15 February 2020

Dismissal dispute of ex-Nissan boss with the Dutch Court

Category: Dismissal law

The Amsterdam District Court is considering the claim for dismissal of ex-Nissan top executive Carlos Ghosn, accused of fraud. The dismissal case started on February 10, while in Japan Nissan Motors filed a lawsuit in Japan on February seeking $90 million from its former chairman Carlos Ghosn. The Dutch judge said he wants to keep the court case “practical”. Rachelle Mourits tells about the case as a example of employment issues in a Dutch holding company.The Amsterdam District Court is considering the claim for dismissal of ex-Nissan top executive Carlos Ghosn, accused of fraud. The dismissal case has started in the Dutch Court on February 10, 2020.

“It must be possible to investigate whether what Nissan and Mitsubishi continue to say about Ghosn, with a great deal of fuss, is the truth,” Ghosn’s lawyer express to the Dutch Court. “Nissan and Mitsubishi are doing everything they can.”

The saga surrounding Carlos Ghosn (65), who fled Japan and is accused of fraud, now also touches the Dutch jurisdiction. The Japanese-French car alliance Nissan-Renault-Mitsubishi, where Ghosn was in charge, is not a Dutch company, yet some important companies of the car giant are located here. Ghosn was on the payroll of the joint venture Nissan-Mitsubishi B.V. (NMBV) with an annual salary of 5.8 million euros, so at Ghosn’s request the Amsterdam District Court must now consider the legality of his dismissal.

Dismissal from the Netherlands B.V.

Three reasons were given for Ghosn’s dismissal from the Netherlands B.V. last May, according to his lawyers: irregularities in the establishment of his remuneration, criminal offences committed and absence from work due to remand in custody.

The last ground for dismissal is correct. Ghosn, celebrated for his successful cost-cutting operations, was arrested in Tokyo at the end of November 2018 on suspicion of misreporting his earnings at Nissan to the Japanese stock market watchdog. He then spent more than three months in prison before being released on bail. This was repeated three more times, each time with fresh accusations coming to light about how Ghosn would have enriched himself at Nissan’s expense. Also read: dismissal of a Dutch director.

Escape from Japanese legal system

Last December, Ghosn added a new dimension to the case. He escaped his house arrest in Tokyo in disguise and fled – hidden in a box in which music equipment is usually transported – via a private jet from Osaka to Beirut. Since then Ghosn has lived as a ‘free man’ in Lebanon, where his parents are from. At the beginning of January Ghosn held a well-attended press conference, where he said he was innocent and had to flee because he could not trust the Japanese legal system. “In Japan, the prosecution wins 99.4 percent of trials, and against foreigners many more.” Also read this story about how Ghosn escaped: The spectacular flight of Carlos Ghosn.

Ghosn says he’s the victim of a conspiracy. He was in favour of a merger between Nissan and Renault, which would weaken the Japanese influence at Nissan. He believes opponents of this within Nissan set him up, with the help of the Japanese prosecutor’s office. According to Ghosn, the disputed payments to him were made in consultation with other directors within Nissan. Ghosn’s lawyer De Mol also put forward this argument on Monday. He pointed out that there was “unanimous” agreement at board level to enable NMBV to make payments to Ghosn and other directors of the company. A controversial derivatives transaction was said to have been decided by “nine directors – each one a heavyweight”.

Request for disclosure files by Ghosn lawyer

The hearing at the Amsterdam Court, where Ghosn himself was not present, was essentially about gathering evidence surrounding Ghosn’s ‘knowledge’. His lawyers filed an extensive request for information with Nissan and Mitsubishi. By invoking the so-called ‘obligation to exhibit’, they demanded all kinds of internal documents with which Ghosn can prove his innocence, and contest his dismissal. The lawfulness of Ghosn’s dismissal, and the €15 million in severance pay and back pay he is demanding will only be dealt with later in the proceedings.

Although they recently received thirteen documents from the Japanese, the members of the Ghosn camp claim that the other side maintains an ‘information monopoly’ and that without the internal documents it is impossible for Ghosn to defend himself. For this reason, they requested, among other things, the internal investigation reports from Nissan and Mitsubishi which – according to the car makers – would show that other top executives knew nothing about payments to Ghosn.

Legal battle about duty to disclose documentation

Nissan and Mitsubishi, assisted by a Dutch law firm, tried to suppress the request for information with a procedural defence: they emphasised that there is no place at this stage of the proceedings for the legal ‘obligation to exhibit’.

Lawyer Eelco Meerdink did not just limit himself to the procedural defence. He portrayed the Brazilian-French-Lebanese Ghosn as someone who “started a media offensive, in which he tried to portray himself as a victim”. The lawyer recalled that it was not only the Japanese authorities who had identified irregularities in payments to Ghosn. At the end of September, Ghosn and Nissan settled with the US stock exchange watchdog SEC . Between 2009 and 2018, Ghosn, with the help of, among others, an HR director, was said to have set up a structure that would make it possible to exclude $140 million (€128 million) in future (pension) compensation from public annual reports. The $140 million was never paid. Nissan and Ghosn avoided criminal proceedings in return for a payment of 15 million dollars and 1 million dollars respectively.

Ghosn’s lawyer submits that payments to him were ‘unanimously’ agreed to. Ghosn had “absolute power within the alliance and used it to reward himself in all branches of the company”. By way of illustration, the lawyer had also added some colourful pictures to his pleading note, including how Ghosn underwent the planned adjustment of the Dutch 30 percent tax rebate for expatriates in 2019, by having part of his salary paid out a year earlier.

Dutch court case will proceed with written statements

The Dutch judges did not go into what Ghosn did or didn’t do. The requests for disclosue of information are in fact a smaller part of the larger dismissal case, Monday was focused on “getting a clearer picture of the playing field”. The lawsuit will proceed with the Dutch Court continue in writing in the coming weeks. Nissan and Mitsubishi will write a defence statement in which they will indicate if, and which, documents they still want to provide Ghosn with. If that is not enough for Ghosn, he can still invoke the obligation to exhibit. “I’d like to keep it a little practical,” said the presiding judge, “and don’t want us to spend two years on this.”

This blog is based on the Original Article written by Camil Driessen and Egbert Kalse in NRC