Is Ghosn Guilty?

Ghosn looks like a minority report arrest. Incarceration for pre-crime.  Solitary confinement for a theft at best imagined. Preparing an illicit retirement package never submitted, or yet to be submitted to approval by share-holders. A real life pre-emptive crime-bust for  $50 million “fraudulent” retirement moneys of which Ghosn’s lawyers, nor the public, have ever seen proof. Absolutely nothing guaranteed that Nissan would actually pay Ghosn any of this money, nor that if its board decided not to pay it, that it not do so.

For those outraged by Ghosn’s retirement package, consider it a better way of spending the $200 million that Nissan threw at smearing and destroy Ghosn’s life (and of his wife), and the value of Renault, AvtoVaz, Dacia, and Nissan shares. The package of $140 million consisting of a purported 50$ million in hidden moneys,  would have been well earned by a CEO of Ghosn’s stature, in keeping with international best practice.

Japan is not even trying to  hide its true intentions in regards to Ghosn. To get Renault out of its share-holding structure, although this was telegraphed already in June of 2019, by the man who slandered and set up Ghosn – Hari Nada. As head of its legal department, he worked hand in glove with Latham & Watkins and Cleary Gottlieb.

The SEC’s $15 million settlement is not favorable to itself, nor traditional rule of law. It evidences a conspiracy between Japanese authorities, current heads of Nissan, and those who formulated the SEC’s docket (Latham & Watkins).  The money wasn’t distributed to share-holders, since no concrete share-holders are named in the complaint, and no “recovery of ill-gotten gains” has taken place. The SEC claim ignores that the largest holder of Nissan was Renault, and as such it is impossible that Ghosn and his team could have mislead the “general public” unless SEC wishes to suggest Ghosn mislead Renault colleagues and directors. Renault has never made such a charge, and its near control of Nissan makes it the single biggest part of “the public” on whose behalf the SEC has obtained money from Ghosn.

The SEC appears to have brought this case on behalf of itself and at most – on the part of theoretical investors. It has not demonstrated any loss to share-holders, or the public, nor has it evidence that anyone was defrauded. Seeing as the case was initiated while Ghosn was held in solitary confinement, its legitimacy is undermined by duress.

For all the sneering at the ordeal of an “arrogant fat-cat,” the Hollywood drama of Corporate Django  vs. Corporate Japan B-rate Changbara thriller –  the only one to hit jackpot is Uncle Sam.

While enjoying the inflexible tatami mat in Japan’s equivalent of Belmarsh it is the American SEC that settled with Ghosn and Kelly for $1 million and one hundred thousand respectively, and for $14 million with Nissan. The settlement did not involve admission of guilt, nor fraud.

The SEC’s work was facilitated by Latham & Watkins  and Cleary Gottlieb, Nissan’s long-term outside legal advisors. It appears to have taken place while Ghosn was under house arrest, but was launched  while Ghosn was in incarcerated, suggesting that the French raid, Japanese arrest, and the SEC’s behavior were coordinated.

The SEC charged Ghosn and Nissan executives and the Nissan board, with misleading American investors about Ghosn’s retirement package. The SEC built this charge with materials provided by the very same Tokyo District Public Office Prosecutor responsible for Ghosn’s very incarceration.

The man who Ghosn credits with his arrest and ousting from Nissan, Hiroto Saikawa, was  part to any and all of the supposed fraud attributed to Ghosn, but while Ghosn hasn’t pocketed a single illicit dime, Saikawa had to resign soon after being appointed to replace Ghosn as Nissan’s CEO, when it became public that he had already pocketed an illegal $450,000. Following his exposure, an unknown number of further Nissan executives have been “exposed” within Nissan, although not one has been sent to jail. The Japanese reserve that for the foreigners.

A New York Times article disclosed that virtually every single executive at Nissan had pocketed illicit money in 2019, while Ghosn was already sitting in jail. Along with Saikawa, Itaru Koeda, Arun Bajaj, Asako Hoshino, had all received some form of improper compensation.

Both Hari Nada and Toshiaki Onuma, key witnesses against Ghosn at the Japanese trials, pocketed illicit sums. When Nissan’s internal oversight attempted to investigate them, “Christina Murray, then the head of Nissan’s internal audit and compliance offices” was taken off the job, having been specifically ordered to “back off” of  Nada. Murray chose to resign.

Nada was the prosecutors star witness. He claimed to have both “help” Ghosn defraud the company, and to have provided evidence of this. Clearly the Japanese government had struck a deal with,  Nada and would protect him.

When senior Nissan lawyer, Ravinder Passi addressed the Nissan board with a memo about the apparent conflict of interest between Onuma and Nada and the government investigation, he was summarily taken off the case, but the conflict wasn’t limited to the public sector.

