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Sorry, but I can't resist asking: Feel Sorry for Tokyo Electric Power Co?

March 27th, 2011 2 comments

(Note; tongue firmly in cheek: see my straight post earlier.)

Well, maybe they weren’t WISE to build a row of nuclear power plants on a coastline known for earthquakes and a history of prior massive tsunamis, but surely the earthquake and tsunami are not TEPCO’s fault, right?

And it’s not THEIR fault that

  • their founding shareholders took advantage of Japanese limited liability incorporation laws that free shareholders from any concern about personal liability (and, as TEPCO’s shares are “fully paid-up”, from any future cash calls by management) that would otherwise exist for private enterprises;
  • the Japanese government allowed them to qualify as a ‘public company’ and thus widely raise capital from the public, under regulations that isolate managers from shareholders and create barriers to entry);
  • the Japanese government licensed TEPCO as a public utility, effectively granting it a monopoly in the greater Tokyo area,
  • the Japanese government ensured that TEPCO could raise the long-term capital necessary to fund the nuclear power plants,
    • by authorizing to set rates guaranteeing TEPCO’s returns on its investments by government,
    • by licensing the power plants themselves and approving their location, suppliers and safety, and
    • by giving TEPCO express liability caps for damages that radiation releases may cause others if an “act of nature” occurs?

And surely none of the concatenation of these acts of government, the construction of the plants and the earthquake or tsunami is the PERSONAL responsibility of any of TEPCO’s emploees, managers or executives, right? (Much less of the poor shareholders!) After all, having a corporation means that we get to embark on mega-projects that pose mega-risks, all without any real people being  personally responsible! How else, without these layers of protection for personal responsibility provided by government, would progress ever be made?

Thus, we can see clearly that this was all nothing more than a simple ACCIDENT, in which “TEPCO” – whoever the heck we consider that to mean – is the BIGGEST VICTIM – both of the earthquake/tsunamis and of Japanese silly government and citizens and customers who now clamor for TEPCO to pour more BILLIONS down a money hole! Outrageous – all of these snivelling people should just go away, and lump it, so that TEPCO can more easily figure out what it should do next. Cleanups are for governments and the smaller victims.

Such a wonderful system, allowing such marvelous works! Though unfortunate calculations might be made, the system allows us to quickly move ahead, as if nothing had happened. Naturally, TEPCO might require further assistance from government and government-protected banks, so that TEPCO can build more engineering marvels.

Boy, aren’t Austrian insights wonderful?

[Those of you who missed or who wish to refresh your recollection regarding my posts last year on a very related case, might enjoy the following link:]

Categories: Uncategorized Tags:

Paul Joskow: What electric power regulatory reforms are need? A Federal Power Act of 2009

February 8th, 2009 No comments

Further to my previous posts, excerpted below are the recommendations that Paul Joskow (energy expert, MIT economist and current president of the Alfred P Sloan Foundationn) recently made in a speech at the National Press Club:

What is to be done?


We need to stop dealing with the electric power sector by placing band aids on the Federal Power Act of 1935. We need a comprehensive national policy for the electric power sector — a Federal Power Act of 2009 to replace the Federal Power Act of 1935. A policy that respects legitimate state rights but also reflects the contemporary attributes of electricity generation, transmission and distribution technologies, opportunities for innovation, and the public policy demands that are or will be placed on the electric power sector. While, I recognize that there are many technical differences between them, the restructuring of the U.S. natural gas industry provides a very successful basic organizational model to start with for the electric power industry. The special attributes of electricity and electricity networks can be layered on top of this model.


What provisions might a Federal Power Act of 2009 contain?


1. The economic, planning, reliability, and siting review and regulation of high voltage transmission facilities with voltages above, let’s say, 69 kv, should be federalized and the prices for transmission service over this network fully unbundled from generation and distribution service and made transparent. This would follow the structural and regulatory reform model associated with interstate pipeline transportation of natural gas and the successful implementation of electricity sector reform models introduced in other countries. Recent federal legislation effectively “federalized” reliability rules and made them mandatory. This is a step in the right direction.


2. The key provisions of FERC Order 2000 should be put into law. This would require the creation of [additional] TROs [regional transmission organizations] that manage the operation of large regional transmission networks, implement FERC’s transmission access, pricing, and planning regulations, and operate voluntary wholesale markets for electric energy, ancillary services, capacity and transmission rights. There is abundant evidence (a) that RTOs are needed to support efficient competitive markets, (b) that expanding the geographic expanse of RTOs and improving the market designs for energy, ancillary services and capacity lead to efficiency improvements, (c) and that wholesale market designs built around what is generally referred to as the “standard market design,” augmented by capacity obligations and capacity markets, promote economic efficiency.


3. Vertically integrated utilities should be required to unbundled generation service from distribution service so that their respective costs or prices are transparent. They should also be required at least to move their generation facilities to a separate generation affiliate. Existing cost-of-service arrangements governing existing generating capacity can be replicated through properly structure long-term wholesale contracts between distribution and generation affiliates that are regulated by FERC. This will preserve the imbedded economic benefits (or costs) of existing generating capacity for retail consumers. These contracts would be transparent wholesale power contracts and regulated by the FERC.


4. The states would be free to decide whether or not they wanted to introduce retail competition for some or all customer classes. Where distribution companies continue to have obligations to serve retail customers at regulated retail prices, however, they would be required to meet at least their incremental power supply needs through competitive wholesale market solicitations managed by the states using procurement mechanisms that meet reasonably flexible FERC competitive procurement criteria. In states that have already restructured and adopted a competitive wholesale market model, all default retail supply obligations would be met through approved competitive procurement programs.


5. Any federal loan guarantees available for financing nuclear, CCS, or renewable generation would be available only for “merchant” generating facilities and not to facilities subject to traditional cost-of-service regulation. Generators should get loan guarantees only once. Regulated generators can effectively get loan guarantees through cost of service regulation. Merchant generators can get similar financing relief from federal loan guarantees. This would roughly place regulated and merchant generation investment options on a level playing field.


6. [Assuming that a cap and trade program is enacted,] Any free CO2 allowances allocated to the electric power sector should go directly to electricity consumers through non-distortionary lumpsum distributions based on, say, historical consumption in a base period. All generators that emit CO2 would be required to buy allowances in the market to cover their emissions. Generators subject to cost-of-service arrangements would be allowed to pass the associated costs through the retail price regulatory process and they would be reflected in retail prices. Consumers would get a lump sum “dividend” on their bills each month for the value of the allowances allocated to them. That is, consumers would face the efficient retail price on the margin, while receiving a dividend that would not depend on whether their consumption increases or decreases, but would lower their total bills. This would then provide better retail price signals on the margin where it matters for stimulating wise consumption decisions.


7. State regulatory jurisdiction and regulation would continue over distribution facilities, sub-transmission facilities below 69 say kv, whether and how retail competition will be permitted, energy efficiency programs, and competitive procurement of generation consistent with FERC procurement criteria. This is no different from the states’ jurisdiction in the natural gas industry.  …


It will take significant political courage to design and implement a comprehensive electricity sector reform program because there are powerful interest groups that benefit from the status quo. 


(emphasis added)


I encourage interested readers to see Joskow`s full written remarks, linked above.


H/T Lynne Kiesling.

MIT economist Paul Joskow describes our current electricity regulatory framework

February 8th, 2009 2 comments

I believe that a key problem – and thus a key opportunity – that our country faces is over-regulation and misregulation of the electric power sector.  Regulatory reform in this area is a middle ground, both for enviros and those whose principle concerns are economic liberty and healthy markets.

As I noted previously, Paul Joskow, current President of the Alfred P Sloan Foundation and former head of the MIT Department of Economics (now on leave) and former director of the MIT Center for Energy and Environmental Policy Research, laid out a history of the electric power regulation and a series of regulatory reform proposals in a speech given at the National Press Club in September last year.

Here is an excerpt of his remarks on the evolution and current status of electric power regulation

For almost 50 years this sector was stuck in an organizational and regulatory framework that may have been well matched to the electricity generation and transmission technology available in 1935, but was surely poorly matched to changes in technology, new technological opportunities, contemporary investment needs, or current economic and environmental challenges. Then in the early 1980s, electricity sector reformers began to stir, responding to concerns about the system of regulated vertically integrated monopolies inherited from the 1930s. The “good old days” of regulation represent a view to the past with rose colored glasses. The system of regulated vertically integrated monopoly was plagued by cost overruns associated with nuclear power plants, poor operating performance for both nuclear and large fossil-fueled plants, poor fuel procurement decisions, wide price differences between neighboring areas, excess generating capacity, inefficient dispatch and economy energy trading between generating companies, regulatory incentives to keep old inefficient plants operating rather than retiring them, too many small utilities to take advantage of economies of scale, institutional and technological barriers to using the transmission network to access lower cost power, productivity lags, and inefficient retail prices. The system …was unnecessarily costly and inefficient.

Reformers looked to the favorable experience with restructuring, competition, and regulatory reform in other sectors and with electricity in other countries to help to solve the problems associated with the fragmented electric power sector made up of over 100 vertically integrated geographic monopolies. Municipal distribution companies and large industrial customers were especially aggressive at promoting reforms focused on open transmission access, the creation of transparent organized regional competitive wholesale markets, and (in the case of large industrial customers) retail competition.

A large number of states initially embraced this restructuring, competition, and regulatory reform vision and began to implement it. In 2000 it looked like restructuring and competitive market reforms were going to sweep the U.S. electric power industry.

Then came the California electricity crisis, the collapse of Enron and a number of merchant generating companies, increased volatility to natural gas markets and associated volatility in wholesale electricity market prices, and a long march upward in fossil fuel prices ultimately resulting in rising retail electricity prices in both regulated and restructured states. Most of the states that were leaders in restructuring during the late 1990s, when natural gas prices were low and there was excess capacity, initiated reforms during a period when regulated prices for generation service were expected to be much higher than perceived comparable competitive wholesale market prices. The expectation was that over time retail prices would fall. This forecast was based on the assumption that low prices for natural gas in particular would continue and that a new system built on efficient CCGT technology would evolve. At that time, a major “problem” that many of these states had to cope with were the “stranded generation costs,” primarily associated with what were perceived to be costly nuclear power plants, that were expected to result from the introduction of real wholesale and retail competition. This was expected to be a “transition problem” because it was expected that competition would result in market prices that would fall to levels below the embedded costs of nuclear plants and older fossil plants that would have otherwise been used to calculated (higher) regulated retail prices.

However, as natural gas and coal prices continued to rise far above anyone’s expectations, many of these states soon found that competitive market prices were rising dramatically along with natural gas prices (which affect competitive wholesale electricity prices in most regions of the country) — arguably rising to levels above what regulated prices would have been today under the status quo ante (though this requires a difficult counterfactual analysis). This, of course does not mean that these electricity sector reforms were a failure. In states that adopted the restructuring, wholesale and retail competition model, retail prices now reflect marginal supply costs, as they should to give consumers the right price signals to use electricity wisely. Rather it means that regulated prices are or would have been too low to give consumers appropriate incentives to make wise consumption decisions.

In evaluating restructuring, competition and regulatory reform one must understand all of its efficiency and distributional properties, not just at short run price effects. From an efficiency perspective, the restructuring reforms implemented at the federal level and in some states have led to numerous cost reducing successes in the face of rising fossil fuel prices.  These include dramatic improvements in the performance of divested nuclear plants, significant improvements in the performance of fossil plants that now face market incentives, roughly 200,000 GW of new (mostly merchant) gas-fired generation has been added to the system between 1999 and 2004, while the risk of cost overruns, fuel price fluctuations, demand variations, and availability problems experienced by some of these plants were shifted to their owners through the market rather than borne by consumers through cost-of-service regulation. There is good empirical evidence that the expansion of the boundaries of RTOs (e.g. PJM) have led to significant changes in power flows and more efficient dispatch of power plants, while inefficiencies are observed at the boundaries of RTOs that have not agreed to be consolidated (e.g. NY/NE). Gradual improvements in wholesale market designs have increased the efficiency of these markets and have restored investment incentives. Moreover, retail prices now respond quickly to changes in wholesale market prices, providing consumers with the right price signals rather than the wrong price signals resulting from retail price regulation. And these price signals are properly differentiated by time and location to reflect marginal supply costs, rather than the depreciated original cost of generating plants built 50 years ago. Demand management programs linked to short-term supply and demand conditions are expanding quickly as well in the reform regions.

Of course, the full reform program has not been implemented in large areas of the South, the West, and portions of the Midwest. The partial electricity reform equilibrium that we appear to be in now will not serve the country well and is potentially quite unstable. We have a system that is 1/3 reformed and 2/3 stuck in the structural and regulatory paradigm of the 1935s or somewhere in between.

The problems created by an antiquated industry structure and incompatible mix of state and federal regulation have not gone away. They are lurking out there to undermine achieving the goals that I enumerated earlier. Absent a comprehensive national electricity policy framework this sector is and will perform poorly in meeting the four sets of goals that I discussed earlier.

