Yokohama, Japan - In September 2007, despite weighty responsibilities at the helm of Nissan and alliance partner Renault, Carlos Ghosn found time to get involved in a seemingly straightforward business decision.
Two days before Nissan's executive committee was due to formalise the choice of a company called TVS as a partner for sales and marketing in India, Ghosn threw his weight behind a different firm: Hover Automotive India, four company sources with knowledge of the matter said.
Hover had been a candidate but was knocked out of the running because it had been deemed insufficiently experienced in automotive distribution and marketing, they said. However, its founder and chairman, Moez Mangalji, was a close family friend of Ghosn's, the sources added.
A Nissan executive wrote to the team preparing for the committee meeting saying it was Ghosn's wish that Hover be recommended over TVS, two of the sources said, adding that this was enough to ensure Hover got the job.
The incident is part of Nissan's wide-ranging probe into what it calls years of serious misconduct by Ghosn. There is no evidence of Ghosn benefiting from the decision but it is an example of conduct investigators believe helped his friends at Nissan's expense, the two sources added.
A spokesman for Ghosn said the former Nissan chairman did not intervene on behalf of Hover, that Hover met key criteria to launch the distribution business, and all partnership decisions were made by Nissan's executive committee.
"The baseless accusations against Mr. Ghosn and steady stream of leaks from certain Nissan executives are a transparent and dishonorable attempt to smear Mr. Ghosn's reputation, destabilise and reset the balance of power in the Alliance, and distract from Nissan's alarming performance," the statement from Ghosn's spokesman said.
The spokesman declined repeated requests by Reuters to be identified, citing the "sensitive nature of the topics."
A representative for Mangalji said Hover employed experts with substantial experience and "that at no point was Hover aware of any special treatment on its behalf by Mr Ghosn or anyone else."
Ghosn would continue to back Hover even after Nissan dealers in India began protesting in 2012 to executives about a collapse in sales, according to the sources, who declined to be identified, citing the sensitivity of the subject.
Those protests grew in 2013, with some groups representing Nissan's India dealers sending letters to senior executives, imploring them to step in, and Nissan ultimately dropped Hover as a partner the next year.
An internal Nissan document that summarises some of the decision-making around the choice of Hover and which one source said was created in 2014, was also reviewed by Reuters.
Company insiders say the Hover episode was a defining moment for some managers inside Nissan, leading them to question the agenda of a man who had been universally lauded for bringing Nissan back from the brink of bankruptcy.
At the same time, the sources acknowledge there was little resistance among the executive committee and other management to Ghosn's support for Hover and one other dealership decision in the Middle East that had raised eyebrows within Nissan.
"In so many ways it was assumed that what he said would not need to be questioned. That applies to just about every decision he made," one of the sources said.
Too much power
Looking back at Ghosn's reign, it is clear that too much power was concentrated in one man, and that management did not do enough, Nissan Chief Executive Hiroto Saikawa told employees in a town hall meeting one week after Ghosn's November 19 arrest.
"For 19 years, management, myself included, we allowed his high-handedness, allowed wrongdoings, and regret for that is what I think we all feel," he said, according to a copy of his speech reviewed by Reuters.
"Our biggest and most urgent task....is to undo the negative legacy that resulted from years of Ghosn's leadership and corporate governance," he added.
Last week, Nissan and major shareholder Renault said they would break up the all-powerful chairmanship position held by Ghosn, with the chairman of Renault serving as head of the alliance but not as chairman of Nissan.
An external committee is due to make recommendations this month on changing Nissan's corporate governance including procedures for executive appointments and compensation.
The re-evaluation of Ghosn's legacy is also driving a broader shift in Nissan's strategy, particularly Ghosn's practice of setting ambitious objectives for sales and profitability called 'commitments', where managers were held to account if they were not delivered.
"If you couldn't meet them then you'd be in trouble, those numerical targets came to feel like threats," Saikawa told the town hall meeting. "Now, we have to change this, work out something that is healthier."
Not until 2017 did a lone internal auditor, Hidetoshi Imazu, discreetly start making checks into dealings that Nissan now says were orchestrated by Ghosn.
Imazu had been aware of queries by Nissan's external auditor Ernst & Young ShinNihon LLC about the purpose of a Dutch unit Zi-A Capital, according to one source. Payments for Nissan-owned luxury apartments used by Ghosn were made through Zi-A Capital and its units, sources have previously said.
Imazu's concerns also followed a June 2017 Reuters report that Renault-Nissan alliance bankers had drawn up plans to pay millions of dollars in undisclosed bonuses to Ghosn and other managers through a separate Dutch unit, the source said.
Saikawa would only learn of the probe around October last year after Imazu and Hari Nada, head of Nissan's CEO office and an ally Imazu later teamed up with, had turned their findings over to prosecutors, two sources said.
Nissan declined to make Imazu, Nada and Saikawa available for comment on this article.
Tokyo prosecutors have accused Ghosn of under-reporting $82 million in compensation for 2010-2018 - pay he had arranged to receive after his retirement.
He has also been charged with temporarily shifting personal losses to Nissan after a foreign exchange contract went sour and improperly steering $14.7 million in Nissan funds to a firm owned by Saudi businessman Khaled Al-Juffali.
Ghosn has said he is innocent and believed the compensation arrangements had been vetted by experts. Both Ghosn and the Khaled Juffali Company have asserted the $14.7 million in payments were for legitimate business purposes.
"Mr. Ghosn is innocent of the charges brought against him and he will be vindicated," the statement from Ghosn's spokesman said.
Nissan investigators continue to pursue a number of other leads with the probe expanding as whistleblowers come forward, one source said.
The alleged schemes took so long to come to light, sources with knowledge of the probe said, due to Ghosn's practice of conveying his wishes verbally to trusted lieutenants rather than in writing. Many payments were made via the 'CEO Reserve', a budget for unplanned expenses, and were made through unconsolidated units which did not require vetting by the CFO or external auditors, they said.
In addition to the case involving Juffali, one key focus of the automaker's probe is a sum of more than $30 million in Nissan funds Ghosn arranged to have transferred via the CEO Reserve to a Nissan distributor in Oman owned by businessman Suhail Bahwan and whether the money was used to repay personal debt, the sources said.
Ghosn's spokesman said payments of $32 million made over nine years were rewards for the Bahwan firm being a top Nissan dealer. Such dealer incentives were not directed by the CEO and the funds were not used to pay any personal debt for Ghosn, the spokesman added.
One of the Nissan sources countered that dealer rewards were a planned event each year and were not paid via the CEO Reserve.
A spokesman for Bahwan did not respond to requests for comment.
The probe is also looking at the amount of money spent on Nissan-owned residences in Paris, Beirut and Rio de Janeiro and how the payments were made through units.
Ghosn's spokesman said officials at Nissan, including Saikawa and Nada, had been aware of and had approved of the provision of the residences.
Investigators are also examining payments to Ghosn's sister, Claudine Bichara de Oliveira, for what two sources describe as a fictitious job advising on global donation activities.
Those payments date back to 2003 and total nearly $700,000 through 2016, documents seen by Reuters show.
An internal Nissan letter dated March 27, 2003 shows Ghosn asked Oliveira if she would work for Nissan's global donation advisory council and that she signed the agreement. A source said, however, there was no evidence that the council existed.
The spokesman, who also represents Ghosn's sister, said appropriate officials had approved the contract with the sister, and that Nissan officials opposed to Ghosn were attacking his family with false accusations.