Nissan Motor Company, Ltd v Carlos Ghosn
| Jurisdiction | British Virgin Islands |
| Judge | Wallbank, J. |
| Judgment Date | 16 May 2022 |
| Judgment citation (vLex) | [2022] ECSC J0516-1 |
| Docket Number | CLAIM NO. BVIHCM2019/0121 |
| Court | High Court (British Virgin Islands) |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
CLAIM NO. BVIHCM2019/0121
Mr. George Spalton, QC, with Mr. Joshua Folkard and Mr. Malcolm Arthurs for the Claimants
Ms. Blair Leahy, QC, with her Mr. Alex Riddiford, Mr. David Harby and Mr. Dave Marshall for the Defendants.
Wallbank, J. (Ag.): This is the Judgment of the Court in respect of:
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(1) An application filed by the Defendants on 27 th May 2021, by which they seek primarily to strike out the claim, or parts of it and/or for reverse summary judgment; and
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(2) An application filed by the Claimants on 15 th November 2021, seeking the Court's permission to re-re-amend their Statement of Claim.
The Court will deal first with the Defendants' application.
On 27 th May 2021 the Defendants filed a Notice of Application seeking relief under four specific heads:
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(1) An order striking out the Claimants' statements of case under Part 26.3(1)(b) of the Civil Procedure Rules, 2000, (‘CPR’) on the basis that they disclose no reasonable grounds for bringing the claims; alternatively
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(2) Parts of the Claimants' statements of case be struck out on the same basis and/or summary judgment on a number of discrete issues;
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(3) An order discharging an injunction granted by this Court on 20 th August 2019 and a consent order dated 28 th November 2019 continuing the injunction;
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(4) Costs.
Before considering more closely the applications currently before the Court for determination, and the grounds advanced in support of them, it is useful to give a broad overview of the claims and the defences raised in the pleadings. This summary contains no findings of fact and is taken only from the statements of case that have been filed, not from draft pleadings or evidence.
Mr. Carlos Ghosn (‘Mr. Ghosn’) used to be employed by Nissan, the Japanese car manufacturer. From 2000 until 2018 he was Nissan's Chairman and from 2001 until 2017, he was its Chief Executive Officer (‘CEO’).
Mr. Ghosn was born in Brazil. At the age of six, he moved to Lebanon. The Claimants believe he currently resides there again. During his employment at Nissan, Mr. Ghosn lived in Japan. Mr. Ghosn's career at Nissan ended with the Japanese authorities placing him under house-arrest whilst certain criminal law matters were being investigated. He nonetheless managed to leave Japan and went to Lebanon.
Mr. Ghosn has a son, Mr. Anthony Ghosn.
Mr. Ghosn has a wife, Mrs. Carole Ghosn, née Nahas, whom he married in 2016. Mrs. Ghosn also resides in Lebanon.
Mr. Ghosn has a sister, Ms. Claudine Oliveira.
The Claimants allege that during his employment at Nissan, Mr. Ghosn unlawfully diverted at least US$32 million to himself between June 2012 and July 2018.
As I understand the Claimants' case, the way the unlawful diversion is alleged by the Claimants to have happened is this.
Nissan has a subsidiary in Dubai, called Nissan Middle East FZE (‘NME’). It is the Claimants' case that NME acted at all material times as Nissan's agent. Mr. Ghosn was not a de jure director of NME.
Nissan has a distributor in Oman, which the Claimant refers to as ‘SBA’. SBA sells Nissan vehicles in Oman, Libya and Iraq, and, since 2016, by way of re-export to China and Iran. The Chairman of SBA is or was a Sheikh Bahwan. Sheikh Bahwan's son, Mr. Omar Bahwan, was a Board Member of SBA. A Mr. Kumar was the Managing Director of SBA.
Nissan has or had a budget called the ‘CEO Reserve Fund’. This had originally been established to provide resources for unexpected, unbudgeted events or to fund specific, CEO-led, projects. The CEO Reserve Fund was a ledger, rather than a bank account, with funds being applied to projects by means of accounting entries and then actual monies being paid from available funds.
There was a three-stage, formal process for obtaining monies from the CEO Reserve Fund. First, a payment had to be proposed by a General Manager of Nissan or equivalent, then it had to be approved by a corporate officer from the Control department (known as ‘CNTRL’) such as the Chief Financial Officer, as well as by a member of Nissan's Executive Committee and a senior Vice President in the CEO's office, and finally by the CEO.
Nonetheless, allege the Claimants, from 2008 until 1 st April 2017, during Mr. Ghosn's tenure as CEO of Nissan, the process for obtaining moneys from the CEO Reserve Fund operated on an informal basis, with Mr. Ghosn giving direct instructions to Senior Vice Presidents as to sums to be paid. This is the first anomaly upon which the Claimants build their case.