More later.

MIT’s "Technology Review" on the regulatory obstacles to a "smart grid" needed for open, competitive electricity markets

February 6th, 2009 No comments

David Talbot, chief correspondent for the MIT Technology Review, has an excellent, long piece in the January/February online issue that explores some the of intra- and inter-state regulatory hurdles that frustrate both the expansion of renewable power and a truly free power market.

I’d like to excerpt some portions of the article here:

When its construction began in the late 19th century, the U.S. electrical grid was meant to bring the cheapest power to the most ­people. Over the past century, regional monopolies and government agencies have built power plants–mostly fossil-fueled–as close to popu­lation centers as possible. They’ve also built transmission and distribution networks designed to serve each region’s elec­tricity consumers. A patchwork system has developed, and what connections exist between local networks are meant mainly as backstops against power outages. Today, the United States’ grid encompasses 164,000 miles of high-voltage transmission lines–those familiar rows of steel towers that carry electricity from power plants to substations–and more than 5,000 local distribution networks. But while its size and complexity have grown immensely, the grid’s basic structure has changed little since Thomas ­Edison switched on a distribution system serving 59 customers in lower Manhattan in 1882. …

While this structure has served remarkably well to deliver cheap power to a broad population, it’s not particularly well suited to fluctuating power sources like solar and wind. First of all, the transmission lines aren’t in the right places. The gusty plains of the Midwest and the sun-baked deserts of the Southwest–areas that could theoretically provide the entire nation with wind and solar power–are at tail ends of the grid, isolated from the fat arteries that supply power to, say, Chicago or Los Angeles. Second, the grid lacks the storage capacity to handle variability–to turn a source like solar power, which generates no energy at night and little during cloudy days, into a consistent source of electricity. And finally, the grid is, for the most part, a “dumb” one-way system. Consider that when power goes out on your street, the utility probably won’t know about it unless you or one of your neighbors picks up the phone. …

The U.S. grid’s regulatory structure is just as antiquated. While the Federal Energy Regulatory Commission (FERC) can approve utilities’ requests for electricity rates and license transmission across state lines, individual states retain control over whether and where major transmission lines actually get built. In the 1990s, many states revised their regulations in an attempt to introduce competition into the energy marketplace. Utilities had to open up their transmission lines to other power producers. One effect of these regulatory moves was that companies had less incentive to invest in the grid than in new power plants, and no one had a clear responsibility for expanding the transmission infrastructure. At the same time, the more open market meant that producers began trying to sell power to regions farther away, placing new burdens on existing connections between networks. The result has been a national transmission shortage.

These problems may now be the biggest obstacle to wider use of renewable energy, which otherwise looks increasingly viable. Researchers at the National Renewable Energy Laboratory in Golden, CO, have concluded that there’s no technical or economic reason why the United States couldn’t get 20 percent of its elec­tricity from wind turbines by 2030. The researchers calculate, however, that reaching this goal would require a $60 billion investment in 12,650 miles of new transmission lines to plug wind farms into the grid and help balance their output with that of other electricity sources and with consumer demand. The inadequate grid infrastructure “is by far the number one issue with regard to expanding wind,” says Steve Specker, president of the Electric Power Research Institute (EPRI) in Palo Alto, CA, the industry’s research facility. “It’s already starting to restrict some of the potential growth of wind in some parts of the West.”

The Midwest Independent Transmission System Operator, which manages the grid in a region covering portions of 15 states from Pennsylvania to Montana, has received hundreds of applications for grid connections from would-be energy developers whose proposed wind projects would collectively generate 67,000 megawatts of power. That’s more than 14 times as much wind power as the region produces now, and much more than it could consume on its own; it would represent about 6 percent of total U.S. electricity consumption. But the existing transmission system doesn’t have the capacity to get that much electricity to the parts of the country that need it. In many of the states in the region, there’s no particular urgency to move things along, since each has all the power it needs. So most of the applications for grid connections are simply waiting in line, some stymied by the lack of infrastructure and others by bureaucratic and regulatory delays. …

Utilities, however, are reluctant to build new transmission capacity until they know that the power output of remote wind and solar farms will justify it. At the same time, renewable-energy investors are reluctant to build new wind or solar farms until they know they can get their power to market. Most often, they choose to wait for new transmission capacity before bothering to make proposals, says Suedeen Kelly, a FERC commissioner. “It is a chicken-and-egg type of thing,” she says. …

Smart-grid technologies could reduce overall electricity consumption by 6 percent and peak demand by as much as 27 percent. The peak-demand reductions alone would save between $175 billion and $332 billion over 20 years, according to the Brattle Group, a consultancy in Cambridge, MA. Not only would lower demand free up transmission capacity, but the capital investment that would otherwise be needed for new conventional power plants could be redirected to renewables. That’s because smart-grid technologies would make small installations of wind turbines and photovoltaic panels much more practical.  …

The good news is that many utilities have begun installing the requisite meters–ones that intelligently monitor power flow out of a house as well as into it. The question now is how to move beyond the blizzard of pilot projects, install smarter technologies across the grid, and begin integrating more renewable power into the new infrastructure. “The smart-grid vision is nice; we all have our color PowerPoint slides,” says Don Von Dollen, who manages intelligent-­grid research at EPRI. “I think people kind of get the vision by now. Now it’s time to get stuff done.”  …

Last summer, former vice president Al Gore began arguing that the country needed to implement an entirely carbon-free electricity system within a decade to avert the danger of global warming. As part of his vision, Gore called for a “unified national smart grid” that would move power generated from renewable sources to cities, increase the efficiency of electricity use, and allow for greater control over renewable resources. He estimated that the grid overhaul would cost $400 billion over 10 years.  …

While pilot projects like the one in Boulder are worthwhile as a way to demonstrate new technologies, they’ve been implemented in hodgepodge fashion, with different utilities deploying different technologies in different states. Transmission projects are advancing incrementally, but they’re often complicated by conflicts between the states. “What we have today is this patchwork of rules and regulations that vary by state,” says Peter Corsell, CEO of GridPoint, a startup in Arlington, VA, that makes smart-grid software and is participating in the Boulder project. “We are all entrenched in this broken system, and there is no agreement on how to fix it. It’s a vicious circle.

Some think that the answer is to give FERC more ­authority. Today, the agency can overrule states’ decisions on where to site transmission lines, but only in regions that the U.S. Department of Energy has designated as critical for the security of the elec­tricity supply. So far, only two such corridors have been designated: one in the mid-Atlantic states and another in the Southwest. Even in those regions, delays continue. Southern California Edison has proposed a major transmission line in the southwest corridor; stretching from outside Los Angeles to near Phoenix, AZ, it would be able to handle power generated by future photovoltaic and solar-thermal power plants. But Arizona rejected the idea, so the utility is preparing to take its plans to FERC.

Others think the solution is a new federal policy that would make the market for renewable power more lucrative, perhaps by regulating carbon dioxide emissions, as the cap-and-trade policy proposed by Obama would do. Under such a policy, wind energy and other carbon-free electricity sources would become much more valuable, providing an incentive for utilities to expand their capacity to handle them (see “Q&A,” p. 28). “It could all change very fast,” says Will Kaul, vice president for transmission at Great River Energy in Minnesota, who heads a joint transmission planning effort that includes 11 utilities in the Midwest.  …

[A]n explosion in the use of renewables will depend heavily on upgrading the grid. That won’t come cheap, but the payoff may be worth it. “We should think about this in the same way we think about the role of the federal highway system,” says Ernest Moniz, a physics professor at MIT who heads the school’s energy research initiative. “It is the key enabler to allow us to modernize our whole electricity production system.”

(emphasis added)

One would think that deregulation of state utilities would also be a step in the direction of freeing up markets, introducing competiion and incentivizing both new grid investments and profitting from efficiency improvements.

In any case, I hope to vist this subject in other posts.

Categories: power, regulation Tags:

Oct. 17, 2019 Petition filed by Carlos Ghosn’s lawyer for Dismissal of Prosecution

