New Nissan Pay Problems Point to Conflicts at the Top

0
15

TOKYO — An outside law firm investigating problems at Nissan, the troubled Japanese automaker, this summer discovered some potentially explosive information.

Hari Nada, a powerful Nissan insider who was behind the ouster last year of Nissan’s chairman, Carlos Ghosn, over compensation issues, had been improperly overpaid himself, the firm found. A second insider involved in the corporate coup was responsible, the firm said, and had briefed Mr. Nada on what he had done.

A senior Nissan compliance officer planned to share the findings with the company’s board of directors, according to people familiar with the situation.

But the full board never heard the details of the findings, according to people who attended the board’s last meeting on Sept. 9. Moments after the meeting ended, Nissan issued a statement that cleared an unnamed group of executives of misconduct.

In the weeks after the law firm delivered its findings, Nissan sidelined two senior in-house lawyers who had handled issues of misconduct at the company, including the one who hired the outside law firm, according to people briefed on the moves. Both had warned Nissan executives that Mr. Nada had continued influencing inquiries into the company’s problems, these people said, even after recusing himself to avoid conflicts of interest.

The series of events, most of which have not been previously disclosed, paint a picture of a major global automaker hobbled by distrust and deep conflicts of interest among top executives. Nearly one year after Mr. Ghosn was arrested by the Japanese authorities, shaking the global auto industry, Nissan remains riven by corporate intrigue that has left members of its own board and Renault of France, which owns a 43 percent stake in the Japanese company, in the dark. The automaker has also reported a deep plunge in profits as sales have plummeted and announced plans to lay off as many as 12,500 employees worldwide.

The findings from the outside law firm, which were reviewed by The New York Times, could also raise questions about the credibility of crucial witnesses against Mr. Ghosn, who has been charged with trying to conceal his pay level from regulators, among other charges, and Greg Kelly, a former senior Nissan executive charged with helping him. Both men say they are innocent.

Nissan said that the executives whose pay issues came to light after Mr. Ghosn’s ouster were “unaware that improper methods were used” to increase their compensation and that there was “no reason to suspect” that they broke the law. A Nissan spokeswoman said the company possessed a more recent version of the findings from the outside law firm, but Nissan declined to make that version available.

Christina Murray, then the head of Nissan’s internal audit and compliance offices, hired the law firm, Anderson Mori and Tomotsune, this past summer. Ms. Murray had been leading an examination into misconduct at the company since last year. In late August, the firm delivered a report on its findings addressed to Ms. Murray.

CreditNissan Motor Co.

Mr. Nada, the head of Nissan’s legal department and security office, had in 2017 received about $280,000 in “unjust enrichment,” the firm found.

The Nissan spokeswoman said that the more recent version of the law firm’s findings had included a different, lower amount for Mr. Nada’s overpayment. Nissan declined to release further details or to explain the discrepancy. “As the investigation progressed, updates were made,” it said.

Toshiaki Onuma, a senior Nissan administrator, changed the payout dates for stock-based compensation, the firm found, improperly increasing pay for Mr. Nada and others. The firm did not say why Mr. Onuma changed the dates.

Both Mr. Nada and Mr. Onuma were deeply involved in Mr. Ghosn’s fall and are widely expected to be central witnesses in his trial. The two have struck cooperation agreements with Japanese prosecutors, according to Mr. Ghosn’s lawyers and Nissan documents reviewed by the Times. Japanese prosecutors have not made details of the agreements public.

It is not clear what happened to the law firm’s findings after it delivered its report. But shortly after, Motoo Nagai, a Nissan director who heads the company’s audit committee, told Ms. Murray that she could no longer participate in any investigations involving Mr. Nada, according to an email reviewed by the Times. She subsequently resigned. Her last day in the office was Aug. 30, and she officially left the company on Sept. 9. She had planned to present the results of her yearlong investigation to the full board that day, said the people familiar with the plans.

Mr. Nagai has told reporters that Ms. Murray had been contemplating resigning since July and that the timing was coincidental. The company has said she resigned for personal reasons.

The board’s meeting on Sept. 9 focused on Hiroto Saikawa, Mr. Ghosn’s successor as chief executive. The board unanimously asked for his resignation, and he resigned that day. He had admitted earlier that month that he received about $440,000 in improper share-based compensation. Mr. Saikawa said he had not realized that the overpayment was “against the rules” and vowed to return the money.

But some directors at the meeting demanded more information about the compensation of other executives and were growing frustrated with a lack of it, said people who were there. Days before, Bloomberg News reported that Mr. Nada had received overpayments, without specifying the amount or how. Jean-Dominique Senard, the chairman of Nissan’s French partner, Renault, and other board members asked why they were learning about top executives’ pay issues from media reports.

