Inside Nissan's Battle With Ghosn: A Whistle Blower Speaks Out
Ravinder Passi uncovered flaws in Nissan’s investigation of Carlos Ghosn, then he faced a vicious blowback.
(Bloomberg) --
Nissan Motor Co.’s former top lawyer, who led an internal investigation into alleged financial misconduct by Carlos Ghosn, said he endured retaliation, demotions and even corporate surveillance of his family after questioning the integrity of the probe.
Former Global General Counsel Ravinder Passi, speaking for the first time about the arrest of Nissan’s celebrated ex-chairman Ghosn and his daring escape out of Japan, described what he views as a toxic corporate culture, one rife with fear, intrigue and reprisals for those who step out of line.
“This is just not normal behavior,” said Passi of what he claims was heavy surveillance of his family. “This is a car company. This is not the KGB.”
In an extended interview for Bloomberg’s QuickTake Storylines, Passi said he knew of similar instances of Nissan’s top managers having security teams tail individuals. “I had seen the Nissan security department behave in a very, very egregious manner with others, in terms of following, surveilling.”
In Passi’s telling, there’s been scant oversight by the automaker’s board of directors regarding internal conflicts of interest by senior staff, as well as executive compensation and stock option award policies.
Ghosn faced Japanese criminal indictments that he underreported his remuneration by more than $140 million, misused company money and funneled millions of dollars into secret, off-shore entities for his own benefit.
At the same time, Ghosn’s key accusers — former Chief Executive Officer Hiroto Saikawa and Senior Vice President Hari Nada — received inflated stock-based awards, according to people familiar with the matter and documents seen by Bloomberg.
Saikawa resigned in late 2019 after those compensation irregularities came to light. Nada also lost some of his operational responsibilities, but still works at the company and testified earlier this year in the financial misconduct trial against former Nissan director Greg Kelly, who is being tried in Tokyo for allegedly helping Ghosn hide his compensation. Kelly has denied the charges.
“You had a revelation that a number of executives had benefited from share appreciation rights,” said Passi. “Substantive amounts of money had been taken by these guys, when they weren’t entitled to take them.”
Passi was part of a select inner circle who had advance knowledge of Ghosn’s arrest in November of 2018. He left Nissan last fall and is pursuing legal action in London against the automaker for wrongful termination under the U.K.’s whistleblower statute.
“Nissan is contesting a claim by Mr. Passi which contains numerous mischaracterized allegations,” said Nissan spokeswoman Lavanya Wadgaonkar, who declined to make Nada available for comment. “We are unable to comment further on a matter which is subject to ongoing litigation.”
During his final months in Japan last year, Passi was stripped of key responsibilities, demoted and pressured to move his wife and four children back to the U.K. in the middle of the Covid-19 pandemic, he says.
In addition, as previously reported by Bloomberg, the family was subjected to a surprise Nissan-initiated raid of their home after a Yokohama court ordered the seizure of Passi’s company-issued laptop and smartphone. Passi alleges the devices contained evidence of “misconduct and other forms of inappropriate conduct” by Nissan executives.
Internal Conflicts
As Nissan’s most senior corporate attorney, top management turned to Passi to help lead an internal audit of Ghosn’s alleged financial misconduct in tandem with the criminal investigation by Tokyo prosecutors. However, as the Nissan inquiry progressed, Passi said he became aware of serious conflicts of interest by key executives.
Passi reported to Nada, who was a central player in a campaign to dethrone Ghosn amid concerns over his plan to further integrate Nissan and its alliance partner Renault SA, according to email communications disclosed by Bloomberg last June. Nada also had a deal with Tokyo prosecutors to cooperate in exchange for immunity as part of their case against Ghosn and Kelly, which raised questions about his true motivations in investigating Ghosn.
“I had doubts about the process right from the start,” said Passi. "It didn’t smell right.”
Passi says he was under pressure to move fast and come up with the evidence supporting the allegations by prosecutors that Ghosn had underreported his remuneration and mishandled Nissan funds.
Those efforts would be for naught. In late 2019, Ghosn escaped from Japan after being smuggled onto a private plane in a music equipment box. His alleged accomplices, American security consultant and ex-Green Beret Michael Taylor and his son, Peter, were extradited to Japan in early March to face trial, and were indicted in Tokyo last week.
The Tokyo Job: Inside Carlos Ghosn’s Escape to Beirut
Prior to Ghosn’s escape, as Passi gathered information around Ghosn and Kelly’s alleged crimes, the lawyer began to share his conflict-of-interest concerns with Nada. He says they were largely ignored, so he took the fateful step in September of 2019 of writing a detailed memo spelling out his worries about the probe’s credibility to independent directors on Nissan’s board.
Within three days of submitting that letter, Passi said, he was removed from the Ghosn investigation. Soon after, he was shut out of board meetings, despite his responsibilities as global general counsel.
Next, Passi lost his oversight over corporate legal affairs and a team of more than 200 lawyers and staff worldwide. His new assignment: vice president for “projects and transformation” with a staff of three in the U.K.
“You can imagine what this feels like at this stage,” said Passi. “An almost arbitrary removal from Japan, where I have lived for eight years and had three children.”
Then the surveillance started. In March of 2020, Passi became aware one day while driving that he was being followed by what he said was a security detail in a grey van. “And I noticed that somebody in the van was taking pictures.” After that, Passi said, sightings of small surveillance teams, usually of two or three burly security men, were commonplace for the family.
Later came the shock raid at his home one morning, which unnerved Passi’s children and his wife, Sonia.
“It was just another form of intimidation, another form of harassment, forcing me almost to leave the company and the country,” Passi said.
Ghosn’s Nemesis
Passi’s journey into the dark recesses of corporate Japan is not without its ironies, starting with his relationship with the key figure behind Ghosn’s demise. Nada had recruited Passi into the U.K. branch of Nissan, was his mentor and sold him on working at the company’s Japanese headquarters.
“I have a long-standing relationship with him, or did have a long standing relationship with him,” Passi said. “It's only toward the latter part of that career, given some of the things that he was involved in, that I started to see a very different side to him. In many respects, he was acting as an agent, I think, of the Tokyo prosecutors.”
Nissan has maintained since late 2019 that the financial misconduct allegations against Ghosn and Kelly were based on “substantial and convincing evidence” the automaker had uncovered and the sole reason why they were arrested and removed.
Unlike Passi, Nada appears to be in good standing with the current Nissan management regime, led by CEO Makoto Uchida, who’s trying to return Nissan to long-term profitability and keep the carmaking alliance between Nissan, Renault and Mitsubishi Motors Corp. intact.
In late 2018, with the industry still in shock over Ghosn’s detention in Japan and the allegations being leveled against him, Nissan supplied Nada with a bodyguard, car and driver and rented him a $12,000-a-month luxury apartment in Tokyo’s Roppongi district, according to a person familiar with the matter.
And what of the main character in this bizarre corporate drama, Carlos Ghosn? He now lives in his childhood home of Lebanon, which doesn’t have an extradition treaty with Japan.
Whether he thinks Ghosn crossed a line into criminal behavior or not while at the top of Nissan, Passi doesn’t have a ready opinion. In any case, the industry legend turned international fugitive will probably never have to face his accusers in a Japanese courtroom.
But Passi was somewhat taken aback at how some reacted to Ghosn’s downfall at Nissan, a company that he, and the financial resources of Renault, saved from financial ruin in the early 2000s.
“It generated a lot of angst on one side of the fence, and on the other side of the fence, it was almost vitriolic in that sense, like we've got them,” said Passi. “That was quite a strange thing to experience because these guys — they haven't killed anyone.”
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