January 5th, 2020 No comments
Note: The below is an English version of a Petition for Dismissal of Prosecution that was filed by Hiroshi Kawatsu, a member of Carlos Ghosn’s legal team, with the Tokyo District Court on October 17, 2019.
It was posted in the “NBR’s_Japan_Forum” email forum. I have edited the formatting to improve readability. At this point, I have not seen the Japanese original.
The attorney who apparently wrote this is Hiroshi Kawatsu, who is a partner in the Kasumigaseki-sogo Law Office (for twenty years) and is the Director of the Research Office for Criminal Affairs of the Japan Federation of Bar Associations. More on his background here:
To: Tokyo District Court, 17th Criminal Division Department 2019 Toku (Wa) No.14 Companies Act Violation Criminal Case Defendant: Carlos Ghosn Bichara
Lead Defense Counsel:
Intended Claims Document
I. Petition for Dismissal of Prosecution
October 17, 2019
Hiroshi Kawatsu
The prosecution of this case is based on an extremely illegal and prejudicial investigation, and is an abuse of the official authority of criminal prosecution for unfair purposes against a backdrop of discrimination against Mr. Carlos Ghosn’s race, nationality and social standing. This prosecution should be dismissed.
1. Background — the Nissan-Renault integration “crisis”
Mr. Carlos Ghosn, from the time that he became the COO of Nissan in June 1999, understood that the key to the success of the alliance was mutual respect of each company’s autonomy and culture. With a deep understanding of Nissan’s history and corporate culture, Mr. Ghosn spearheaded the “Nissan Revival Plan.” In just 2 years, Mr. Ghosn was able to turn Nissan, which had an interest-bearing debt of more than 2 trillion yen and was on the verge of bankruptcy, back to being a profitable company and grow into one of the world’s leading automakers. Mr. Ghosn was consistent in his stance of protecting Nissan’s corporate identity. Even after he became the CEO of both Nissan and Renault in April 2005, thereby becoming responsible to the shareholders
of not just Nissan but also Renault, his attitude, based on his management beliefs, never changed. Renault’s largest shareholder, the French government, occasionally began to talk about building the closeness of the alliance between the two companies, referring to it as “irreversible integration.” In 2015, Minister of Economy, Industry and the Digital Sector, Emmanuel Macron, increased the French government’s shareholding ratio of Renault, and then applied the Florange Law to Renault which doubles the voting rights of long-term shareholders. This enabled the French government to reinforce its voice with Nissan through Renault which owns 43.3% of Nissan stock. Even so, Mr. Ghosn did not change his policy. He made the French government recognize that Nissan was going to maintain its autonomy. He loved the company that is Nissan. Mr. Ghosn became the Director Chairman in April 2017, and Mr. Hiroto Saikawa (hereafter, “Mr. Saikawa”) replaced him as CEO. When Macron became President the same year, the pressure from the French government to move towards “irreversible integration” became stronger. Mr. Ghosn’s position to take a stand against the French government to protect Nissan’s autonomy did not change. However, at the same time, Mr. Ghosn came to think that there is no choice but to restructure the strategic partnership of the alliance in a way that can be explained to Nissan’s largest shareholder, Renault (the French government). Each company of the alliance would be placed under the umbrella of a newly incorporated holding company, and each company would get a say based on their performance. The French government ought to be satisfied with this new structure. Mr. Ghosn began to explain this idea to some of the directors
of Nissan as well.
Those in Mr. Ghosn’s inner circle, as well as other officers of the Company began to sense Renault’s (the French government’s) yearning for an integration with Nissan, and the subtle changes in Mr. Ghosn’s way of thinking. In particular, some of Nissan’s Japanese officers believed that the new structure of the alliance would essentially mean the “integration” of Nissan and Renault.
Nissan is one of the group companies of the “Nissan Konzern [Conglomerate]” which was a newly-rising zaibatsu [family-run conglomerate] of the pre-war era, and has been manufacturing cars under the Datsun brand since before the war. The founder, Yoshisuke Ayukawa’s lineage is one of a father who was a feudal warrior of the Choshu domain and a mother who was the niece of former senior statesman Kaoru Inoue during the Meiji period. Ayukawa was a powerful entrepreneur and politician who also served after the war as a member of the House of Councilors and as Supreme Economic Advisor in the Kishi Cabinet. The company name “Nissan” derives from one of the group companies, “Nihon Sangyo” [Japanese Industry]. Some also believed that Nissan’s integration with Renault would mean that a company with the history of having a role in Japan’s key industry would pass over to the hands of foreigners. This belief was shared not only among the directors of Nissan, but also among key figures in the Japanese government, beginning with the Ministry of Economy, Trade and Industry.
2. Collusion between Nissan and the Task Force of the Tokyo District Public Prosecutors Office
After Mr. Ghosn stepped back as CEO in April 2017, Nissan’s business performance noticeably declined. Along with this, remarks by Renault (French Government), the largest shareholder, began to attract attention. The “integration” of Nissan and Renault became a realistic crisis to succeeding CEO, Mr. Saikawa, and other Japanese officers of Nissan.
Around January 2018, the French government informed the Japanese government that it intended to integrate the management of Nissan and Renault. In response, the [Japanese] Ministry of Economy, Trade and Industry (METI) sent a letter of opposition to the French Ministry of the Economy and Finance. Talks were held among the METI (Director-General Akihiro Tada, Manufacturing Industries Bureau), the French Ministry of the Economy and Finance (Director General Faure), the Agence des participations de l’État (APE) [French state holding agency] (Director Vial), among others, but no progress was made.
In February of the same year, Renault’s Board of Directors passed a resolution reappointing Mr. Ghosn as CEO until 2022. Nissan’s Japanese officers believed that the “integration” has increasingly become more realistic. Around March of the same year, Senior Managing Executive Officer Hitoshi Kawaguchi, Statutory Auditor Hidetoshi Imazu, and former Vice-Minister for International Affairs, Ministry of Economy, Trade and Industry Masakazu Toyoda (who became a director of Nissan in June of the same year), with others, led a top-secret effort to form a group to investigate the “improper acts” of Mr. Ghosn. Their aim was to prevent the integration of Nissan and Renault by finding Mr. Ghosn’s “improper acts” and ousting him from Nissan. So as to absolutely ensure that non-Japanese officers including Mr. Ghosn and Mr. Greg Kelly would not find out, they went through a former prosecutor with the Tokyo District Public Prosecutors Office’s Task Force, Akihide Kumada and others, to consult with the prosecutors of the Tokyo District Public Prosecutors Office’s Task Force, and while receiving their instructions, conducted a top-secret investigation to search for “improper acts” that could be established as a criminal case against Mr. Ghosn.
They asked Senior Managing Executive Officer in charge of Legal and Compliance, Mr. Hemant Kumar Nadanasabapathy (hereafter, “Mr. Hari Nada”), and attorneys of one of Nissan’s legal advisers, the law firm of Latham & Watkins (L&W), to conduct an investigation of the companies affiliated with the alliance, not just in Japan but worldwide. Mr. Hari Nada and the attorneys at L&W sent out letters to the management of affiliate companies worldwide to cooperate with the investigation, to appear at the Tokyo District Public Prosecutors Office and comply with the interrogations by the prosecutors, and which outlined that related expenses, etc. would be borne by Nissan, etc. Mr. Hari Nada and L&W were deeply involved in the events that were the subject of the investigation in the first instance. Investigative activities led by them are a conflict of interest, and lack impartiality. They, who were themselves in charge of the investigation, cast a blind eye to their own “improper acts” as well as those of Mr. Saikawa and
other Japanese executives, while single-mindedly searching for “improper acts” by Mr. Ghosn. The purpose of this unjust and biased investigation was to restructure the relationship between Nissan and Renault (French government) by unseating Mr. Ghosn and preventing the “integration” of the two companies.
The investigative team of the Tokyo District Public Prosecutors Office accepted the results of such unfair and biased investigation and commenced their criminal investigation. Furthermore, as described below, they also engaged in illegal investigative activities in Lebanon, Brazil, France, etc. using Nissan and its attorneys at its beck and call.
3. Illegal plea bargaining
(1) Illegality of the objective
The Public Prosecutors state that they reached an agreement with Mr. Hideaki Ohnuma (head of Nissan’s Secretariat Office; hereafter, “Mr. Ohnuma”) and Mr. Hari Nada (in charge of Nissan’s Legal Division) under the consultation and agreement program (the Japanese version of plea bargaining) of the 2016 Amended Code of Criminal Procedure to, in exchange for not indicting these two individuals, have them make witness statements and submit evidence to the prosecutors about the criminal charges against Mr. Ghosn who is believed to be an “accomplice.” However, this consultation and agreement (plea deal) was reached with the objective of ousting Mr. Ghosn from his position of Chairman and CEO of the Nissan- Renault-Mitsubishi Alliance based on discussions that were held between METI officials and the Japanese senior management executives of Nissan.
The objective is completely different from the intended purpose of the program, which is to, in cases where it is difficult to uncover the truth by conventional methods, offer accomplices advantageous prosecutorial treatment in exchange for cooperation with the investigation and prosecution of the case, so as to uncover the truth and prosecute the case appropriately.
(2) The actual party is Nissan
The prosecutors claim that of the criminal charges that have been alleged against Mr. Ghosn, consultations were held and an agreement reached with Mr. Ohnuma and Mr. Hari Nada regarding only the Financial Instruments and Exchange Act violations case (falsification of securities reports), and that as a result of plea bargaining on matters related only to those charges, those charges were dropped against these two individuals, but nothing could be further from the truth. First, these two individuals are not the actual parties in the plea bargain. It was the attorneys that were hired by the corporate entity of Nissan and its Japanese senior management executives that brought the case to the Tokyo District Public Prosecutors Office, cooperated with prosecutors, and reached an agreement. These attorneys were hired by Nissan for the purpose of searching for “improper activities” that would make Mr. Ghosn a suspect and, together with attorneys from L&W, communicated with the Tokyo District Public Prosecutors Office and conducted an “investigation” — the search for something with which to charge Mr. Ghosn.
As a result of the “investigation,” Nissan and the Tokyo District Public Prosecutors Office determined that Mr. Hari Nada and Mr. Ohnuma could potentially be charged as accomplices in the case involving violations of the Financial Instruments and Exchange Act and the case involving violations of the Companies Act, and decided to adopt a scheme in which Mr. Hari Nada and Mr. Ohnuma would be made the parties to a plea deal. Mr. Hari Nada and Mr. Ohnuma did not take the initiative on their own, nor make the decision on their own will, to cooperate with the prosecution of Mr. Ghosn. They were persuaded by Nissan — the Japanese senior management executives and Nissan’s attorneys — and merely signed the written agreement in obeyance of basically what was a “Company order.” This kind of application of the consultation and agreement program goes against its intended purport, and is illegal.
(3) Legal procedures were not carried out for crimes that were subject to plea bargaining
The content of the written agreements with Mr. Ohnuma and Mr. Hari Nada (Kou Exhibit 147, Kou Exhibit 148) in which the prosecutors demanded the examination of evidence state that an agreement was reached regarding the case involving violations of the Financial Instruments and Exchange Act, but there is no reference to the case involving violations of the Companies Act which is also a charge of the action — that an agreement was executed with Shinsei Bank that switched the party to swap agreements to Nissan (the charged facts in relation to the swap agreements), that payment of 14.7 million dollars was made to Khaled Juffali (the charged facts in relation to KJC), and that payment of 5 million dollars was made to Suhail Bahwan Automobiles (SBA) (the charged facts in relation to SBA). However, both Mr. Ohnuma and Mr. Hari Nada have provided witness statements regarding the case involving violations of the Companies Act (e.g. Kou Exhibits 40 through 44, Kou Exhibits 149, Kou Exhibits 174, Kou Exhibits175 of the Companies Act violation case).
With Mr. Ohnuma and Mr. Hari Nada, the prosecutors have engaged in plea deals in an informal manner, not based on the provisions of the law (to have accomplices make statements that implicate others in a crime by inducing them with advantages). It is illegal to engage in virtual plea bargaining without following the legal procedures, and it is not permissible to allow the resulting statements and evidence.
(4) An “under-the-table deal” was made
It was neither Mr. Ohnuma, the individual, nor Mr. Hari Nada, the individual, that brought up the idea of a plea deal with the prosecutors. It was Nissan, the company, its Japanese senior management executives, and the attorneys they hired, that proposed the criminal prosecution [of Mr. Ghosn] to the Task Force of the Tokyo District Public Prosecutors Office, and
proactively promoted the transaction consisting of providing evidence and witness testimony from those involved in exchange for not prosecuting them. As a result, consultations and agreements were effectively carried out between Nissan CEO Mr. Saikawa and multiple other individuals at Nissan, and the prosecutors of the Tokyo District Public Prosecutors Office’s Task Force regarding the provision of testimony and evidence disadvantageous to Mr. Ghosn in exchange for the dropping of criminal charges against such individuals.
In particular, Mr. Saikawa is a submitter of the Annual Securities Reports said to contain “misstatements” in relation to Mr. Ghosn’s director compensation in the Financial and Instruments Exchange Law violation case. Furthermore, he himself is the person who approved and decided the payment from the “CEO reserve” in the Companies Act violation case. It is clear that he was investigated as a suspect in these cases, and that the Tokyo District Public Prosecutor’s Office did not prosecute him in exchange for providing testimony and evidence that is disadvantageous to Mr. Ghosn. However, the Toyo District Public Prosecutor’s Office has not revealed whether a consultation and agreement has been made with Mr. Saikawa, and has refused to respond to requests for disclosure of evidence regarding this.
There are numerous other directors and employees of Nissan other than Mr. Saikawa that were involved in the acts stated in the prosecutors’ charges in this matter. Facing threats displayed by Nissan and the prosecutors that they may be subject to criminal prosecution, they were pressured to make statements in accordance to the wishes of Nissan and the prosecutors – statements that Mr. Ghosn behaved like a “dictator,” and that because they couldn’t defy his authority, they had no choice but to take part knowing it was wrong. It was based on this kind of an extensive “under-the-table deal” and unjust inducements that the indictment was carried out.
4. Illegal search and seizure
(1) Seizure of attorney Mr. Fadi Gebran’s personal computer and HDD, etc.
Mr. Ghosn’s personal residence that is also used as an office located in Beirut is managed by a local company called Phoinos, and Ms. Amal Abou Jaoude who was the representative of Phoinos was in charge of managing its affairs. Her salary and other expenses were paid by Nissan Middle East. Ms. Amal Abou Jaoude had at one time worked as a secretary of attorney Fadi Gebran, who passed away in August 2017, and managed the computer and other items he had left behind, as well as took care of his remaining affairs.
On November 19, 2018 (Beirut time), attorneys from L&W stole attorney Fadi Gebran’s PC and HDD which Ms. Amal managed, from her in Beirut. This PC and HDD contained a large amount of personal information such as email exchanges between attorney Fadi Gebran and his clients. The so-called evidence that prosecutors say they have obtained in this case as a result of analyzing the emails of attorney Fadi Gebran, etc. (for example, Kou Exhibit 182 forward of the Companies Act violation case) were discovered from the PC and HDD that the attorneys from L&W and others took without permission at this time.
They raided Ms. Amal Abou Jaoude’s office, and invaded Mr. Ghosn’s empty home while consulting with the Tokyo District Public Prosecutors Office in advance, and stole the PC, HDD and the contents saved therein without the consent of the proprietors, such as attorney Fadi Gebran’s surviving family and his clients. Acting as the hands and feet of the Tokyo prosecutors, they committed crimes of stealing data from other’s PC and HDD. The use by an investigator of a private citizen to carry out a search and seizure in order to circumvent the requirements of the warrant system (Article 35 of the Japanese Constitution) is, in itself, a serious illegal act that effaces the principles of the warrant system. It is also illegal and impermissible that the investigation authorities of the Japanese government use a private citizen, circumventing the formal legal process to gather information abroad where its investigative authority does not reach.
Furthermore, an enormous volume of communications with clients and documents prepared for clients was saved in attorney Gebran’s PC and HDD. These [communications and documents] are strongly protected as attorney-client privilege, not only within Lebanon, but around the world by international human rights laws, domestic constitutions and domestic laws. If this were not the case, one would not be able to solicit [services] from attorneys overseas with respect to international matters. The Tokyo District Public Prosecutor’s Office, as well as the L&W attorneys, seized these being fully aware that they contained a large amount of information subject to the attorney-client privilege.
