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Japanese prosecutors lowered the legal boom Monday on Carlos Ghosn, indicting the ousted Nissan Motor Corp. chairman, a confidant and the automaker for under-reporting the superstar CEO's prodigious income.

Ghosn and Greg Kelly, a U.S. citizen and former Nissan executive-turned-representative director of the Japanese automaker, are charged with under-reporting Ghosn's income by $44 million between 2011-15, The Associated Press reported. Authorities also issued new allegations, saying the pair also under-reported Ghosn's 2016-18 income by $38 million.

Three problems here: One, Ghosn’s out-sized pay package is hardly a secret in Tokyo or Paris, where he’s technically chairman and CEO of Nissan’s alliance partner, Renault SA. His glamorous jet-setting has long rankled the democratically minded in Japan and France, occasionally erupting into media-fueled spats that included French President Emmanuel Macron during his stint as minister of the economy, industry and digital affairs.

Second, the Nissan CEO who announced Ghosn's alleged misconduct, Hiroto Saikawa, may have more than one reason to broom the chairman. The Wall Street Journal reported Monday that Ghosn was preparing to call for Saikawa's ouster at the November board meeting that instead fired Ghosn following his arrest at Tokyo's Haneda Airport. Among the reasons offered for Saikawa's potential dismissal: slumping U.S. sales and quality scandals in Japan.

And, third, how convenient that the executive comp outrage morphs into criminal charges against one of the global auto industry’s true rock stars just as he’s increasingly persuaded, at the urging of the French government, that the alliance may be ready to morph into a merger. That'd give the smaller, less profitable Renault effective control over the larger, more profitable Nissan.

A report earlier this year in the Nikkei Asian Review said that "reports about a potential Renault-Nissan merger that non-Japanese outlets ran may be part of the French government's strategy" to combine the two companies ahead of last June's annual meeting — a prospect a Nissan executive source greeted with four words: "'There is no way.'"

A big lesson of the era of transnational automotive mergers is that culture will out, eventually. The most successful, long-running combinations have been led by transnational figures comfortable on more than one continent: the late Fiat Chrysler Automobiles NV CEO Sergio Marchionne, born in Italy, educated in Canada, comfortable on both sides of the Atlantic. And Renault-Nissan's Ghosn, reared in Brazil of Lebanese heritage, educated in France for a globetrotting career.

Renault's risky rescue of Nissan will be 20 years old next year. It succeeded where the merger of Germany's Daimler-Benz AG and Detroit's Chrysler Corp. failed because Ghosn is a multi-cultural, multi-lingual executive and because Nissan faced imminent collapse. It doesn't anymore, and its proud business culture rebels against pushy Europeans whose company brings less profit, if more Nissan shares, to the table.

Understanding the industry's largest, most complex alliance is critical to understanding what's happening to Ghosn and Kelly. And why it's happening to them, unless the official Japanese explanation is sufficient. That's doubtful.

Renault owns 43 percent of Nissan and appoints three of its nine board members; Nissan owns 15 percent of Renault; and the French government owns 15 percent of Renault, the better to safeguard its interest in ensuring the French automaker's 47,000 people working in France keep working in France.

But Nissan is larger. It sells more vehicles worldwide (2.8 million for Nissan, 2.1 million for Renault in the first half of the year). It books more of the group's revenue and a larger percentage of its profits. And it plays in the world's top two markets — China and the United States. Renault does not compete in the rich U.S. market.

Officially, the investigation and arrest of Ghosn and his confidant are responses to a whistleblower complaint issued from inside Nissan. But given the open secret of Ghosn's rich paycheck and the back-channel posturing about potentially merging the cross-shareholding group under what would likely be French control, it could be something else:

Namely, a coup intended to stop Ghosn from realizing a gambit that could leave the Japanese on the outside looking in to their own company. Barring a lot more compelling evidence, a credible explanation or both, that remains a distinct possibility.

daniel.howes@detroitnews.com

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.

 

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