In its statement, Nissan said the law firm’s findings had been “reflected” in a broader report shared with the board after the meeting. But that broader report named only directors, not executives, who received improper compensation, according to people aware of its contents. It did not identify the executives, like Mr. Nada, who received that compensation nor say how much they received or how they received it, the people said. Some members of the board were not aware that the firm had been hired, they said.

When the board meeting ended, Nissan released a statement that said that in addition to Mr. Saikawa six other directors and executives, whom it did not identify, had received extra compensation. Nissan added that they had been unaware of the “improper methods used” to increase their pay.

The findings by Anderson Mori and Tomotsune said five executives and directors, including Mr. Nada, were overpaid. It is not clear whether the six cited by Nissan overlapped with the five named by the law firm. Nissan declined to discuss their identities, citing privacy issues.

Mr. Onuma told the firm’s investigators that he had “explicitly explained” to Mr. Nada that he had changed the date for stock-based compensation to increase Mr. Nada’s pay, according to the law firm’s report. Investigators also cited an email to Mr. Nada that they said showed Mr. Onuma explaining the change.

The law firm said it was unable to verify what Mr. Onuma said because Mr. Nada refused to be interviewed.

Mr. Nada refused to talk to the law firm unless Mr. Nagai was present and given full authority over the interview, as well as its results. The law firm called Mr. Nada’s demands “unusual and inappropriate” and left the question of how to proceed with Mr. Nagai.

In a statement, Nissan said that “all subjects of the investigation were interviewed appropriately” by Anderson Mori and Tomotsune. It declined to provide further details.

The firm also found that Mr. Onuma had adjusted the compensation of Itaru Koeda, a former Nissan director, by about $93,000, and the compensation of Arun Bajaj, a former executive in Nissan’s human resources department, by $46,000. The men said they were unaware of Mr. Onuma’s actions, the firm said.

The law firm wrote that overpayments to two other executives, including Asako Hoshino, Nissan’s most senior female executive, were “relatively innocent” and resulted from what appeared to be miscommunication.

CreditChristopher Jue/European Pressphoto Agency

As investigators inside and outside Nissan have explored the problems with how the company is run, people within both the Japanese company and Renault have begun to focus on Mr. Nada’s role within the company. He has remained the head of Nissan’s legal department despite his cooperation agreement with prosecutors and his role as a potential witness in Mr. Ghosn’s trial. Some within Nissan and its board see this as a troubling conflict of interest, say people familiar with the concerns.

Mr. Nada recused himself in April from matters involving investigations at the top, according to people familiar with the situation. But, they said, Mr. Nada has continued to use his position and a team of loyal employees to influence those matters directly and indirectly.

Ms. Murray, the former compliance chief, repeatedly expressed concerns over what she described as Mr. Nada’s continued influence over the investigations and related legal matters, according to people she spoke with and emails reviewed by the Times.

Nissan’s internal and outside legal advisers have also questioned Mr. Nada’s role within the company.

During the Sept. 9 board meeting, six of the board’s seven independent directors — everyone except Mr. Nagai — were given a letter written by a senior Nissan lawyer, Ravinder Passi, with a legal memo attached, that outlined potential conflicts of interest within Nissan’s top ranks. Mr. Passi’s letter was previously reported by The Wall Street Journal.

The memo, which was reviewed by the Times, had been commissioned by Mr. Passi and written by two outside law firms, Cleary, Gottlieb, Steen and Hamilton, based in New York, and a Japanese firm, Mori Hamada and Matsumoto. It said executives involved in Mr. Ghosn’s alleged wrongdoing “should not be involved in decision making” related to those accusations. It also cited deals struck by Mr. Nada and Mr. Onuma with prosecutors to cooperate in their case against Mr. Ghosn in exchange for immunity from criminal liability.

The memo was dated July 23. In his Sept. 9 letter to the six outside directors, Mr. Passi said he had shared the memo on July 25 with Mr. Nagai, the chairman of the board’s audit committee. Mr. Passi wrote he had not been able to find out whether board members had seen the memo but felt “duty bound” to bring it to their attention.

Since July, Mr. Passi said in his letter, the problem of conflicts of interest within the company’s top ranks had “become more acute.”

Shortly after the board meeting, Mr. Nada wrote in an email to the company’s legal department that Mr. Passi would no longer handle any legal matters related to the Ghosn investigation. Instead, Kathryn Carlile, one of Mr. Nada’s former assistants, would take over, said the email, which was reviewed by the Times.

That surprised some board members and Nissan employees who saw Ms. Carlile as loyal to Mr. Nada, said people familiar with their thinking. In its statement, Nissan said Mr. Passi had been removed from those matters because of potential conflicts of interest. It did not specify the conflicts.

In his email, Mr. Nada said the legal team should make arrangements to brief Ms. Carlile on related issues “as soon as possible.” The email ended, “Best regards, Hari.”

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here