The admissibility of evidence obtained as a result of such an illegal investigation must, of course, be denied. However, the illegality of the investigation and prosecution in this case is not something that can be straightened by simply excluding part of the evidence.
(2) Invasion of home/office in Rio de Janeiro
Mr. Ghosn’s personal residence that is also used as an office located in Rio de Janeiro is managed by a company called Hamsa, and Ms. Vania Rufino was in charge of managing its affairs. On November 19, 2018 (local time), an employee of Nissan Brazil made an unannounced visit to Ms. Ruffino’s office and questioned her asking such things as, “Did you do personal work for Carlos Ghosn?” In addition to a cell phone, PC, etc., all documents were also seized, and without providing any reason, Ms. Rufino was ordered to take a leave of absence. After that, the employee of Nissan Brazil proceeded to lock Mr. Ghosn’s house so that Mr. Ghosn or any of his family could not enter the home.
This, too, was nothing other than an illegal search and seizure that was conducted upon discussion between the Japanese prosecutorial authorities and Nissan.
(3) Search and Seizure in Tokyo on April 4, 2019
Early in the morning around 5:50 am on April 4, 2019, the Task Force of the Tokyo District Public Prosecutors Office arrested Mr. Carlos Ghosn on charges of violation of the Companies Act. At the time of his arrest, the Task Force also confiscated a personal computer, 3 smartphones, and a passport (issued by the country of Lebanon) that belonged to Mr. Ghosn’s wife, Mrs. Carole Ghosn, who was at the restricted residence where Mr. Ghosn was arrested. Mrs. Carole Ghosn who was shaken with fear was then intimidated and made to say the passwords on the smartphones.
The prosecutors claim that this seizure was a legitimate seizure carried out on the basis of a legally obtained search and seizure warrant. However, that warrant covered Mr. Ghosn’s belongings inside of his home, not Mrs. Carole Ghosn’s. The prosecutors deceived the court by lying that Mrs. Carole Ghosn’s PC, smartphones and passport were Mr. Ghosn’s possessions. The prosecutors and administrative officers of the Tokyo District Public Prosecutors Office who were involved in this search and seizure seized Mrs. Carole Ghosn’s PC, smartphones and the like having full knowledge of this.
Mrs. Carole Ghosn’s PC and smartphones that were seized based on this illegal search and seizure also included many e-mails and other communications between her and her lawyers. This is clearly an infringement of Mrs. Carole’s attorney-client privilege.
The PC and smartphones seized from Mrs. Carole also included data that related to communications between Mr. Ghosn and his lawyers. Furthermore, the notebook that Mr. Ghosn used while he was detained in the Tokyo Detention House to exchange information with his lawyers was also seized. Needless to say that this is illegal and a violation of Mr. Ghosn’s right to consult with his lawyers (Article 34 of the Constitution, Article 39, Paragraph 1 of the Criminal Procedure Code).
This illegal search and seizure should result of course in the exclusion of evidence; however, beyond that, this illegal [act], coupled with the other illegal [acts], invalidates the entirety of the
prosecution in this case.
5. Infringement of the right to a speedy trial
It was from around the Spring of 2018 that the Tokyo District Public Prosecutors Office, together with Japanese top management officials at Nissan, began investigating Mr. Ghosn’s “improper activities” as well as engaged in investigative activities related to the violations of the Financial Instruments and Exchange Act and the Companies Act which became the causes of action. Yet, they broke up the facts that were the subject of the investigation into small pieces and detained Mr. Ghosn repeatedly. With respect to the Financial Instruments and Exchange Law violation case, they even repeated arrests for every fiscal year. With respect to the Companies Act violation case as well, irrespective of the fact that they had obtained statements from Nissan directors by the beginning of 2019, they delayed the timing of his arrest. Moreover, they arrested Mr. Ghosn for the fourth time for violation of the Companies Act just as he was about to start preparing for trial for the case he was released on bail and indicted. As a result, Mr. Ghosn was held in custody for as many as 130 days.
Even with regard to the pretrial conference procedures, the prosecutors took as many as 4 months to submit the facts that they sought to prove. Also, the prosecutors delayed their answers to requests that were made by Mr. Ghosn’s attorneys for the disclosure of evidence, and failed to make clear when the evidentiary disclosure period would end. Furthermore, the prosecutors are engaging in illegal acts, violating legal requirements such as by limiting the disclosure to viewing by Mr. Ghosn’s attorneys only and by deleting electronic data subject to disclosure at Nissan’s request. They are returning evidence seized at Nissan’s request, ignoring Mr. Ghosn’s attorneys’ request for disclosure of evidence. As a result, the Companies Act violation case is still remiss, and similarly with respect to the Financial Instruments and Exchange Law violation case for which [Mr. Ghosn] was indicted in December 2018, the disclosure of evidence has not been
completed, nor is there even an outlook for completion.
In this way, the defense’s preparations have been obstructed and delayed, while on the other hand, the prosecutors continue to this day to conduct “supplementary investigations” by obtaining statements and evidence from involved persons residing overseas based on investigational assistance from the relevant foreign governments. They are still continuing the investigation that should have been completed prior to indictment. Even now, after more than 10 months since the initial indictment, there is no timeline for the start of a trial.
Mr. Ghosn’s right to a speedy trial (Article 37, Paragraph 1 of the Japanese Constitution; Article 14, Paragraph 3(C) of the International Covenant on Civil and Political Rights) has already been seriously infringed.
6. Illegal interference with personal life
From around March 6, 2019, ever since Mr. Ghosn was released on bail, Mr. Ghosn and his family have been followed by police officers or their affiliates. They are not inconspicuous in the way that they follow Mr. Ghosn and his family members, and in fact, linger around them in plain sight. This constant monitoring of Mr. Ghosn and his family even after his release has caused them mental anguish in their daily lives. This is a violation of Mr. Ghosn’s right to privacy and right to a peaceful everyday life.
Mr. Ghosn is not a terrorist, nor a member of an organized crime group. He is an international company executive. There is no legitimate reason, anywhere, for having to monitor him for the safety of the local community. Under this situation where Mr. Ghosn and his family are subject to regular psychological persecution by the investigational and prosecutorial authorities, Mr. Ghosn clearly cannot engage sufficiently in his defense activities. Mr. Ghosn’s right to a fair trial (Article 14, Paragraph 1 of the International Covenant on Civil and Political Rights; Article 37, Paragraph 1 of the Japanese Constitution) is also being compromised.
7. Information leaks and comments about guilt
The prosecutors told some members of the media in advance about the pending arrest of Mr. Ghosn before his actual arrest, thereby enabling them to report on the scene of his arrest at Haneda Airport. The prosecutors then repeatedly leaked one-sided and arbitrary information about their investigation to the media, such as that there is an abundance of evidence that shows Mr. Ghosn’s guilt: that agreements with Mr. Ghosn pertaining to his compensation had been obtained from those involved at Nissan (Asahi Shimbun Newspaper, November 27, 2018, evening edition), that there is evidence that future payments of compensation had already been fixed (Asahi Shimbun Newspaper, November 29, 2018, morning edition), or that “there are documents outlining payment methods” (Asahi Shimbun Newspaper, December 11, 2018), thereby giving the impression that there was abundant evidence of Mr. Ghosn’s guilt. The prosecutors, even though they still to this day have not proven anything, continued to leak information one after the next to suggest there was ample evidence to support the suspicion of aggravated breach of trust, such as that: a total of 14.7 million dollars was remitted in 4 installments from a subsidiary of Nissan to an acquaintance in Saudi Arabia (Asahi Shimbun Newspaper, December 22, 2018, morning edition); “funds in excess of 5 billion yen were caused to be disbursed from Nissan to the companies of 2 acquaintances in the Middle East” (Nihon Keizai Shimbun Newspaper, January 4, 2019); an executive of a sales distributor in Oman to which 3.5 billion yen was disbursed from a “CEO discretionary reserve” that is “under the direct jurisdiction” of Mr. Ghosn “paid approximately 1.6 billion yen as payment for a cruiser” that was purchased by a company in which Mr. Ghosn is involved (Nihon Keizai Shimbun Newspaper, January 11, 2019); “There is suspicion that Nissan funds were funneled to former Chairman Ghosn through GFI” (Asahi Shimbun Newspaper, April 4, 2019, morning edition), etc.
The prosecutors continued to make one-sided comments that assumed Mr. Ghosn’s guilt such
as that: “there was a cover-up to hide executive compensation” (Asahi Shimbun Newspaper, December 2, 2018, morning edition); “the Saudi business man [Juffali] has no actual business entity” (Asahi Shimbun Newspaper, December 26 2018); “falsifications were made to make it appear as though approval of the Board of Directors was obtained for the switching [of contract parties]” (Asahi Shimbun Newspaper, December 30, 2018); based on e-mails and the like that remained in a personal computer at the offices of a lawyer in Beirut, “it has been determined that the suspect, Ghosn, essentially owned GFI and allocated Nissan funds for private use” (Sankei Shimbun Newspaper, April 9, 2019, morning edition), etc. Based on these arbitrary and one- sided comments by the prosecutors, the media incessantly painted Mr. Ghosn as a villain who exploited the company for personal gain.
Meanwhile, the prosecutors also provided information about the investigation to the media that was in line with the interests of Nissan and its Japanese senior management executives such as that: Shinsei Bank demanded that the approval of the Board of Directors of Nissan be obtained, but Mr. Ghosn rejected it (Asahi, December 23, 2018, morning edition); Charges have been dropped against President and CEO Hiroto Saikawa who was accused of violating the Financial Instruments and Exchange Act due to “lack of evidence” (Asahi Shimbun Newspaper, May 18, 2019, morning edition), etc.
The media outlets competed in continuing coverage that was based on such information from the prosecution and in line with their intensions. As a result, Mr. Ghosn’s public reputation did a 180 from being the “’savior’ and ‘charismatic management executive’ who ‘saved Nissan which was in crisis on the brink of bankruptcy, and growing it into a world-class company’” to “a dictator that exploited the company to fatten his own wallet.” By now, his “improper activities” are treated as unquestionable facts, and the focus has moved onto “recurrence prevention.” In such an environment, there is no denying that it will be a virtual impossibility to have a fair trial in which Mr. Ghosn is afforded his right to a presumption of innocence and his right to an
adequate defense.
Be that as it may, the prosecutors’ frequent leaks of information about the investigation while the prosecution of the case has been ongoing as well as comments made by them that assume the guilt of Mr. Ghosn are in and of themselves occupational crimes by the prosecutors, or comparable illegal acts.
The act of a prosecutor leaking information about the investigation to the media is “an act of leaking secrets that were learned in an official capacity on the job” (Article 100, Paragraph 1 of the National Public Service Act), which is itself a crime (Article 109, Item 12 of the National Public Service Act). As explained above, in this case, due to such crimes committed by the prosecutors, Mr. Ghosn has been denied of his right to receive a fair criminal trial (Article 14, Paragraph 1 of the International Covenant on Civil and Political Rights; Article 37, Paragraph 1 of the Japanese Constitution) which is a basic human right.
In this case, even though Mr. Ghosn has not been found guilty through a trial, he has repeatedly been publicly assumed guilty through the media at the hands of the prosecutors who are national public servants. This is a violation of another basic right of Mr. Ghosn, the right to be presumed innocent (Article 14, Paragraph 2 of the International Covenant on Civil and Political Rights; Article 11, Paragraph 1 of the Universal Declaration of Human Rights).
8. A cozy relationship with Japanese officers at Nissan and the Ministry of Economy, Trade and Industry
In Japan, prosecutors, who have a monopoly of authority over criminal prosecution, and furthermore, who are “given a broad range of discretionary power” in exercising said authority (Judgment of the Supreme Court of Japan, December 17, 1980, 1st Petty Bench Decision, Criminal Procedure Code precedent 34-7-672, p. 675) are not permitted to act simply as a unilateral party in a lawsuit. Prosecutors are not allowed to be a servant to some, or an advocate
for a private benefit, and must carry out their functions impartially and avoid all discrimination as to race, nationality, etc. (Article 13 (A) of the United Nations Guidelines on the Role of Prosecutors), “in representation of the public interest” for the purpose of demanding “the proper application of the law in court” (Article 4 of the Public Prosecutor’s Office Act).
In this case, the prosecutors of the Task Force of the Tokyo District Public Prosecutors Office ignored this most basic of professional obligations of a prosecutor, and acted as a tool for realizing the objectives of the Ministry of Economy, Trade and Industry and Nissan’s Japanese senior management executives to prevent Nissan from becoming a French company. The prosecutors aided the objective to oust Mr. Ghosn by searching for “improper activities” committed by him and to building a criminal case against him, and used tax money to help them to that end. The prosecutors held discussions with Nissan’s Japanese senior management executives and the attorneys that represented them, and abused the “consultation and agreement (plea bargaining) system” so as to give one-sided consideration to Nissan’s interests. The prosecutors circumvented the requirement of obtaining a warrant and infringed on national sovereignty by using Nissan’s employees and attorneys as tools for carrying out their investigation overseas. The prosecutors, in order to shift the public’s focus away from these one-sided and unfair investigational prosecutorial activities and to gain the support of public opinion, committed the crimes of violating confidentiality and repeatedly leaking information about the investigation. The prosecutors, when asked during the pretrial conference procedure about their information leaks asserted that, “We believe there hasn’t been something like this,” which is factually impossible. And the prosecutors have delayed the disclosure of evidence to defense counsel, and moreover refused the disclosure itself in response to Nissan’s requests.
9. Prosecution based on an illegal investigation
This indictment could not have been realized without the egregiously illegal investigation
involving white-collar crimes by public servants as described thus far, and constitutes “a case in which the illegal nature of investigative procedures is material, where the indictment would have been impossible or extremely difficult unless the illegal procedures were predicated, and in that sense, is a case in which the two situations are closely related and inseparable” (Judgment of the High Court of Sendai, October 17, 1967, High Court Decision Criminal Procedure Code precedent 20-5-699, p. 706).
Therefore, this case must be dismissed (Id.).
10. Arbitrary and discriminatory exercise of the authority of prosecution
This investigation originated with the Ministry of Economy, Trade and Industry and the Japanese senior management executives of Nissan who wanted to prevent the “irreversible integration” of Nissan and Renault and stop Nissan from becoming a French company, and with the aim of ousting Mr. Ghosn who, as CEO of Renault, was working to facilitate the integration of Nissan and Renault, searched for “improper activities” on the part of Mr. Ghosn, and bring criminal charges against Mr. Ghosn for such activities, requested the cooperation of the Tokyo District Public Prosecutors Office by way of conducting an investigation that included plea bargaining. The Task Force of the Tokyo District Public Prosecutors Office complied with this request and commenced an investigation into this matter. In carrying out their investigation, as described above, the prosecutors only took Nissan’s interests into account and worked collusively with Nissan and its attorneys. In this case, there is no doubt that Mr. Ghosn has been discriminated against based on his race, nationality and/or social status. This investigation and prosecution is a case of “the defendant being treated unfairly and unfavorably in an investigation compared to general cases because of their ideology, religion, social status, lineage, etc.” (Judgment of the Supreme Court of Japan, 2nd Petty Bench decision, June 26, 1981, Criminal Procedure Code precedent 35-4-426, p. 429, Akasakicho Case). This is a violation of Article 14 of the Japanese
Constitution, and is also in violation of Article 13(A) of the United Nations Guidelines on the Role of Prosecutors.
As explained above, this criminal prosecution has been based on extremely illegal investigation activities that constitute professional crimes. In addition, the prosecution itself cannot be said to have been carried out “in representation of the public interest” for the purpose of demanding “the proper application of the law in court” (Article 4 of the Public Prosecutor’s Office Act). This prosecution falls under the category of “an extreme case in which the prosecution of the case itself constitutes a professional crime” (Judgment of the Supreme Court of Japan, 1st Petty Bench, December 17, 1980, Criminal Procedure Code precedent 34-7-672, p. 676, Chisso-Kawamoto Case).
Therefore, this prosecution is unconstitutional, illegal, and invalid.
