Nissan apologizes as indictments rock automaker and 2 former bigwigs

In light of tainted financial statements spanning five years, the company says it ‘takes this situation extremely seriously’ and ‘expresses its deepest regret.’

As indictments in its financial scandal roll out, Nissan seeks to restore confidence among investors and the public.

Japanese authorities have announced charges for former Nissan Chairman Carlos Ghosn, for former Representative Director Greg Kelly and for the company itself. Along with the reputational damage to Nissan, Ghosn’s indictment means he will stay behind bars for the foreseeable future.

CNBC wrote:

Ghosn was arrested in November for under-reporting his compensation in the company’s financial statements over a period of five years. The auto giant said in a statement in November that “over many years” Ghosn and board director, Greg Kelly, had been under-reporting compensation amounts to the Tokyo Stock Exchange securities report.

Nissan added that, in regards to Ghosn, “numerous other significant acts of misconduct have been uncovered, such as personal use of company assets.” The company said Ghosn had also made inappropriate investments.

On Monday, Nissan confirmed that both Ghosn and Kelly had been indicted for “violating the Japan Financial Instruments and Exchange Act, namely making false disclosures in annual securities report.”

Nissan responded to the legal filings with a statement:

Today, Nissan Motor Co., Ltd.’s former Representative Director and Chairman Carlos Ghosn and former Representative Director Greg Kelly were indicted for violating the Japan Financial Instruments and Exchange Act, namely making false disclosures in annual securities reports.

Nissan, as a legal entity, was also indicted for the same violation.

Nissan takes this situation extremely seriously. Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company expresses its deepest regret.

Nissan will continue its efforts to strengthen its governance and compliance, including making accurate disclosures of corporate information.

Nissan also claimed to be prepared for such charges following its internal investigation into Ghosn’s and Kelly’s activities.

The BBC reported:

A source close to the firm said that the charges were not unexpected “given the company flagged its concerns” to prosecutors after it had conducted an internal investigation.

Some in the global community insist the process occurring in Japan is unfair, making ripples internationally.

The Washington Post reported:

But former French ambassador to Japan, Philippe Faure, told the Mainichi Shimbun he was “stunned” by the arrest. “I thought Japan was a friend,” he said.

Faure argued Japan should provide details of its suspicions and said Ghosn’s long detention was unjustifiable. “Democratic countries don’t do it this way,” he said. “What is happening today in Japan is just as if it’s happening in Saudi Arabia.”

The crisis has also brought Nissan’s current leadership into question, as some see Ghosn’s arrest as part of a power play within the company.

The Washington Post continued:

Many experts say Ghosn may have been a victim of an internal power struggle within Nissan, where the company’s Japanese management team is known to have been unhappy with his plans to tie the automaker more closely to Renault.

The Wall Street Journal reported that Ghosn was also about to replace Nissan CEO Hiroto Saikawa before his arrest derailed the plan.

On the of day of Ghosn’s arrest, Saikawa held an emotional news conference in which he complained of his “resentment” and “dismay” at his former boss and mentor’s alleged misconduct.

Nissan has worked closely with prosecutors throughout the investigation but ultimately could not avoid its own responsibility if a crime were committed, legal experts say, since it would have had to approve and sign off on all securities reports.

Ghosn’s allies at Renault are skeptical of his arrest and are demanding more proof from Nissan and Japanese authorities.

Bloomberg reported:

Executives are suspicious of Nissan’s motives, demanding to see proof from the Japanese carmaker of the accusations against Ghosn, people familiar with the matter have said. Nissan offered up a presentation summarizing his alleged transgressions, but Renault declined, requesting the presence of lawyers and the full report on the allegations, the people said.

Renault and Nissan have complicated cross-shareholdings, and poor relations would make operations difficult. The French carmaker is the largest shareholder in Nissan and has 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.

CNN reported:

Ghosn’s downfall has strained the global autos alliance between Nissan, Renault and Mitsubishi Motors.

Renault, which has appointed an acting chief executive but kept Ghosn in his positions of CEO and chairman, said it has not been provided with evidence of wrongdoing.

“We have no specific comment to make on the indictment and at this stage we still haven’t received any evidence in relation to the investigation,” a spokeswoman said.

Both Nissan and Renault stocks are down as investors assess the latest news.

How would you advise Nissan and Renault to address these latest developments?

(Image via)


PR Daily News Feed

Sign up to receive the latest articles from PR Daily directly in your inbox.