Ghosn escape proves fresh headache for ailing Nissan

by AFP/ pic by AFP

TOKYO – Out of Japan and free to speak to the media, a fugitive Carlos Ghosn is proving a fresh headache for his old firm Nissan as it struggles to rebuild its reputation.

The tycoon who once headed the automaker jumped bail and fled Japan last month while awaiting trial on financial misconduct charges. And he has not pulled any punches when it comes to the firm he helped turn around.

He accuses executives there of effectively setting him up, in a bid to block his plans for further integration with Nissan’s French partner Renault.

And in a press conference on Wednesday in Lebanon, where he emerged after his audacious escape, he slammed the firm’s executives, accusing them of losing shareholder value and pursuing a vendetta.

Nissan has remained largely silent, waiting until Jan 7 to release a statement calling his decision to flee “extremely regrettable” and insisting it had uncovered “numerous acts of misconduct” by the tycoon.

The firm faces its own legal proceedings linked to the case, which limits what it can say, a source close to Nissan told AFP.

“We have responsibilities, we must respect the law, we have obligations. It will be painful, but we have to do it.”

Ghosn meanwhile, in Lebanon and apparently beyond the reach of Japanese prosecutors, “can say what he wants, he has no more constraints,” the source said.

Morale hit

In a lengthy and at times combative press conference on Wednesday, the former auto magnate once again accused Nissan executives of plotting his downfall and sought to rebut the charges against him.

“For the moment there is nothing new in Mr Ghosn’s allegations against Nissan,” Koji Endo, an automotive analyst at SBI Securities, told AFP.

“But if Ghosn continues with his negative campaign… the market will get more sceptical about Nissan’s fundamental recovery and its brand image,” he said.

And internally there is “no doubt” that seeing the firm slammed so publicly is hitting morale, Endo said.

“I’ve been told that lots of people continue to resign from Nissan, young engineers” in particular, he added.

The Ghosn scandal has already cost Nissan dearly.

Its market cap has fallen more than $10 billion since his arrest.

“They lost more than $40 million a day,” Ghosn said on Wednesday.

The losses coincide with an overall crisis in the auto industry, which has hit earnings, but Ghosn argues Nissan’s desire to push him out has hurt profits and shareholder value.

Bloomberg News has also reported that Nissan spent $200 million on lawyers, investigators and private detectives during the scandal, a claim that insiders dismiss.

“The figure is ridiculously exaggerated. You probably need to take one zero off,” one source inside Nissan told AFP.

A one-man show

But there have been other costs related to the case.

Nissan was forced to pay a $15 million fine in September to settle an investigation by US securities regulators, who charged that the firm hid more than $140 million in Ghosn’s expected retirement income from investors.

And in December, it said it would not contest a $22 million fine levied by Japan’s Securities and Exchange Commission for filing documents that under-reported Ghosn’s compensation.

It still faces questions from the Tokyo Stock Exchange, to avoid being delisted, and is the subject of legal action by shareholders in the United States.

Internally, the firm says it has tried to clean up shop implementing governance reforms and internal investigations.

Among those caught up in that were former CEO Hiroto Saikawa, who stepped down last year after admitting he had received more pay than he was entitled to.

Current Nissan executives have remained largely tight-lipped on their former colleague’s broadsides.

“I don’t have time to deal with a one-man show by someone who fled the country in violation of the law,” Masakazu Toyoda, an external administrator told reporters acidly when asked for comment.

And Nissan’s new management likely has more pressing things on its mind: profits have fallen to their lowest level in ten years and sources say a strategy will be presented to the board next week to reverse the slide.