II. Statute of Limitations
  1. With respect to the indictments stated in the Charging Sheet, dated January 11, 2019 (excluding, however, the one with payment date of March 27, 2012), the seven-year statute of limitations period (Article 250, Paragraph 2, Section 4 of the Code of Criminal Procedure) has passed, and the statute of limitations has expired. A judgment should therefore be rendered to dismiss them (Article 337, Paragraph 4 of the Code of Criminal Procedure).
  2. Article 255, Paragraph 1 of the Code of Criminal Procedure specifies that, “where the offender is outside Japan,” the statute of limitations shall be suspended during the period when the offender is outside Japan. In regard to this point, with respect to the meaning of “where the offender is outside Japan,” a judgment by the Supreme Court of Japan, 1st Petty Bench on October 20, 2009, Keishu Vol. 63, No. 8, p. 1052 (hereinafter, the “2009 judgment”) ruled that “according to Article 255, Paragraph 1 of the Code of Criminal
Procedure, even in cases of temporary overseas travel, time during which an offender is outside Japan is interpreted as suspending the statute of limitations.” However, that ruling is not applicable to this case.
Rather, considering the legislative purpose and history of the system for suspending the statute of limitations, the interpretation of the requirement “where the offender is outside Japan” should be limited to not include overseas travel of less than two months.
  1. As an initial matter, this case is completely different from the 2009 judgment. Specifically, given that the purpose of Article 255, Paragraph 1 of the Code of Criminal Procedure concerns difficulty in the service of charging sheets, since the case of the 2009 judgment relates to Japanese nationals who were working in real estate brokerage, construction, and employment of foreign technical interns, it is believed to be a case where a “workplace” at which to effect service other than the defendant’s address or residence (Article 54 of the Code of Criminal Procedure, and Article 103, Paragraph 2 of the Code of Civil Procedure) could not be identified. In contrast, Mr. Ghosn was working consistently at Nissan’s main office, so service could have been effected at his workplace at any time, and there would have been no difficulty whatsoever in serving him charging sheets.
  2. In addition, considering the legislative purpose and history of the statute of limitations system, the ruling of the 2009 judgment is not applicable to this case.
(1) Given that the system for the statute of limitations exists, the benefit to defendants,
namely not being prosecuted after time has passed, is protected by law. As such, provisions depriving such benefits should be interpreted narrowly and in line with their substantial grounds.
(2) Furthermore, relative to when the 2009 judgment was made, new mutual legal assistance treaties with the E.U. and Russia have also come into effect, and there has actually been a marked increase in the number of cases where mutual assistance for investigations
has been given. Therefore, there has also been a reduction in the degree of difficulty occurring in investigations when defendants are outside Japan.
(3) Considering the legislative history in the first place, given that the purpose of suspending the statute of limitations concerns difficulty in serving transcripts of charging sheets, since transcripts of charging sheets can be served in the event of temporary overseas travel, and in light of the aforementioned reduction in the difficulty of investigation, etc., there is scant substantial reason at this point to deprive this benefit.
Thus, cases where an individual who has a residence and workplace in Japan engages only in temporary overseas travel (specifically, overseas travel of less than two months, which is specified as the period to serve charging sheets (Article 271, Paragraph 2 of the Code of Criminal Procedure)) should be interpreted as not suspending the statute of limitations. Accordingly, in relation to Mr. Ghosn, who has a residence and workplace in Japan, the statute of limitations is not suspended for periods of overseas travel in which he re-entered Japan within two months from the date he left the country.
  1. Calculated excluding overseas travel of less than two months, of the [indictments] in Charging Sheet No. 2, dated January 11, 2019, the end date for the statute of limitations for the one with payment date of March 9, 2011, is August 7, 2018. Therefore, at the time of the indictment, the statute of limitations had already expired.
    Among the indictments stated in this Charging Sheet, the statute of limitations has also similarly
    expired for those acts that were completed on March 9, 2011, or earlier.
  2. Thus, among the indictments concerning Mr. Ghosn, the statute of limitations has expired for the indictments stated in the Charging Sheet, dated January 11, 2019 (excluding, however, the one with payment date of March 27, 2012). A judgment should therefore be
    rendered to dismiss them (Article 337, Paragraph 4 of the Code of Criminal Procedure).
III. Charged facts regarding the swap contracts
1. Mr. Ghosn is innocent.
  1. (1)  There is no recognizable act committing an aggravated breach of trust in executing the novation agreement in this case because the act is not one that gave rise to an actual risk that Nissan would incur a “financial loss” (Company Act, Article 960 (1)).
  2. (2)  No “financial loss” (Company Act, Article 960 (1)) was inflicted on Nissan whatsoever.
  3. (3)  No intent (Criminal Code, Article 38 (1)) can be recognized either, because Mr. Ghosn
    was unaware of and did not affirm inflicting “financial loss” on Nissan.
  4. (4)  It is also not recognizable that the purpose of executing the novation agreement in this case was in contemplation of “his own interests or the interests of a third party”
    (Companies Act, Article 960 (1)) because the purpose contemplated the interests of Nissan.
2. (1) In 1999, Mr. Ghosn came to Japan and became a director to turn Nissan around. Because Mr. Ghosn’s family resided in the U.S. and their living costs were generally based on U.S. dollars, he asked to be paid in U.S. dollars; however, Nissan refused to do so. Therefore, from around 2002, Ghosn entered into foreign exchange swap agreements with financial institutions to periodically sell Japanese yen and purchase U.S. dollars.
(2) At the recommendation of a representative at Shinsei Bank, who stated that U.S. dollars can be purchased at favorable rates, Mr. Ghosn entered into the swap agreements between Canayany and Shinsei Bank. The purpose of the swap agreements was to exchange the yen that Mr. Ghosn received as remuneration from Nissan into dollars, and Shinsei Bank created the agreements based on Mr. Ghosn’s current and future yen cash flow. While the swap agreements provided that a certain amount of dollars will have to be purchased at a below-market exchange rate when the dollar/yen exchange rate was 100 yen or 80 yen or below per dollar, from 1999 (when Mr. Ghosn came to Japan) until 2007, not once did the
dollar drop below 100 yen.
(3)  The bankruptcy of Lehman Brothers in September 2008 triggered a worldwide financial crisis. Because of the rapid appreciation of the yen, and at the same time the drastic decline of stock prices, the collateral Mr. Ghosn had offered Shinsei Bank based on the swap agreements became insufficient. After October 24, 2008, the person in charge at Shinsei Bank requested Mr. Ghosn for an immediate increase in collateral, or to terminate and pay penalty fees. In the midst of the financial crisis, it was not possible for Mr. Ghosn to procure the collateral required by Shinsei Bank in just a few days, and in order to terminate the contract and pay the penalty fees, Mr. Ghosn’s only option was to resign from Nissan and apply the retirement allowance to the payment. However, leaving Nissan in the midst of the financial crisis would cause irreparable harm to the company, and was not an option that Mr. Ghosn could choose. Mr. Ghosn proposed guaranteeing the obligations himself under the swap agreements to Shinsei Bank but Shinsei Bank rejected the proposal, and the idea was presented that Nissan’s guaranty would be acceptable. In this context, the proposal of shifting the contractual status of the swap agreements to Nissan until Mr. Ghosn could gather the collateral was considered, under the condition that the shift would be at no cost to Nissan.
(4)  After consideration by Shinsei Bank and Nissan’s Legal, on October 31, 2008, Nissan’s Board of Directors passed a resolution giving Ohnuma, the General Manager of the Secretariat Office, the authority to sign current or future FX forward contracts for non- Japanese executive officers (including directors) at no cost for the company.
(5)  The resolution granted authority to the General Manager of the Secretariat Office to
execute transactions to sell yen and buy a foreign currency for the benefit of non-Japanese executive officers in relation to their remuneration payment. The resolution presumed that losses caused by a transaction would be attributed to the executive officer and would be at no cost to Nissan. Therefore, as Nissan passed the resolution assuming the transaction was not a conflict of interest (Article 365, Paragraph 1 and Article 356, Paragraph 1, No. 3 of the Companies Act) and Shinsei Bank had the same understanding, on the same day, Nissan, Canayany and Shinsei Bank entered into a novation agreement to transfer the swap agreements from Canayany to Nissan.
(6)  As a result of the novation agreement, Nissan took over the right and obligation to sell yen and buy dollars on the exercise date every three months in relation to Shinsei Bank; however, as stated above, it was presumed that the losses would be attributed to Mr. Ghosn and that Nissan would not bear any responsibility. In fact, when a loss of 62,580,000 yen was incurred on January 30, 2009, from purchasing dollars under swap agreement, Mr. Ghosn paid the amount and Nissan did not bear any losses. The swap agreements were created based on Mr. Ghosn’s cash flow, so the agreements were to sell yen and buy dollars in relation to Mr. Ghosn’s payment. Therefore, Mr. Ghosn had the ability to bear any losses that arose in the future, and there was no risk that Nissan would bear the losses. Furthermore, along with Nissan’s termination of its retirement allowance program in June 2007, it had been decided that Mr. Ghosn would be paid a retirement allowance, and based on the amount of said allowance, it was sufficiently guaranteed that Nissan would not bear any losses.
(7)  Unlike Canayany, Nissan did not bear an obligation to Shinsei Bank to provide required collateral according to “fair market value” under the swap agreements. Therefore, while
the “fair market value” under the swap agreements was negative “1,850,405,142 yen” at the time of the execution of the novation agreement, Nissan did not receive a demand from Shinsei Bank to provide a required amount of collateral, nor did it receive a demand to pay penalty fees because collateral could not be provided.
(8) After that, while the contractual status of the swap agreements was returned from Nissan to Canayany on February 20, 2009, following Mr. Ghosn’s procurement of collateral, Nissan suffered no “decrease in asset value” whatsoever during this time.
IV. Charged facts regarding KJC
1. Mr. Ghosn is innocent.
(1) Each of the remittances to Khaled Juffali Company (“KJC”) underwent appropriate approval procedures as compensation, including expenses, for services that KJC, which is managed by Khaled Juffali, provided to assist Nissan’s business in Saudi Arabia, so Mr. Ghosn has committed no “act in breach of his duty” (Article 960, Paragraph 1 of the Companies Act).
(2) The $14.7 million that Nissan paid KJC in total are compensation, including expenses, for services conducted by KJC to assist Nissan’s business in Saudi Arabia. Accordingly, no “financial damages” (Article 960, Paragraph 1 of the Companies Act) have been incurred by Nissan whatsoever.
(3) As Mr. Ghosn did not recognize or approve of any “financial damages” to be incurred by Nissan, no intent can be recognized either (Article 38, Paragraph 1 of the Penal Code).
(4) Each of these remittances was executed for the purpose of promoting Nissan’s interest, namely the development of Nissan’s business in Saudi Arabia, so there is no purpose of promoting “his own interest or the interest of a third party” that can be recognized either (Article 960, Paragraph 1 of the Companies Act). Both the remittances from ParkView to the securities
account under the name of Tomanaga Holding Limited and the provision of the standby letter of credit have no relation to the purpose of the remittances from Nissan to KJC.
2. Mr. Juffali is a highly regarded businessperson from Saudi Arabia and Mr. Ghosn’s trusted friend.
Mr. Juffali is a highly regarded businessperson from Saudi Arabia. His predecessors in the Juffali family formed the “Juffali Group” conglomerate in the 1970s, and the Juffali family has been managing the largest corporate enterprise in Saudi Arabia, dealing in a broad variety of businesses including manufacturing, distribution and trade. Since becoming Vice Chairman of the Juffali Group, Mr. Juffali has utilized his own experience and abilities to develop ties with companies all over the world. Mr. Juffali has managed Khaled Juffali Company (KJC) since 2004.
Mr. Juffali has been Mr. Ghosn’s trusted friend for more than twenty years. When Mr. Ghosn met with Mr. Juffali occasionally during return visits to Lebanon and when attending international conferences, etc. such as the Davos conference, Mr. Ghosn sometimes sought Mr. Juffali’s advice with respect to business in the Gulf region.
In September 2008, the collapse of Lehman Brothers led to a global financial crisis. As a result, Mr. Ghosn faced a situation in which the collateral that he had provided to Shinsei Bank became insufficient based on swap contracts. Shinsei Bank required Mr. Ghosn to either immediately provide additional collateral or cancel the contracts and pay to settle the margin calls. In order to avoid having to resign from Nissan to settle the margin calls, Mr. Ghosn asked his trusted friend Mr. Juffali for help. Mr. Juffali cooperated with the issuance of a standby letter of credit for 3 billion yen to Shinsei Bank, but that action is unrelated to the purpose of the remittances of this case.
3. Nissan, whose business in Saudi Arabia was sluggish, sought KJC’s assistance.
The Middle East region is an important market for Nissan, and it was a region that was forecast to be especially profitable within the automotive industry. More specifically, Saudi Arabia, which has shown marked economic development, was a particularly important market for Nissan in the Middle East. However, Nissan’s business results in the Middle East were faltering and had largely fallen behind other Japanese and Korean companies in the industry. In particular, sales results in Saudi Arabia were very sluggish for many years. In 1957, Nissan designated Al Hamrani United Company (AUC) as a national sales company (“NSC”) for Nissan in Saudi Arabia, and it was selling Nissan vehicles as a local dealer. However, AUC’s business performance was very bad and it regularly failed to meet its objectives for unit sales. Against that background, there were circumstances of internal divisions surrounding management rights among the Al Hamrani family that manages AUC. It was very difficult to build a relationship between the Al Hamrani family and the Japanese company Nissan, as well as its subsidiary Nissan Middle East, and there were no signs of improvement. Nissan was in a predicament because it had signed an exclusive sales distributor agreement with AUC and had no choice but to sell Nissan vehicles through AUC.
In September 2008, since before the financial crisis, Nissan considered breaking through such circumstances in Saudi Arabia. As a means of doing so, Nissan decided to seek assistance from Mr. Juffali, who had cultivated connections due to his performance and reputation in business. As a result of repeated meetings from around May 2008 between corporate officer Gilles Normand of Nissan Headquarters, Atsuo Kosaka of Nissan Middle East and Mr. Juffali, the decision was made to establish a limited liability company through joint investment by Nissan’s 100% owned subsidiary Nissan Middle East and Al Dahana FZCO, which is jointly managed by Mr. Nassar Watar, an influential businessperson in the Gulf region. Upon receiving approval from Nissan Headquarters’ Executive Committee on July 18, 2008, Nissan Gulf FZCO was established in Dubai (United Arab Emirates). Nissan Gulf’s purpose was to oversee the NSCs in four countries in the
region, namely Saudi Arabia, Abu Dhabi (United Arab Emirates), Kuwait and Bahrain, and expand Nissan’s local market share.
Nissan asked KJC to assist Nissan’s business in Saudi Arabia by utilizing its business network and knowhow. Mr. Ghosn was receiving communications from Mr. Juffali regarding overall matters, and Colin Dodge and Mr. Normand were in contact with Mr. Juffali regarding local operations in Saudi Arabia.
The development of Nissan’s business in Saudi Arabia increased in importance due to the financial crisis. The financial crisis had a substantial impact on the Japanese economy, and the automotive industry in particular, which is a key sector in Japan, was deeply affected. Exports overseas declined because of the high yen and sales fell globally. Nissan was no exception. Mr. Ghosn took every measure to save Nissan from the financial crisis, and developing business in the Middle East, which was experiencing remarkable economic growth, particularly in the market of Saudi Arabia, was part of those measures.
4. KJC took initiatives and paid expenses on Nissan’s behalf to develop Nissan’s business in Saudi Arabia for the benefit of Nissan.
Starting in the second half of 2008, for the benefit of Nissan, KJC began providing services to develop Nissan’s business in Saudi Arabia and also paid expenses for those efforts on Nissan’s behalf.
For example, relying on his business network, Mr. Juffali conducted negotiations with the Al Hamrani family, which manages AUC, and improved the relationship between AUC and Nissan. As stated above, one of the reasons that sales of Nissan vehicles were stagnant in Saudi Arabia was that a dispute over management rights had unfolded within AUC, which led to their sales efforts being neglected. Nissan was considering terminating its distributor contract with AUC by declining to renew it. However, in that case, it was expected that doing so would result in litigation risk, an
