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Shortly after the arrest of Carlos Ghosn last fall, embarking on a strange legal odyssey that shook the world of the automobile, some wondered if the financial crimes he was charged with were serious enough to justify the shocking arrest of Nissan Motor Co. legendary president.
It turns out that it was only the first part. The initial arrest last November – about what some saw as a relatively minor charge of underestimating compensation – was a tactical tactic of saving time to analyze the flow of money in from and to Oman, according to people close to the case. Additional fees followed. Nissan executives have since cooperated with Tokyo prosecutors and received plea agreements in at least two cases, according to people who asked not to be appointed to discuss private matters.
The ousted motorist is now facing much more serious charges for enriching himself with numerous complex financial transactions involving trading partners in Oman and Saudi Arabia, as well as in his ancestral homeland of Lebanon, where he is still a visionary.
The prosecutors were convinced that they could defend their case, so they again arrested Ghosn on April 4, just weeks after he was released on bail. A Tokyo court on Friday approved his detention until April 14. In the latest allegation, Ghosn is accused of siphoning $ 5 million out of a total of $ 15 million that Nissan sent to a foreign distributor between 2015 and 2018, according to Japanese prosecutors. This figure excludes more than $ 15 million that Nissan has found that Ghosn had sent in previous years, according to people close to the record.
The prosecutors and Nissan refused to comment beyond what they said publicly.
Authorities did not reveal the name of the distributor, but an investigation by Renault SA and Nissan revealed that payments made under Mr Ghosn would have been paid to Suhail Bahwan Automobiles LLC, Nissan's exclusive distributor in Oman, according to knowledgeable people. According to their findings, some of these transfers could be to a yacht and a start-up run by Ghosn's son.
"The new charges are more substantial and more serious," said Stephen Givens, a law professor at Sophia University in Tokyo. "Things could change for Ghosn's prospects if it turned out that he was actually hijacking Nissan's money."
For its part, Ghosn continues to deny all accusations of wrongdoing in financial order. In a statement, he said his latest arrest was "scandalous and arbitrary" and that he "will not be broken". In an interview with French television just before his detention, the former Renault CEO, a French national, called on President Emmanuel Macron's government to "defend me and preserve my rights".
Ghosn has hoisted himself to the top of the auto industry thanks to his Nissan turnaround, which nearly came to a standstill under the weight of heavy losses in the early 2000s. He built one of the the most important automotive alliances in the sector, including Renault and Mitsubishi Motors Corp. Until last year, he was a Davos Man business celebrity, admired for his knowledge of five languages, his cosmopolitan education in Lebanon and Brazil, and his gilded business relationships. .
In Lebanon, where Ghosn invests in real estate and vineyards, he is seen as a national hero and a managerial world. "It is considered as an icon and an ideal of good management, so what is reported is surprising for many," said Yusuf Sidani, professor of ethics and leadership at the Suliman S. Olayan School of Business and Marketing. American University of Beirut.
Ghosn still has many defenders in the country, where his image has been proven in national postage stamps. "It's a plot and I felt like they wanted to be replaced by another," said Racha Nassif, a private school administrator. "I'm still very proud of him."
At his next trial, Ghosn's past victories will no longer matter, as Tokyo prosecutors present evidence detailing his commercial relations with two important trading partners in the Middle East: Khaled Juffali, a descendant of 39, a powerful business family and president of one of the largest Saudi conglomerates; and Omani billionaire Suhail Bahwan, who is Nissan's sole distributor in the sultanate.
Personal relationships between multinationals and business moguls are not unusual in the Middle East, where facilitators can be essential to navigating local customs and regulations. "Business in the Middle East is highly personalized, and in the Gulf in particular, some business families are successful because of their ability to attract outside companies," said Gary Grappo, former US Ambassador to Oman. and eminent member of the University. from the Denver Middle East Studies Center. "It's a small group of families whose business interests tend to go back several decades," he said.
But Japanese prosecutors accused Ghosn of abusing the relationship by committing an aggravated breach of trust – legalese for abusing a company's personal business situation under the Companies Act.