The WSJ called the relationship between  Hari the Dindu Nada and Latham & Watkins as a “conflict of interest” as well:

“U.S. law firm Latham, which has had a long relationship with Nissan, advised the company on some of the governance issues currently under scrutiny, including executive pay disclosure, said the people familiar with the internal concerns.”

Begging the question, what role did Latham & Watkins play in the case against Carlos Ghosn?

“From the outset and throughout the engagement, Latham regularly discussed the firm’s engagement on the internal investigation with several Nissan executives, including Mr. Passi, and the company chose to continue with the engagement,” a spokesperson for Latham said.”

Put another way, Latham & Watkins was a corporate spy. It leveraged its ties to the SEC to slap Ghosn around,  and gave the SEC $15 million.

The settlement between Carlos Ghosn and the SEC can be found here. The rest of the case, as well as supporting evidence are not public access. 

The initial SEC complaint filed with the United States  Southern District Court of New York named Ghosn and Greg Kelly as primary defendants alongside Nissan and two subordinates.  The updated cease and desist order filed on September 23d  identifies Nissan Motors as the primary defendants with Ghosn, Kelly as relevant persons, along with executive blandly named ” Nissan Employee 1″ which must be Hiroto Saikawa or Hari Nada himself . The charges read that

“Although this undisclosed compensation was in fact not paid to Ghosn”

“Ghosn and certain subordinates, including Kelly made, caused to be made, knowingly false and misleading statements regarding approximately $50 million of additional pension benefits for Ghosn….approximately $22 million for exchange rate fluctuations”

No sources are provided for either the figures or the accusations being made.

 Regarding Employee 1

“a former Nissan executive and director, failed to disclose more than $90 million3 in compensation for Ghosn.”,”

“Each year beginning in 2011, a senior employee in Nissan’s Secretariat’s Office (“Nissan Employee 1”) would prepare for Ghosn’s approval a document summarizing Ghosn’s total fixed compensation, his paid compensation that was being disclosed, and his remaining compensation that was not paid and was not being disclosed.”

The SEC stated that Ghosn, Kelley and Nissan mislead public investors, but no evidence is provided.  Not a single instance, not a single statement, not a single case of the public being mislead.

One would think that if investors were actually defrauded, the fine should have been significantly higher, and that investors, and not the SEC would receive it.

Without access to more supporting evidence, and without input from Ghosn’s attorney, it is impossible to know if the SEC’s case isn’t based on the distorted evidence of select employees within Nissan, culled by Latham & Watkins and Hari Nada.

In both the Southern District Court document and the Settlement tables are presented which supposedly show how much money Ghosn hid. What is omitted, is that these tables are simplistic reductions of Ghosn’s annual contribution to his retirement package, and nothing about them indicates anything off the books.

It might sound criminal: “On October 21, 2013, Nissan Employee 1 emailed Nissan Employee 2 about booking the increase to Ghosn’s retirement allowance “without making it public.” – but it is not. Corporations have a right to privacy, as do CEOs, and virtually everything from company strategy to key decisions, are far removed from the public eye. Making something “private” is not equivalent to either fraud or misleading investors. Shareholding does not give automatic access to propriety information nor logic.   

All retirement packages are deferred compensation. Their constitution is never held to scrutiny by any financial authorities prior to board decisions.  Due diligence is up to share-holders, and share-holder activists who often revise retirement packages.

The SEC repeatedly mentions backdated statements as “proof” of Ghosn’s fraud, ignoring that backdating is a common business practice, especially if retroactive pro-rata calculation takes place (and it does take place in accounting). It isn’t illegal. In 9 times out of 10 it is perfectly legitimate (the initial date was wrong, or a contract was delayed, or its terms were delayed). Backdating is illegal only when fraud is proven as its intent.

It is easy for anti-Capitalists to get carried away with the never ending stream of corporate and bourgeois corruption, ignoring in their simplistic denunciations of the system the necessity of compromise and imperfection in the world of practical action. Corporate accounting is by its very nature a competitive enterprise, with vast maneuver room. Losses and unpaid bills can be deducted pro-rata, retroactively, etc. Not all asset classes behave the same.

It’s not only the minds of rabid anarchists or, most free-market fanatics are equally ignorant of the practical issues of accounting, and are as unaware  of the intricacies of managing large corporations which they preach like the Gospel as self-professed communists.

A magnifying glass put to even small sized companies will expose systematic inconsistencies in their books. It is not that laws are poorly adapted or that regulation is bad per se, it is simply that navigating the daily life of a company is no easy task, and mis-interpreting accounting inconsistencies is second nature to those without personal experience in the field. Whether lovers of “trade” or haters, without practical considerations, both remain ignorant.