accompanying loss of brand strength, and a further decrease in sales. Mr. Juffali negotiated with the Al Hamrani family and succeeded in reaching an agreement on a business plan targeting sales volume of 50,000 units for fiscal year 2009, along with the rough contours of an interim plan targeting sales volume of 100,000 units for fiscal year 2013, five years later. Results were achieved where AUC significantly increased the sales volume of Nissan vehicles, generating a sales volume in fiscal year 2009 that greatly exceeded the target of 50,000 units. Due to AUC’s significant improvement in performance, Nissan decided to renew their exclusive distributor contract on July 31, 2009. As a result, Nissan avoided the litigation risk, etc. that was expected in the event of not renewing the contract with AUC.
Furthermore, starting in 2007 or earlier, the Saudi Arabian government solicited various automobile companies to construct automobile plants in the hopes of cultivating an alternative industry to the crude oil industry and generating domestic employment. Around April 2007, Nissan was contacted by the Saudi Arabian government regarding construction of an automobile plant. Mr. Ghosn expected an increase in demand for automobiles in the Middle East and Africa, and an increase in production volume. He thought proactively that if an automobile assembly plant were constructed as a production base in Saudi Arabia, then depending on the requirements, it could be profitable in the future. Mr. Ghosn established a unit at Nissan Headquarters and assembled experts in various fields to consider constructing such a plant from the perspectives of logistics, manufacturing, the supply chain, etc. Mr. Juffali actively assisted in the negotiations with government agencies such as the Saudi Arabian General Investment Authority (SAGIA) regarding the requirements, and assisted Nissan’s plan to construct an automobile plant. Over time, from 2008 through 2013, Nissan continued to consider a plan to construct an automobile plant. However, this plan was not ultimately realized because the requirements for sustainability and profitability were not met.
Mr. Juffali also engaged in establishing a limited liability company for Nissan in Saudi Arabia. Mr. Juffali utilized the network he had cultivated in business and actively negotiated to establish the limited liability company for Nissan. As a result, a license to set up a limited liability company owned by Nissan and KJC was obtained from SAGIA around mid-2013. Nissan Saudi Arabia (Nissan KSA) was established in November 2014, 75% owned by Nissan and 25% owned by KJC, and Nissan has been able to sell its vehicles in Saudi Arabia from that point.
5. Nissan greatly benefited from Mr. Juffali’s business expertise in Saudi Arabia.
After conducting appropriate approval procedures, Nissan paid compensation, including expenses, to KJC for services to assist the business in Saudi Arabia.
After conducting proper approval procedures, Nissan paid compensation, including expenses, to KJC for services to assist the business in Saudi Arabia. When making those payments, allocations were made from the CEO Reserve budget, which is merely a line item, and special cash or bank account for the Reserve does not exist (see Section V. 5 for details). In addition, the strict procedures necessary for allocating the CEO Reserve budget have been followed completely.
In May 2009, based on an evaluation of KJC’s contribution and performance, Nissan decided to pay $3 million as compensation, including expenses.. This proposal was approved at the Executive Committee meeting held on May 21, 2009. An application for allocating the CEO Reserve budget to make that payment (Application for Budget Adjustment) was subsequently prepared on June 1, 2009 by Gilles Normand who was in charge of the Middle East. Signatures were given by Greg Kelly, who was in charge of the Office of the CEO, and Emmanuel Delay, who was the corporate officer in charge of accounting, finance and management planning, as well as Colin Dodge, the corporate officer in charge of overseas markets in general, and then finally by Mr. Ghosn. Further, a Decision Form Concerning Execution of Remittances (Decision
Form C) was prepared, and in addition to Colin Dodge and Gilles Normand, who both had knowledge of the local operations, this was also signed by Steven Ma who is Controller of the region.
The payments for the compensation, including expenses, from 2010 to 2012 were all completely executed by going through the same procedures and were approved by either a corporate officer handling finance functions or the CFO (Chief Financial Officer), as well as Gilles Normand and/or Colin Dodge, who were in charge of managing business in the Middle East.
V. Charged facts regarding SBA
1. Mr. Ghosn is innocent.
(1)  Mr. Ghosn has committed no “aggravated breach of trust” (Article 960, Paragraph 1 of the Companies Act). Of the July 25, 2017 payment of $5,000,000, approval for the payment of $2,500,000 was granted by Mr. Saikawa, not Mr. Ghosn. Additionally, the July 30, 2018 payment of $5,000,000 was granted by Mr. Saikawa, not Mr. Ghosn. For both of these amounts, there weren’t any “payments to be obtained by [Mr. Ghosn himself].” Both of these payments were made for the benefit of Nissan. There is no basis in fact that money was transferred, directly or indirectly, from SBA to Mr. Ghosn or his family.
(2)  No “financial damage” was inflicted on Nissan (Article 960, Paragraph 1 of the Companies Act).
(3)  Since Mr. Ghosn does not recognize or acknowledge that “financial damage” was inflicted on Nissan, intent cannot be recognized (Article 38, Paragraph 1 of the Penal Code).
(4) Because the payments in this case were made for the purpose of Nissan’s interests, they cannot be recognized as made for the purpose of “[Mr. Ghosn’s] own interest or the interest of a third party” (Article 960, Paragraph 1 of the Companies Act).
By offering incentives such as sales incentives to regional dealers, automakers maintain and increase market share, so sales incentives are an essential sales strategy for increasing vehicle sales volume.
Nissan is a global company that has production and sales bases around the world. In terms of sales bases, Nissan has Regional Headquarters, which are mainly wholly owned subsidiaries, in North America, Central and South America, Africa, Asia, the Middle East, etc., and the Regional Headquarters sell Nissan automobiles to National Sales Companies (NSC), which are local dealers that form the foundation of sales in each country or region. When a Regional Headquarters receives orders for sales from an NSC, it procures the Nissan automobiles from production sites around the world and sells (exports) them to the NSC.
Needless to say, NSCs are necessary for selling Nissan automobiles around the world, and they act as the front line in competing with other companies’ brands. The NSCs’ market share, sales volume and revenue are directly connected with Nissan Headquarters’ business performance in their countries and regions. Consequently, since Nissan Headquarters provides the NSCs of each region with sales incentives, preferential treatment on the terms of payment, etc. through the local Regional Headquarters, those NSCs continue to be Nissan dealers (without switching over to Toyota or Hyundai) and they are encouraged to give their best efforts at expanding the market share and sales volume of Nissan automobiles.
Incentives such as sales incentives are not necessarily fueled by past or expected sales performance by an NSC. The level of achievement toward numerical targets is an important factor, but is not everything. Various factors are considered when determining incentives, for
example the importance of that NSC’s existence as a Nissan regional dealer, its relationship with Nissan up to that point, and strategies for expanding Nissan’s market share and sales.
The Middle Eastern Gulf region is very attractive for Japanese automakers such as Toyota and Nissan for the following reasons.
1) The quality of Japanese and Asian-made automobiles, in particular the air- conditioners, engines, etc. which are highly durable in high temperatures and harsh climates, is highly regarded in the Middle East.
2) Profitability is higher than in other regions.
3) There is great potential as a developing market. For example, Toyota’s market
penetration is tremendous, which contributes to Toyota’s overall business
performance. Nissan also has room to recover the market share that it lost in the past. Nissan’s Regional Headquarters in the Middle Eastern Gulf countries is Nissan’s wholly owned subsidiary, Nissan Middle East F.Z.E. (NMEF). The following companies are representative NSCs in the region.
Arabian Automobiles Co. (AAC) (Dubai)
Saleh Alhamad Almana Co. (Almana) (Qatar)
Suhail Bahwan Automobiles LLC (SBA) (Oman) Rasamny Younis Motor Co. S.A.L. (RYMCO) (Lebanon) Al Masood (Abu Dhabi)
Bustami & Saheb Co. (Jordan)
Arata International (part of the SBA Group) (Iraq)
3. SBA was an essential NSC in Oman and other Gulf countries for expanding market share.
Suhail Bahwan Automobiles (SBA) is an automobile dealer belonging to Suhail Bahwan
Group Holdings (SBGH), the largest conglomerate group in Oman. SBGH’s founder, Suhail Salim Bahwan Al Mukhaini, is a very well-known and respected businessman not only in Oman but also in the Middle East and other parts of the world. When he was 15 years old, he started a business by loading up a dhow sailing vessel with date fruits, spending 40 days travelling to India, purchasing rice, oil and clothing, and returning to sell them in the town of Sur. Bahwan used the money he gained as capital to open a shop selling construction materials and fishing nets. He became a distributor for Toshiba and Seiko of Japan, and subsequently expanded into various areas such as electric appliances, watches, construction, telecommunications, food products and transportation. He served as consul general of Sweden, head of the Omani chamber of commerce, etc. His eldest son Mr. Ahmed Suhail Bahwan Al Mukhaini, studied auto industry management in the U.S. and subsequently took over SBA and then afterwards he formed his family group under the name of Bahwan International Group Holdings (BIGH) which now holds the shares of SBA. During his time at the helm, Ahmed has poured substantial financial resources into all of his auto-related businesses.
SBA became a Nissan NSC in the Gulf region in 2004. SBA sold Nissan automobiles not only in Oman but also through an affiliate (Arata International Trading F.Z.C.; Arata) in Iraq, Libya, Saudi Arabia and China.
In the early 2000s, Nissan’s market share in the Gulf region began to fall, and was considerably behind Toyota and Hyundai. The Middle Eastern region, with its high rate of population growth, high young population rate and the anticipated increase of the middle class population, was a region with growth potential for auto manufacturers. From around the time of the financial crisis until today, the strategy to expand the market in the Middle Eastern region continues to be Nissan’s key issue.
In FY2004 when SBA became Nissan’s NSC, SBA purchased a little over than 2000
automobiles with sales under $33 million. From that point on, its performance improved dramatically year on year, reaching sales of more than 23,000 automobiles for $400 million in FY2008. However, during the FY09, due to the effects of the global slowdown from the financial crisis sparked by the collapse of Lehman Brothers, sales failed to reach 20,000 automobiles. Both sales volume and revenue continued to pick apace after that year, reaching over 31,500 automobiles for $1 billion in FY2018.
SBA received awards practically every year granted to outstanding NSCs that significantly increased sales results for Nissan.
4. Changes to the terms of payment: usance
The financial crisis sparked by the collapse of Lehman Brothers that occurred in Fall of 2008 negatively affected auto sales throughout the world. The effects also extended to the Middle Eastern Gulf region.
Initially, SBA paid NMEF according to letters of credit (L/C) payable at sight. Around January 2009, SBA asked Nissan to make the terms of payment more flexible to achieve the double purpose of mitigating the effects of the crisis and supporting an aggressive sales strategy. Changes to the terms of payment cannot be made at the sole discretion of the Regional Headquarters. It needs to be approved by numerous people on various levels of responsibility and governance in accordance with Nissan’s strict internal procedures. In other words, the changes to the terms of payment will be approved when (1) the person in charge of sales at NMEF makes a proposal, (2) gets approval from the person in charge of NMEF Finance Department, (3) the head of said Department, (4) and from the President (MD) of NMEF, (5) is then reviewed by the department in charge of sales at Nissan Headquarters, (6) and subsequently by the Accounting Department, (7) and lastly, obtains final approval from either the Global Treasurer or the CFO at Headquarters. It is not possible for the CEO to make
changes to the terms of payment at his sole discretion.
Procedures to review and approve were conducted from January to February 2009 by NMEF and Nissan Headquarters. Over 10 people, including NMEF President Toru Hasegawa, Accounting Department Deputy General Manager Takahiko Ikushima at Nissan Headquarters and Nissan Headquarters CFO Alain Dassas, participated in the review and approval process. Starting from the first half of FY2009, a change of the terms of payment were approved so that the payment deadline would be 210 days after issuance of an L/C (the so called “usance”) and so that 3.0% interest would be paid during that period for yen- denominated L/C and 5.0% interest for dollar-denominated L/C.
After that, SBA’s terms of payment continued to change. All of the changes were made after a strict review and approval process, and implemented after NMEF, through the President, proposed them to Nissan Headquarters and after they were approved by the CFO and the Accounting Department General Manager at Headquarters by following the approval procedures according to the internal company rules. Mr. Ghosn has never arbitrarily eased SBA’s payment terms. He has never instructed or approved a decision to ease SBA’s payment terms beyond the solid corporate governance processes involving the above mentioned Nissan officers.
5. Payment of sales incentives to SBA from the CEO Reserve
The CEO Reserve is not “money that can be freely used by the CEO.” There is no special cash or savings account. The CEO Reserve is a line item in the yearly Nissan global budget which serves to support various types of Nissan expenditure and investments during a given year. The CEO Reserve is not a system set up only for paying sales incentives. It is normally used for unexpected expenses or investments that occur during the fiscal year. For example, it is used for the following purposes.
  •  Payments to hire talented executives
  • Emergency measures against unexpected product defects
  • Ad hoc measures to make synergistic or organizational improvements, engage in mergers, etc.
All payments and/or allocations from the CEO Reserve are duly recorded in the financial statements under the corresponding field which reflects the nature and type of payment, and is naturally subject to internal audit. In order to disburse company funds from the CEO Reserve, it is necessary to carry out special procedures for application/approval/final decision.
In the case of allocation and payment of sales incentives, first, the proposer must prepare a proposal containing the reasons why the disbursement is necessary, the date and amount of disbursement, etc., and then must present the proposal in front of the appropriate members of the Executive Committee (EC). The application/approval documents must be filled out with all necessary information, and the CEO, who is the decision maker of disbursements, ultimately approves after consent is received from Executive Committee members, the CFO and others. After such approval is granted, application/approval documents to actually pay the funds are prepared, and payments will be made after final approval from the vice president in charge (CVP or SVP). Whether it is the “CEO Reserve” or something else, and whether it is at Nissan Headquarters or Regional Headquarters, it is not possible for the CEO to disburse company funds at his own discretion.
From June 2012 to July 2018, sales incentives were paid to SBA by NMEF from the CEO Reserve expense item a total of ten times.
June 10, 2012: $3 million
October 18, 2012: $2 million
June 20, 2013: $4.5 million
July 2, 2014: $2.5 million
March 11, 2015: $2 million
June 17, 2015: $3 million
December 30, 2015: $2 million
January 9, 2017: $3 million
July 25, 2017: $5 million
July 30, 2018: $5 million
These payments were generally determined and executed in the following way. In the beginning of each year, NMEF and SBA would check the sales results from the previous fiscal year and whether the numerical targets established in the previous year were achieved. They then would establish the numerical targets to be achieved for the current year and the conditions for payment of the incentive.
The General Manager of the Middle East at Nissan Headquarters (CVP or SVP) prepared an approval application for the use of the CEO Reserve (Application for Budget Usage). Final approval was received from the CEO after consent was obtained from the CFO, related EC members, the executive officer in charge of the office of the CEO and others.
After the approval is granted, the General Manager of the Middle East at Nissan Headquarters prepares a document to approve the disbursement (Decision Form C), and after review by the General Manager of the Accounting Department, the General Manager of the Middle East (CVP or SVP) makes the final decision.
Based on the approval process and final decision within Nissan, NMEF and SBA would enter into a Memorandum of Mutual Understanding (MoU) between them, and NMEF’s President and SBA’s President or Chairman would sign the MoU. NMEF would make
payments to SBA based on Nissan’s decision and following the signature of the MoU.
Of the July 25, 2017, payment of $5,000,000, which is the basis of the charge in this case, approval for the payment of $2,500,000 was granted in March 2017 when Mr. Ghosn was still CEO. However, the payment of the remaining $2,500,000 was approved by Mr. Saikawa, who was CEO at the time. In addition, Mr. Saikawa also approved the July 30, 2018 payment of $5,000,000.
From FY2011, which is the fiscal year before 2012 when these incentive payments started, to FY2017, SBA’s automobile purchases averaged 35,000 vehicles per fiscal year with a yearly average of procurement value of $807,000,000. The ratio of the average amount of yearly cash incentives ($4.28 million) to the yearly procurement value amount ($807,000,000) was 0.53%.
In this way, payments of the sales incentives were determined and executed following stringent internal company procedures. The amounts were also appropriate and reasonable as management strategy for Nissan to maintain and expand its market share in the Middle Eastern Gulf region.


