered is the dark side of Ghosn’s long reign,” he said. Three days later, Nissan’s board voted unanimously to remove its chairman.

Inside the Takedown That Put Carlos Ghosn in Jail

The Tokyo House of Detention could pass for a hospital or suburban office campus. There’s no barbed wire; the external fences might otherwise surround a soccer field. Unarmed guards walk lazy circuits of the perimeter, passing within a few steps of the parking lot for an apartment complex next door. Many of the cars are Nissans.

The term “Kafkaesque” is often used imprecisely. But as a way of describing the Japanese justice system, it’s fairly apt. Suspects can be held without charge for as long as 23 days, and they have no right to a lawyer during questioning. Prosecutors also have the power to forbid family visits. When the 23-day period expires, a suspect can be rearrested for another offense, resetting the clock to zero. And once someone has been indicted, the outcome is all but predetermined, leaving defense attorneys to focus on coaching their clients to confess in the least damaging way.

Ghosn spent the weeks after his arrest being interrogated daily, while Kelly was questioned elsewhere in the same facility. After Ghosn’s first indictment, for failing to properly disclose his proposed retirement pay (a seemingly technical issue that carries a penalty of as much as 10 years in prison), he and his lawyers had started making plans on the assumption that he would be granted bail in time for the holidays. According to people familiar with his defense, the preparations were elaborate: Ghosn would be whisked from jail to the French Embassy, then onto a flight to Paris, where Emmanuel Macron’s government had agreed to supervise the accused and ensure his return to Japan for trial.

Instead, he was rearrested less than an hour before the bail hearing, this time for a breach of trust charge relating to his decision, in 2008, to temporarily use Nissan’s balance sheet to provide collateral for personal foreign exchange contracts. (Kelly was released in late December. Barred from leaving Japan before he’s tried for the deferred-pay charges, he recently underwent back surgery near Tokyo.)

While Nissan has said that Ghosn engaged in a wide pattern of unethical behavior, the criminal charges against him pertain only to the foreign exchange transaction and to allegations that he concealed the true scale of his retirement compensation—money he has yet to receive. At trial, his lawyers will likely argue that the proposals for post-retirement payments were only ever that—proposals, subject to negotiation, with no certainty they’d be disbursed or in what amounts. Therefore, they could claim, the proposals shouldn’t be regarded as deferred compensation or income, meaning Ghosn was under no obligation to disclose them.

The second indictment is more complex. During the 2008 financial crisis, with Nissan’s share price and the yen’s value gyrating, the Japanese lender Shinsei Bank Ltd. demanded more collateral from Ghosn to maintain hedging contracts he’d entered to shield his salary from currency fluctuations. Ghosn didn’t have enough in his personal accounts, so he arranged for Nissan to take on the contracts temporarily. Later he took them back, secured by a letter of credit from Khaled Juffali, a Saudi businessman whose family firm later received $14.7 million in payments from Nissan’s CEO Reserve, a source of money the company says Ghosn controlled with little oversight. Ghosn’s representatives maintain that the transaction was properly approved and that Juffali, who owns a car dealership chain, was paid for helping with regional distribution, not for getting Ghosn out of a jam.

Judges in Japan tend to defer to prosecutors when deciding whether to grant bail, and Ghosn’s most recent application for release was denied on Jan. 22. It looks likely he’ll remain locked up until his trial, which has yet to be scheduled. According to a person familiar with the conditions of Ghosn’s detention, he wasn’t permitted to take notes while being interrogated or to keep writing implements in his roughly 75-square-foot cell. Prosecutors were under no obligation to inform his defense team of the evidence against him, so he tried to memorize what they asked him and details from the documents they showed him. That was the only way he could give his lawyers some idea of what they might face at trial.

Despite the long odds against him, Ghosn is an atypical defendant, and an atypical verdict—that is, one other than guilty—isn’t out of the question. Legal vindication wouldn’t be enough, though, to repair his relationship with Nissan. In a brief jailhouse interview on Jan. 30 with Nikkei, Ghosn said he had “no doubt” he was the victim of “plot and treason” by rivals who opposed closer integration with Renault. Nissan’s internal investigation is still going on, according to people there, and has expanded to consider Ghosn’s and other executives’ relationships with dealers, distributors, and other business partners worldwide. Remarkably, given his own involvement in some of the conduct under investigation, Nada is still assisting. At one point after the arrest, someone familiar with Ghosn’s defense says, Nada reached out to Ghosn’s first wife, Rita, to seek information on her ex. (She didn’t return calls from Bloomberg Businessweek seeking comment. Nissan declined to comment.)

Meanwhile, new information about Ghosn’s conduct and spending habits is appearing at frequent intervals in the Japanese and foreign press. Many of the revelations have been awkward for Ghosn, if not necessarily legally damning. (A spokesman for his family declined to comment on them.) Nissan covered the cost of his Rio yacht club membership, and his sister was on the company payroll for more than a decade, performing ill-defined consulting duties in Brazil. And during one of the worst phases of the 2017 inspections crisis, he’d sent an email urging the company to speed up payments to the contractors who’d renovated the Beirut house. The delays, he wrote, were “preoccupying.”