In December, in the Juffali case, prosecutors alleged that Mr. Ghosn had mishandled losses related to personal investments to Nissan. A key derivatives transaction that a Ghosn-related company has with a Japanese bank is a major problem. It collapsed when the yen skyrocketed during the 2008 financial crisis, charging Ghosn $ 16.7 million in unrealized losses and prompting the lender to demand more collateral.
Prosecutors allege that Mr. Ghosn first transferred his position to Nissan, then that the investment was transferred to the books of his affiliate, Juffali having provided a letter of credit to satisfy the bank. Prosecutors are also considering payments of $ 14.7 million paid by Nissan to companies controlled by Juffali.
Ghosn and Juffali, who have not been charged with any crime, deny any wrongdoing. "The $ 14.7 million in payments made by Nissan Motor Co. for four years were for legitimate business purposes, to support and promote Nissan's business strategy in Saudi Arabia, and included reimbursement of business expenses." According to a statement released in January on behalf of Khaled Juffali Co. by his New York-based public relations firm.
Juffali played a key role in settling the concession dispute with a local partner who had depressed Nissan sales in the Middle East and helped secure government approval for a joint venture called Nissan Saudi Arabia, according to the statement. . He also helped Nissan get approval and funding for a new plant in Saudi Arabia, he added.
The Juffali family, one of the most powerful in the region, is the direct descendant of Khalid ibn al-Walid, whose Meccan tribe has played a central role in the early history of the country.
Founded in 1946, EA Juffali & Brothers became one of the most successful companies in the kingdom by partnering with international partners including IBM Corp., Massey Ferguson Corp., Siemens AG, Robert Bosch GmbH and Michelin, according to its website. Ghosn and Juffali have known each other for years.
In Oman, Suhail Bahwan Automobiles, the flagship company of Bahwan International Group Holding, has been Nissan's distributor since 2004. A year later, this partnership paved the way for the opening of Nissan's largest showroom at the time.
The local business magnate is well known in Oman and the website of his holding company is a distributor of more than 20 international brands. "The Bahwan family is well known in Oman. It would be difficult to find someone there who does not know his name, "said Grappo, US ambassador from 2006 to 2009.
Renault said it discovered suspicious payments to companies in the Middle East. Transactions with Oman and Lebanon could then have been used for the personal benefit of Ghosn and his family, according to people close to the file who asked not to be named, because the details are not public.
A spokeswoman for the Paris-based Ghosn family denied any wrongdoing on the part of Mr. Ghosn and said that information on payments to Oman, use of aircraft and start-up were part of a smear campaign aimed at giving the former executive a greedy appearance. A spokesman for Suhail Bahwan Automobiles could not be contacted for comment.
Such dubious payments would scape even in the Middle East, despite its reputation as an opaque operator. "To my knowledge, there is no cultural agreement to conclude that it is acceptable to negotiate bribes under the table," said Sidani, author of the book "Business Ethics in the Middle East". Orient ", published in 2018.
As Nissan investors prepare for a special shareholders' meeting on April 8 in order to formally remove Mr. Ghosn to the company's board of directors, many worrying issues are threatening the automaker. What is the legal exposure of Ghosn in France, where prosecutors have been heard on suspicious payments in the Middle East, not to mention a possible financial fault related to the celebration of the marriage of the theme of the executive, Marie Antoinette, at the Palace of Versailles?
If it turns out that Ghosn used Nissan's trading partners in the Middle East to transfer millions of dollars for his personal use, how did that bypass the company's financial controls and the Attention of the top leaders of the region and back to headquarters? How long will Ghosn's former protégé and current Nissan CEO, Hiroto Saikawa, run the company?
"There must be compelling evidence that they have to take it again," said Koji Endo, Senior Analyst at SBI Securities, about Ghosn. "It will take a long time to settle this case, with his new arrest and all his complicated problems."
The answers, if they came, seem to be found in the desert sands of the Arabian Peninsula.
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