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What is a “drone corporation”? I don’t wanna know — I just want Govt to save me, please!

April 19th, 2014 No comments

[cross-posted from the We Build Our Society FB group]

What is a “drone corporation”?

I don’t wanna know — I just want to pretend that I need Govt to SAVE US! from “business” and “free markets”.

“Corporations “un-owned” by their shareholders—corporate “drones”—are far worse corporate citizens and have significantly lower average shareholder returns than firms in which owners still exercise authority over management”

“First, corporations have ascended to levels of unprecedented power in the United States, thanks in large part to legal rulings. The Supreme Court’s decision in the 2010 case Citizens United v. Federal Election Commission, for example, removed virtually all limitations on corporate political spending—a “grotesque decision,” rightly judges Monks. Second, the leaders of the largest and most powerful corporations in the U.S. (ExxonMobil, IBM, and General Electric top the list) have never been less accountable to shareholders. This is because of weak boards and the movement of large ownership positions to passive institutional investors, among other things. The result is “drone corporations,” in which “manager kings” have free rein to pursue their own self-interest. Monks puts more than half of the Fortune 500 among their numbers.

“The dangers in such a situation are obvious. Monks offers up a litany of them, including the gutting of the political system, regulatory abuse, tax avoidance, the mistreatment of U.S. workers, obscene CEO compensation packages—and the list goes on.”

“What makes a corporation a drone corporation?

“By drone corporation, I mean one in which there is no element of effective ownership to monitor or to restrain the exercise of power by the corporate executive,” Monks told Corporate Crime Reporter in an interview last week.

Most major American corporations are drone corporations.

“I would say that about 60 percent of the biggest ones are,” Monks said. “Companies like General Electric. Exxon. IBM.”

Name some that aren’t drones?

“Microsoft, Berkshire Hathaway, Google, Apple,” Monks says.

The key characteristic of a drone corporation?

“Drones were more likely to externalize liability,” Monks said. “In comparing drone corporations to non-drone corporations, we discovered that the drone corporations were distinctly more likely to externalize liability. They were distinctly more liable to be indicted for criminal activity. And the extent of their criminal fines were significantly larger than those for the non drones.”

“There are now a significant number of drone corporations that use the violation of criminal law and the fines and penalties that result as a sales expense that on balance they have concluded is worthwhile.”

“This is true for companies like Pfizer in the pharmaceutical industry. And it seems to be a policy that British Petroleum has followed. They are prepared as a matter of management policy to conduct themselves in such a way as to violate criminal laws, to accept criminal penalties, and then continue to violate criminal law. That seemed to be substantially more prevalent in drone corporations than in non drone corporations.””

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BLOWBACK in Benghazi and Cairo – it’s not a BUG, it’s a FEATURE

September 13th, 2012 No comments

For those befuddled about the “Global War on Terror” and the attacks on US embassies/consulates in Libya and Egypt, perhaps this bit of fun from The Onion in 1998 might help:

State Department To Hold Enemy Tryouts Next Week (excerpts below; go to link for full piece)

Taking steps to fill the void that has plagued the American military-industrial complex since the 1991 collapse of the Soviet Union, Secretary of State Madeleine Albright announced Tuesday that the U.S. will hold enemy tryouts next week. …

The decision to hold enemy auditions was made during an Oct. 16 meeting at the Pentagon attended by a number of top military-industrial-complex officials, including Albright, Defense Secretary William Cohen, the Joint Chiefs of Staff, Senate Armed Services Committee Chair Strom Thurmond (R-SC) and Lockheed Martin CEO Thomas Reuthven.

“Everyone was of the opinion that an enemy was needed–and fast,” said Reuthven, whose company has laid off 14,000 employees since the end of the Cold War. “Nobody wins when there’s peace.”

General Electric CEO Jack Welch, who was also at the meeting, agreed. “Our profits are down 43 percent from 10 years ago. We sold more tritium hydrogen-bomb ICBM/MIRV triggers in 1988 than in the last six years combined,” he said. “Something had to be done.” …

Speaking to reporters, McDonnell Douglas CEO Richard Klingbell said the State Department should have foreseen the possibility of peace and taken steps to avoid it years ago.

“For decades, we took Soviet aggression and the arms race for granted,” Klingbell said. “We failed to realize that one day it might all come to an end. We failed to sow the seeds of future foreign discord, for our children’s sake. Thankfully, though, we’re finally setting things straight. We’re finally remembering that to make it in this world, you’ve got to have enemies.”