Carlos Ghosn has never dissimulated his desire of better pay. He must have sought a  maximum retirement package. He may even have been aware of the Jap’s intent to oust him, and was willing to go if paid more. Details and complexities for which the blinkered ideologies of both right and left have no time. Ghosn did not deserve, no more than Julian Assange does, to be subject to interrogation, and psychological torture.

Matt Levine some in Bloomberg Opinion columnist have observed that Ghosn “did not, strictly speaking, under-report his pay: It turns out, he only got paid the amounts he reported. He’s innocent!”

Joe Nocera of Bloomberg’s first response to Ghosn’s post-flight Lebanon presentation was:

” I have contended since Ghosn was first arrested that conspiring with prosecutors to have Ghosn arrested was an insane way for Nissan to be rid of him. In most countries, chairmen or chief executive officers are let go by a vote of the board; if they’ve done wrong, the company might try to claw back money or void stock options. “

Precisely. Which is why in a ranking of the biggest golden parachutes, say for 2016, Ghosn wouldn’t even make it into the listing, let alone even remotely engage in fraud. A recent Golden Parachute of nearly $2 billion was paid to Adam Neumann of bankrupt WeWork. Google paid one of its execs $90 million, another $45.

Initial Lawsuit

The first publicly available American documents accusing Ghosn of fraudulently understating his retirement package is a Civil Action Lawsuit submitted to the SEC by the Jackson County Employee’s Retirement System  in a Tennessee court (Nissan is headquartered in Tennessee) on behalf of all those who purchased Nissan American Depositary Receipts between December 2013 and November 2018 (included) stating that “unbeknownst to investors, Nissan has been materially understating its expenses – and overstating profits – by concealing half of the annual executive compensation it was obligated to pay  to its former chief executive officer (CEO) and Chairman of its board of directors defendant Carlos Ghosn.”

It was filed in December 10th, 2018, and claims that Nissan (rather than Ghosn) acted contrary to advice from outside council. Details about the council, or its advice are not provided (Letham & Watkins most certainly).  Also claimed is that Nissan failed to heed the express direction of its outside auditors as far back as 2013 to accurately report Ghosn’s executive compensation.  Ernst & Young Shin Nihon LLC is  identified per a Japanese Time article, through an  anonymous source.

The file provides no evidence for either statement.

There is no clear damage that is being sought, nothing so much as a calculation attempting to establish or quantity the amplitude of the deception or “fraud,” which is being alleged, meaning that the eventual SEC settlement, is nominal and not based on anything concrete.

The Jackson County Retirement System doesn’t disclose its officers because it uses outside firms to manage its $240 million fund.  A list of  members of the board and its financial executors is provided. The law firm representing the Retirement System was Robbins Geller Rudman whose co-founding partner is Samuel Rudman, an SEC veteran.

SEC or CEC (Corporate Exchange Committee?)

Under Donald Trump the SEC has lost all semblance of a government institution. It is a committee owned, run, and operated by the SP500, through staff who are legal lackeys of the upper echelons of global finance. It is a den of thieves besting one another for pieces of meat. It is worst than under Obama – the most Wall Street Friendly president prior to Trump.

The SEC team which rammed the $15 million dollar settlement down the throat of an incarcerated Carlos Ghosn was lead by Steven Peikin, co-director of the SEC’s enforcement division. Penkin is a  partner at Sullivan & Cromwell, where he represented Barclays in the LIBOR manipulation case (which has cost top jobs in French banks). Prior to joining Sullivan & Cromwell, Peikin worked in the Southern District Attorney’s Office of New York. 

The SEC/Ghosn settlement is signed by Vanessa Countryman, of Gibson, Dunn & Crucher fame, a firm helping  CNN in its lawsuit against Trump’s barring of Jim Acosta from the White House.

Both Countryman and Penkin are joined by Christian Schultz, formerly of Kirkland and Ellis, a firm named along with Letham & Watkins as “four firms that scare general counsels the most.”

The current chairman of the SEC is Jay Clayton, a veteran of Sullivan & Cromwell where he worked in the Mergers and Acquisition division on cases involving Moelis, Oaktree, Ziff Capital, Barclays capital, and Goldman Sachs.

Sullivan & Cromwell made history when together with Lazard Frères it partook in the world’s largest marijuana deal  (M&A) Cromwell and Lazard  regularly work together.

Elad Rosiman is an SEC commissioner.  His corporate career includes advising the Chief Counsel at NYSE Euronext (a merger of Europe’s and America’s biggest stock markets on which Lazard advised, and where Rothschild had one board seat – Stephane  Héfès. Whose post-Euronext life is as advisor to Afiniti, an amazingly pretentious outfit portending a revolution in call centers, where former British Prime Minister Cameron joins former French Prime Minister François Fillon and Lord John Browne, Elizabeth Murdoch, Laura Tyson, and tons of US Senators and generals. Its French offices are headed by Jérôme de Castries relative to Joyet, Taittingers, and Castries-Rodochanari families. )

Euronext’s largest shareholders is the French Caisse des dépôts et consignations (one board seat), and Euroclear, Europe’s – and one of the world’s largest –  clearing companies, whose board of directors is made up of representatives from Société Générale, HSBC, BNP (Sophie Javary, Rothschild veteran), J.P. Morgan, International Exchange, and whose share are dominated by the world’s largest banks.