Inside the Takedown That Put Carlos Ghosn in Jail

There’s never a good time for a company to be consumed by infighting and criminal prosecutions, but this moment is particularly bad for Renault and Nissan. Automotive sales are sluggish in the U.S. and declining in China, and the industry is muddling through an unprecedented upheaval, struggling to manage the transition to electric and autonomous vehicles and the attendant challenges from companies such as Tesla Inc. and Waymo LLC, the self-driving technology arm of Alphabet.

Ghosn was a relatively farsighted advocate of new technologies. He championed the Leaf, the world’s best-selling electric car since Nissan brought it to market in 2010. And his integration plan was predicated on achieving the scale needed to keep pace with traditional rivals and Silicon Valley. Put together, Nissan, Renault, Mitsubishi, and the smaller brands in their confederation make as many cars as any other manufacturer, but virtually no one else in the industry views the fragmented alliance as a real rival to the true global giants, Volkswagen AG and Toyota. Creating a more united front would have been difficult, to say the least; according to people familiar with debates inside the alliance, Ghosn’s earlier efforts to consolidate production produced fierce opposition within Nissan—particularly a series of decisions to assemble Nissan cars at Renault plants in France.

Despite public pressure from Saikawa, Renault declined to fire Ghosn, and he remained the chairman and CEO of record until resigning on Jan. 23. The company has said that an internal investigation of his pay found no evidence of wrongdoing, but that it’s continuing to look into the compensation of Ghosn and his inner circle. And though the arrests have undoubtedly widened divisions between the two companies, Renault and Nissan both say they’re committed to their partnership. Unscrambling 20 years of even imperfect integration would be a monumental task—a sort of corporate Brexit.

Saikawa has said he’ll work to improve governance at Nissan, then look to “pass the baton” once the company has been stabilized. There’s considerable evidence, in the meantime, that he also intends for the Japanese side to gain more control within the alliance. He’s said he wants Nissan to take a more proactive role in decision-making; it might, for example, seek to alter a stipulation that Renault’s leader is automatically head of the alliance. Late last year, according to people familiar with Nissan’s plans, the company also began preparing to move more than $1 billion from its Chinese joint venture back to headquarters. That money could help it buy shares in Renault, at the risk of a major confrontation with the French state, which jealously guards its position as the dominant stakeholder in key companies. (Nissan says that it would be “baseless” to suggest anything unusual was occurring and that it doesn’t intend to use repatriated funds to buy Renault stock.)

Before Nissan moves on from the Ghosn era, it will have to deal with its own legal issues. The company was also indicted on deferred-pay charges relating to Ghosn and could face further legal jeopardy—including in the U.S., where the Securities and Exchange Commission has opened an inquiry into its compensation disclosures. If more trouble ensues, it will be hard to take the spotlight off Saikawa, who was a senior executive and board member throughout the period concerned. The Nissan case, like Ghosn’s, will turn on a simple question: How could a sophisticated global automaker, with battalions of lawyers and auditors and abundant bureaucratic infrastructure, not know what it was paying its chairman?

Before this year, January for Ghosn meant a return to his spiritual home: Davos. Unfailingly, he’d carve out the better part of a week from his map-hopping itinerary to speed-walk from panel discussions to TV interviews to “bilateral” meetings with other winners of the global game. This year his absence was marked mainly by the revelation from France’s finance minister, in an interview at Davos with Bloomberg TV, that Ghosn had resigned from his position with Renault. Otherwise, the forum carried on all but oblivious to Ghosn and the possibility that his was a cautionary tale of disconnection and entitled excess.

Spending much of his time at 30,000 feet, confident that Kelly and others had worked out the details of his ample compensation, Ghosn didn’t notice that some of his closest colleagues in Japan were working to engineer his arrest. At times, he’d been collecting more than twice as much pay as the rest of Nissan’s directors combined, in addition to his other salaries and five company residences. He might simply have been enjoying the spoils of corporate success, as his defenders insist. Or, as Nissan and prosecutors argue, he might have transgressed legal and ethical bounds. Either way, he gave his enemies an opening.

Ghosn’s most recent public appearance was Jan. 8, in a utilitarian hearing room at the Tokyo District Court. A few days earlier his lawyers had used an obscure legal maneuver compelling a judge to justify his continued detention—a long-shot strategy but one that guaranteed their client the opportunity to address a court. Court sketches and reports depicted Ghosn sitting behind a blond wood podium, wearing a dark suit with an open-necked white shirt and flimsy, jail-issued plastic slippers. His hands were cuffed in front of his body, and guards had looped a rope around his waist—standard practice for prisoners appearing in Japanese court. He was thinner than before, and gray was visible at the roots of his hair.

“I have dedicated two decades of my life to reviving Nissan and building the alliance. I worked toward these goals day and night, on the Earth and in the air,” Ghosn said after reading out a series of rebuttals to the charges against him. An interpreter translated for the judge. “I have always acted with integrity and have never been accused of any wrongdoing in my several-decade professional career. I have been wrongly accused and unfairly detained.” He concluded: “Thank you, Your Honor, for listening to me.”

He spoke for about 10 minutes. Soon afterward, guards in blue uniforms led him out of the courtroom to begin the long drive across Tokyo, back to his cell. —With Ruth David and David Welch

To contact the editor responsible for this story: Jeremy Keehn at

©2019 Bloomberg L.P.