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Nissan's Ghosn crisis

Nissan scandals put CEO Saikawa's oversight in question

CEO's signature was on documents promising Ghosn's future pay

Nissan's faulty inspection problems seem to have no end. (Photo by Takeshi Shiraishi)

TOKYO -- Nissan Motor's latest vehicle inspection failure, coming on the heels of the arrest of former Chairman Carlos Ghosn, is yet another sign of weak corporate governance at the automaker and is likely to fuel criticism of the management team led by CEO Hiroto Saikawa.

An internal investigation has found problems with how brakes and other parts were inspected. The new problems surfaced after the Ministry of Land, Infrastructure, Transport and Tourism conducted on-site probes at Nissan factories in October.

This marks the fourth time Nissan has reported misconduct, and shows the extent of taking short cuts in its product inspections.

Company insiders point to the excessive focus on efficiency and cost-cutting that Ghosn installed after coming to Nissan in 1999 as one reason. A third-party law firm's report issued in September noted that the company had reduced the number of engineers and failed to assign enough inspection workers, under belt-tightening pressures.

But with so many issues emerging, Nissan's inability to identify or stop misconduct is likely to draw the spotlight.

After becoming CEO in 2001, Ghosn had close to absolute power, deciding on both personnel and compensation matters. The company did not have board committees led by outside directors to consult on compensation or nominations, which is the norm at many other major companies.

Nissan CEO Hiroto Saikawa speaks to reporters in Yokohama on Nov. 19. (Photo by Rie Ishii) Nissan CEO Hiroto Saikawa speaks to reporters in Yokohama on Nov. 19. (Photo by Rie Ishii)

Nissan is likely to be slapped with criminal charges over Ghosn's misrepresentations. And Saikawa and other executives could face civil charges for overlooking the misstatements and be held liable for damages.

Furthermore, in a development that could invite more criticism, Nikkei learned Thursday that Saikawa's signature was on documents that spelled out payments to Ghosn after his retirement as a consultant and for agreeing not to work for or join the board of any competitor.

Prosecutors apparently do not suspect Saikawa of knowing that these were deferred payments of current salaries that went unreported, a suspicion for which Ghosn was arrested.

While Saikawa is not suspected in colluding in the underreporting, his oversight as CEO may be questioned for missing the opportunity to catch the improprieties.

Nissan has been plagued with vehicle inspection failures over the past year. In September 2017, unqualified workers were found to have carried out inspections before shipments. In July of this year, the company was caught faking fuel and emissions data and conducting tests under improper conditions. And at the end of September, it was revealed that certain required tests were skipped.

The transport ministry ordered Nissan to shape up, once in September of last year and again in March of this year. The automaker is required to report quarterly on its progress in preventing a recurrence and has been under increased oversight, with more unannounced probes by the ministry.

Nissan released a supposedly final report of its prevention measures in September to put an end to the issue. It pledged to invest 180 billion yen ($1.6 billion) over six years in measuring equipment and other devices, and to hire 670 workers for the vehicle inspection department.

Asked whether he would continue as president, Saikawa has said, "My job is to do as much as possible to prevent a recurrence in the future."

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