Euroclear’s largest shareholder is French Sicovam. A completely unknown “private bank” about which absolutely nothing is known anywhere, other than garbled gobbledygook. Sicovam used to be a French clearing association, the first to abandon paper contracts, as a way of circumventing the tough anti-capitalist policies of François Mitterrand by avoiding paper trails. Sicovam has no website, not a single article has ever been written about it. Who runs it? Who controls  it? Who were its previous CEOs?

Like Sicovam, Kuri Atyak Investment is one of Euroclear’s largest share-holder, about which nothing is known.  Both are proxies for either HBSC, Goldman, or Barclays, or the Bank of China.

In essence, organizations such as the International Exchange, Euroclear, and ISDA function as financial cartels, manipulating interest rates, currencies,  commodity prices, and facilitating insider trading by the world’s biggest banks. Their risk committees and consultative boards are dominated by banks. Euronext’s ICE Clear Credit is one such cartel, and its board includes veterans of Latham & Watkins.

Latham & Watkins facilitated Japan’s purge of all Ghosn loyalists, by labeling them as collaborators of Ghosn’s purported fraud against Nissan investors. It was Latham & Watkins together with Cleary Gotlieb who hammered out Nissan’s plea bargain with the SEC. This after years of being Nissans outside law firm. The American business press has gone into overdrive defending Latham and Watkins.

The world’s largest law firm by revenue ($3 billion), led by Republican 1996 presidential candidate and senate majority leader  Bob Dole, Latham & Watkins has historically worked closely with Carlyle, KKR, and Drexel Burnham Lambert whose bankruptcy was orchestrated by Rothschild’s Wilbur Ross.

Drexel Burnham had been co-founded by baron Lambert, a Rothschilds relative, owner of Group Bruxelle Lambert, with which Pierre Hass was intimate via French industrials and the Albert Frère (Belgium’s richest man). In the 1980s, prior to Michael Milken’s move into junk bonds, Edmond de Rothschild was an active investor in the Bruxelle Lambert group via Capital Holdings Limited (the world’s first  and oldest “fund of hedge funds,” founded in 1969). Capital Holdings is famous throughout the financial world, having been an early co-investor with George Soros, and Michael Steinhard. Today it is run by Rick Sopher, awarded best money manager,  who has a master’s handle on the world of Hedge Funds in which he invests clients (largely Rothschilds) money.

” Though an insider trading scandal eventually laid Drexel to waste, Levy says Latham benefited from what he calls the “Drexel diaspora”—the flow of former Drexel bankers to such other major investment houses as Bear Stearns; Kidder, Peabody & Co.; and Donaldson Lufkin & Jenrette Securities Corp. “The bankers went elsewhere,” Levy says. “And they like Latham, and they stayed with us.” (pdf link)

Another historical Latham & Watkins clients is GE Capital, at one point the world’s largest non financial asset manager, broken up into pieces and sold off to Wall Street investment firms. In 2017 Latham helped Siemens purchase Alstom’s railroad assets.

The law firm enjoys minor ties with the Rothschilds, and Edmond de Rothschilds does list the firm as one of its philanthropic partners. Edmond de Rothschilds has previously advised  Latham & Watkins  on financial issues (together with Ardian and Roland Berger), while the firm represented Edmond de Rothschilds at the SEC (offshore investigations).

Many of Latham & Watkins staff are former SEC employees with whom it has a “rich” history. It claims to “defend clients,” via this SEC alumni network.  

Latham & Watkins  is particularly prominent in the Japanese “international legal” market, being one of America’s most international firms.

“It claims to be the only law firm with a formalized national office, which includes former U.S. Securities and Exchange Commission officials familiar with NASDAQ and NYSE listing requirements for non-U.S. companies.” (source)

Specializing in the global automotive sector – besides Nissan, it also represents Honda. It’s full  list of car clients  includes Toyota Deutschland, Toyota Motor Sales, Mitsubishi Motors of North America, Honda North America, and Isuzu Motors, Ltd.

Together with Lazard, Latham & Watkins  gives tips to Chinese investors on how to steal American intellectual property.

Its current chair, Richard Trobman has done legal work not only for Carlyle, but also Rothschild’s linked PAI Partners in its acquisition of Swissport International. Trobman’s partner,  Ora Fischer, a co-chair of the firm, has done work for Japanese Takedama Industries .

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