[Earlier posts by me on “defense” issues here: and here:]

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Interesting: Sarah Palin now sounds like a populist, anti-corporate LIBERTARIAN

September 21st, 2011 1 comment

From columnist Anand Giridharadas of the New York Times on September 9 (emphasis added):

when Ms. Palin strode onto the stage last weekend at a Tea Party event in Indianola, Iowa. Along with her familiar and predictable swipes at President Barack Obama and the “far left,” she delivered a devastating indictment of the entire U.S. political establishment — left, right and center — and pointed toward a way of transcending the presently unbridgeable political divide.

The next day, the “lamestream” media, as she calls it, played into her fantasy of it by ignoring the ideas she unfurled and dwelling almost entirely on the will-she-won’t-she question of her presidential ambitions.

So here is something I never thought I would write: a column about Sarah Palin’s ideas.

There was plenty of the usual Palin schtick — words that make clear that she is not speaking to everyone but to a particular strain of American: “The working men and women of this country, you got up off your couch, you came down from the deer stand, you came out of the duck blind, you got off the John Deere, and we took to the streets, and we took to the town halls, and we ended up at the ballot box.”

But when her throat was cleared at last, Ms. Palin had something considerably more substantive to say.

She made three interlocking points. First, that the United States is now governed by a “permanent political class,” drawn from both parties, that is increasingly cut off from the concerns of regular people. Second, that these Republicans and Democrats have allied with big business to mutual advantage to create what she called “corporate crony capitalism.” Third, that the real political divide in the United States may no longer be between friends and foes of Big Government, but between friends and foes of vast, remote, unaccountable institutions (both public and private).

In supporting her first point, about the permanent political class, she attacked both parties’ tendency to talk of spending cuts while spending more and more; to stoke public anxiety about a credit downgrade, but take a vacation anyway; to arrive in Washington of modest means and then somehow ride the gravy train to fabulous wealth. She observed that 7 of the 10 wealthiest counties in the United States happen to be suburbs of the nation’s capital.

Her second point, about money in politics, helped to explain the first. The permanent class stays in power because it positions itself between two deep troughs: the money spent by the government and the money spent by big companies to secure decisions from government that help them make more money.

“Do you want to know why nothing ever really gets done?” she said, referring to politicians. “It’s because there’s nothing in it for them. They’ve got a lot of mouths to feed — a lot of corporate lobbyists and a lot of special interests that are counting on them to keep the good times and the money rolling along.”

Because her party has agitated for the wholesale deregulation of money in politics and the unshackling of lobbyists, these will be heard in some quarters as sacrilegious words.

Ms. Palin’s third point was more striking still: in contrast to the sweeping paeans to capitalism and the free market delivered by the Republican presidential candidates whose ranks she has yet to join, she sought to make a distinction between good capitalists and bad ones. The good ones, in her telling, are those small businesses that take risks and sink and swim in the churning market; the bad ones are well-connected megacorporations that live off bailouts, dodge taxes and profit terrifically while creating no jobs.

Strangely, she was saying things that liberals might like, if not for Ms. Palin’s having said them.

“This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk,” she said of the crony variety. She added: “It’s the collusion of big government and big business and big finance to the detriment of all the rest — to the little guys. It’s a slap in the face to our small business owners — the true entrepreneurs, the job creators accounting for 70 percent of the jobs in America.”

Is there a hint of a political breakthrough hiding in there?

The political conversation in the United States is paralyzed by a simplistic division of labor. Democrats protect that portion of human flourishing that is threatened by big money and enhanced by government action. Republicans protect that portion of human flourishing that is threatened by big government and enhanced by the free market.

What is seldom said is that human flourishing is a complex and delicate thing, and that we needn’t choose whether government or the market jeopardizes it more, because both can threaten it at the same time.

Ms. Palin may be hinting at a new political alignment that would pit a vigorous localism against a kind of national-global institutionalism.

On one side would be those Americans who believe in the power of vast, well-developed institutions like Goldman Sachs, the Teamsters Union, General Electric, Google and the U.S. Department of Education to make the world better. On the other side would be people who believe that power, whether public or private, becomes corrupt and unresponsive the more remote and more anonymous it becomes; they would press to live in self-contained, self-governing enclaves that bear the burden of their own prosperity.

No one knows yet whether Ms. Palin will actually run for president. But she did just get more interesting.

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Japan's nuclear power subsidies to rural areas a case study in sick dynamics: how governments eviscerate local economies and addict them to what destroys them

June 12th, 2011 No comments

We can see the same phenomenon in extractive economies wherever governments own the resources, but locals own the risks – as in the Gulf of Mexico/BP (as I noted in a number of posts) accident, Nigeria, Ecuador/Texaco, etc.

We can also see this more generally with crony, corporation-based capitalism.

Japan’s version is more complicated and seductive: the locals get paid off – at the expense of electric power ratepayers who are subject to a government-supported monopoly – in a way that encourages them to abandon their own livelihoods and further dependent on handouts.

Below are excerpts from a May 31  article at the New York Times:  In Japan, a Culture That Promotes Nuclear Dependency


When the Shimane nuclear plant was first proposed here more than 40 years ago, this rural port town put up such fierce resistance that the plant’s would-be operator, Chugoku Electric, almost scrapped the project. Angry fishermen vowed to defend areas where they had fished and harvested seaweed for generations.

Two decades later, when Chugoku Electric was considering whether to expand the plant with a third reactor, Kashima once again swung into action: this time, to rally in favor. Prodded by the local fishing cooperative, the town assembly voted 15 to 2 to make a public appeal for construction of the $4 billion reactor. …

As Kashima’s story suggests, Tokyo has been able to essentially buy the support, or at least the silent acquiescence, of communities by showering them with generous subsidies, payouts and jobs. In 2009 alone, Tokyo gave $1.15 billion for public works projects to communities that have electric plants, according to the Ministry of Economy, Trade and Industry. Experts say the majority of that money goes to communities near nuclear plants.

And that is just the tip of the iceberg, experts say, as the communities also receive a host of subsidies, property and income tax revenues, compensation to individuals and even “anonymous” donations to local treasuries that are widely believed to come from plant operators. …

In a process that critics have likened to drug addiction, the flow of easy money and higher-paying jobs quickly replaces the communities’ original economic basis, usually farming or fishing.

Nor did planners offer alternatives to public works projects like nuclear plants. Keeping the spending spigots open became the only way to maintain newly elevated living standards.

… Towns become enmeshed in the same circle — which includes politicians, bureaucrats, judges and nuclear industry executives — that has relentlessly promoted the expansion of nuclear power over safety concerns. …

“This structure of dependency makes it impossible for communities to speak out against the plants or nuclear power,” said Shuji Shimizu, a professor of public finance at Fukushima University.  …

Much of this flow of cash was the product of the Three Power Source Development Laws, a sophisticated system of government subsidies created in 1974 by Kakuei Tanaka, the powerful prime minister who shaped Japan’s nuclear power landscape and used big public works projects to build postwar Japan’s most formidable political machine.

The law required all Japanese power consumers to pay, as part of their utility bills, a tax that was funneled to communities with nuclear plants. …

Political experts say the subsidies encourage not only acceptance of a plant but also, over time, its expansion. That is because subsidies are designed to peak soon after a plant or reactor becomes operational, and then decline.

“In many cases, what you’ll see is that a town that was depopulating and had very little tax base gets a tremendous insurge of money,” said Daniel P. Aldrich, a political scientist at Purdue University who has studied the laws.

As the subsidies continue to decline over the lifetime of a reactor, communities come under pressure to accept the construction of new ones, Mr. Aldrich said. “The local community gets used to the spending they got for the first reactor — and the second, third, fourth, and fifth reactors help them keep up,” he added.

Critics point to the case of Futaba, the town that includes Fukushima Daiichi’s No. 5 and No. 6 reactors, which began operating in 1978 and 1979, respectively.

According to Professor Shimizu of Fukushima University, Fukushima Daiichi and the nearby Fukushima Daini plants directly or indirectly employed some 11,000 people in communities that include Futaba — or about one person in every two households. Since 1974, communities in Fukushima Prefecture have received about $3.3 billion in subsidies for its electrical plants, most of it for the two nuclear power facilities, Mr. Shimizu said.

Despite these huge subsidies, most given in the 1970s, Futaba recently began to experience budget problems. As they did in Kashima, the subsidies dwindled along with other revenues related to the nuclear plant, including property taxes. By 2007, Futaba was one of the most fiscally troubled towns in Japan and nearly went bankrupt. Town officials blamed the upkeep costs of the public facilities built in the early days of flush subsidies and poor management stemming from the belief that the subsidies would remain generous.

Eisaku Sato, who served as the governor of Fukushima Prefecture from 1988 to 2006 and became a critic of the nuclear industry, said that 30 years after its first reactor started operating, the town of Futaba could no longer pay its mayor’s salary.

“With a nuclear reactor, in one generation, or about 30 years, it’s possible that you’ll become a community that won’t be able to survive,” Mr. Sato said.

Futaba’s solution to its fiscal crisis was to ask the government and Tokyo Electric, Fukushima Daiichi’s operator, to build two new reactors, which would have eventually increased the number of reactors at Fukushima Daiichi to eight. The request immediately earned Futaba new subsidies.

“Putting aside whether ‘drugs’ is the right expression,” Mr. Sato said, “if you take them one time, you’ll definitely want to take them again.”

Eiji Nakamura, the failed candidate for mayor of Kashima, said the town came to rely on the constant flow of subsidies for political as well as economic reasons. He said the prefectural and town leaders used the jobs and money from public works to secure the support of key voting blocs like the construction industry and the fishing cooperative, to which about a third of the town’s working population belongs.

“They call it a nuclear power plant, but it should actually be called a political power plant,” Mr. Nakamura joked.


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If we just ignore BP/corporate lobbying & risk-shifting – and Government's ownership of oil, coal and other natural resources – we can see clearly that enviros just want to destroy civilization

May 6th, 2011 No comments


1.  BP Spent $2 Million Lobbying On Offshore Drilling, Spill Liability, Other Regulations In First Quarter Of 2011 (Marcus Baram, Huffington Post, April 21, 2011): (emphasis added)

On the first anniversary of the Deepwater Horizon oil spill that killed 11 workers, oil giant BP revealed via mandatory disclosure forms that it spent at least $2 million on federal lobbying in the first quarter of 2011 on a wide range of issues, from advocating for an end to the offshore drilling moratorium imposed by President Barack Obama in the wake of the spill to caps on its contributions to the restoration of the Gulf Coast.

BP tapped five well-connected lobbying firms — Alpine Group; Fierce, Isakowitz & Blalock; the Podesta Group; Stuntz Davis & Staffier; and the Duberstein Group — to ply their influence on Capitol Hill and at federal agencies in the wake of the four-month-long spill, which devastated the environment and leaked more than 205 million gallons of oil into the Gulf of Mexico. Executive-branch agencies targeted by the beleaguered oil behemoth, which faces a criminal probe by the Justice Department, included the Environmental Protection Agency and the State and Treasury departments.

In addition to the drilling moratorium and coastal restoration contributions, BP lobbied heavily regarding implementation of the presidential oil spill commission’s recommendations, which included stricter oversight of offshore drilling.

BP also lobbied Congress on the Put the Gulf Back to Work Act, the legislation passed last week by the House Natural Resources Committee under the leadership of chairman Doc Hastings (R-Wash.) which speeds up the approval process for new drilling permits. That bill prompted Interior Secretary Ken Salazar to accuse House Republicans of having “amnesia” about the oil spill.

Among other issues of interest to BP: the Restoring American Offshore Leasing Now Act, which requires Salazar to conduct certain offshore oil and gas lease sales; financial reform legislation and proposed rules; and liability protection for producing and retailing motor fuel that contains 15 percent ethanol. In addition, the oil company lobbied on several proposed EPA rules relating to greenhouse gas emissions and ambient air quality standards, and lobbied Congress on energy tax issues, corporate tax reform and the export of Caspian gas into European markets.

Earlier this week, it was revealed that BP broke its self-imposed moratorium on political donations in the wake of the spill.

2.  Coal mining to expand on public lands in Wyoming, CNN, March 23, 2011: (emphasis added)

Coal mining on public lands will expand in the coming months in Wyoming, as the federal government makes more coal-rich land available for lease by mining companies.

“Coal is a critical component of America¹s comprehensive energy portfolio, as well as Wyoming’s economy,” Interior Secretary Ken Salazar said at a news conference Tuesday.

The leases are expected to bring in between $13.4 billion and $21.3 billion in leasing bids and royalties to the federal government and the state of Wyoming. Wyoming will receive 48% of those revenues, with the rest going to the federal government.

The four tracts of land in northeast Wyoming’s Powder River Basin are expected to yield about 758 million tons of coal, Salazar said.

“Wyoming is the No.1 coal producer from public lands, contributing more than 400 million tons annually to our domestic energy supply, providing nearly 40% or the coal used by power plants nationwide to provide electricity nationwide,” Salazar said.

Wyoming Gov. Matt Mead, a Republican, applauded the move.

“Coal is a big deal here in Wyoming,” Mead said. “We need the energy, we need the jobs that come with energy, and we need the electricity.”

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