Former Nissan chief executive Hiroto Saikawa testified in court about his role in the events leading to the arrest of Carlos Ghosn more than two years ago, which triggered turmoil within the car maker and later led to his escape from Japan and life as a fugitive in Lebanon.
Greg Kelly, the former Nissan director who was arrested on the same day as Mr Ghosn in November 2018, is standing trial for allegedly helping the former chairman of Nissan and its alliance with Renault and Mitsubishi understate tens of millions of dollars in compensation. Mr Saikawa is taking the stand on Wednesday at roughly the mid-point of the trial, which began in September and is slated to end around July.
Mr Saikawa, 67, was the most senior leader at Nissan after Mr Ghosn when he was detained, sending shock waves through the alliance and wider business world. That put the Japanese executive in a position to know many of the details behind the allegations against Mr Ghosn and Mr Kelly. With Mr Ghosn in exile, Mr Kelly’s trial is the only forum where those accusations will likely get a full legal airing.
Mr Saikawa, dressed in a black suit, told prosecutors that Mr Ghosn didn’t like compensation disclosure rules, and had expressed this to the board. The former chief executive also said he had agreed with Mr Kelly in 2011 that Mr Ghosn should be paid more to prevent him from going to a rival car maker, and that the executive should receive compensation for non-competition and consulting services after retirement.
“I supported what [Mr] Kelly was doing,” Mr Saikawa said in response to prosecutors’ questions. Asked why he signed a document outlining the remuneration, the former chief executive said Mr Kelly had asked him to because “it was a draft and I wanted to support the initiative”.
Following Mr Ghosn and Mr Kelly’s arrests, Mr Saikawa became the face of Nissan’s allegations against the pair, starting with a news conference on the day they were detained, and attacking Mr Ghosn for using Nissan’s money for personal gain. The big question is whether Mr Saikawa himself was also involved in decisions about Mr Ghosn’s pay, and if so, to what extent.
Mr Ghosn and Mr Kelly were accused of underreporting Mr Ghosn’s remuneration by about ¥9 billion ($85 million) over eight years through to March 2018. After helming Nissan as co-chief executive with Mr Ghosn, Mr Saikawa took over from April 2017, and was a board member throughout the period concerned. He stepped down as chief executive in late 2019 following a scandal over his own compensation.
While Mr Kelly denies allegations that he helped Mr Ghosn hide his remuneration and is seeking to exonerate himself, Nissan – the company is also on trial for its role – has effectively pleaded no contest. Mr Saikawa’s testimony this week may shed some light on how the chairman of a publicly listed company, with processes and checks and balances covering every function, was allegedly able to misrepresent his income for close to a decade.
Mr Saikawa has said in the past that he accepts responsibility for the Mr Ghosn's scandal and had intended to resign as chief executive of Nissan once the company found a suitable replacement. In an interview with a Japanese magazine in June 2019, Mr Kelly said Mr Saikawa was fully aware of Mr Ghosn’s compensation situation. Mr Kelly also revealed that Mr Saikawa received tens of millions of yen in extra income through date-adjusted stock appreciation rights, triggering the events that led to the former chief executive's exit.
Nissan doesn’t consider Mr Saikawa’s excess payment to have violated laws and Mr Saikawa has denied he ordered the payments, saying the matter was mishandled by staff.
Mr Ghosn and Mr Saikawa’s partnership began in 2001, two years after Renault rescued Nissan from the brink of bankruptcy by purchasing about a third of its shares. Mr Ghosn, appointed as Nissan’s chief operating officer, chose Mr Saikawa to head a new office coordinating purchasing between the Japanese and French car makers.
Mr Saikawa was groomed and promoted by Mr Ghosn through the years, but their relationship began to change when Mr Ghosn started pushing for greater integration of Renault and Nissan. Mr Saikawa opposed the idea of Nissan becoming subsumed into a global conglomerate with its smaller and less profitable partner, telling the Nikkei that he saw “no merit” in combining the two in an interview in April 2018.
When Hari Nada, a senior vice president at Nissan, brought evidence he and others had been collecting on what they suspected was financial misconduct relating to Mr Ghosn’s compensation to Mr Saikawa in October 2018, the then-chief executive quickly agreed to cooperate with prosecutors, Bloomberg has reported.
Mr Saikawa then went on to help organise the operation to arrest Mr Ghosn and Mr Kelly upon their arrival to Japan the following month.
In Mr Ghosn’s first press conference since his arrest, held in Beirut in January 2020, he called out Nissan executives including Mr Saikawa, accusing them of conspiring to topple him to prevent further integration of Nissan with Renault. Nissan maintains that the cause of this chain of events is “the misconduct led by Mr Ghosn and Mr Kelly” for which the company found “substantial and convincing evidence”.