During this period, the CEO Reserve Fund was used in part to pay substantial special incentives to certain distributors in the Middle East, including SBA.
The Claimants say Mr. Ghosn caused Nissan to pay SBA at least US$32million through the CEO Reserve Fund. The Claimants have identified ten payments, in varying amounts, on specific dates, which together make up this amount. This is the second anomaly, or set of anomalies, upon which the Claimants build their case.
The Claimants say that there are reasons to think that these payments had not been made for a proper purpose.
The Claimants allege that, significantly:
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(1) SBA already had the benefit of contractually agreed incentives, such that there was no commercial justification for the payment of additional, discretionary, sums;
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(2) SBA appears to have provided no consideration (in the sense of nothing discernible in return) for the payments; and
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(3) the payments made were not within the purpose for which the CEO Reserve Fund had been established.
According to the Claimants, the money trail did not end at SBA. They allege it ended with Mr. Ghosn himself, in the following manner.
The Claimants allege that approximately US$9.6million was transferred on, in four tranches, by SBA's Chairman, Sheikh Bahwan or his son Mr. Omar Bahwan to a company called Brasilensis S.A.L. (‘Brasilensis’), between around July 2013 and November 2013.
Brasilensis is a company incorporated in Lebanon. On its face, Brasilensis has nothing to do with Mr. Ghosn. But, say the Claimants, there are indicators that Mr. Ghosn is the underlying beneficial owner of this company. The Claimants made a point of observing that Mr. Ghosn had been born and raised in Brazil, before moving to Lebanon, implying that it is not coincidental that this Lebanese company should bear an apparent and curious reference to Brazil in its name. The Claimants say they understand that Mr. Ghosn's sister, Ms. Claudine Oliveira, was purportedly Brasilensis's sole shareholder. If that is right, it begs the question why a Nissan vehicle distributor (SBA) in Oman should be paying large sums of money to a Lebanese company ostensibly owned by someone (Ms. Oliveira) who herself is not said to have any connection with Nissan but whose brother was Nissan's CEO. The connection between Mr. Ghosn and Brasilensis deepens, according to the Claimants, in that directors of Brasilensis were a Mr. Fady Gebran (‘Mr. Gebran’) and a Ms. Amal Aboujaoude (‘Ms. Aboujaoude’). Mr. Gebran had been Mr. Ghosn's Lebanese lawyer until Mr. Gebran's death on 16 th August 2017, and Ms. Aboujaoude had been Mr. Gebran's associate. Mr. Gebran was also the lawyer of Brasilensis. The Claimants allege that Mr. Ghosn's sister held the shares in Brasilensis as, and/or acted as Mr. Ghosn's nominee.
These payments were made from SBA to Brasilensis, say the Claimants, following email requests from Mr. Gebran to Mr. Omar Bahwan.
Somewhat over a year later, on 5 th March 2015, Mr. Gebran instructed Brasilensis's bankers to pay US$7.5 million to Mr. Ghosn's account. So, in respect of this US$7.5 million, the money trail identified by the Claimants was that monies went from Nissan or NME to SBA, from SBA to Brasilensis and then from Brasilensis to Mr. Ghosn.
On or about the same day, 5 th March 2015, Mr. Gebran also instructed Brasilensis's bankers to pay €1,230,000 to a company called Beauty Yachts Pty Ltd (‘Beauty Yachts’). The same day, a sum of €1,219,914.70 was instructed to be paid by Beauty Yachts to an Italian yacht builder, Ferretti S.p.A. (‘Ferretti’) as the first instalment for the purchase price of a new yacht (on which, more later).
The visible link between Brasilensis and Beauty Yachts was Mr. Gebran. The Claimants allege that Mr. Ghosn had always been the true underlying beneficiary owner of Beauty Yachts.
The Claimants point to the following. Mr. Gebran was sole Director and Secretary of Beauty Yachts from 16 th February 2015 to 11 th August 2017, about a week before he died. Beauty Yachts is a company incorporated in this jurisdiction (the ‘BVI’). It has an issued share capital of 50,000 shares with no par value. On 16 th February 2015, all 50,000 shares in Beauty Yachts were issued to Mr Gebran.
A few days after the shares in Beauty Yachts had been issued to Mr. Gebran, on 19 th February 2015, Beauty Yachts entered into a sale and purchase contract with Ferretti to buy a new motor yacht that Ferretti would design and build, called a ‘Ferretti Custom Line Navetta 37’. The total purchase price was €12,199,147.00, payable in five instalments. The yacht (the ‘Yacht’) was eventually delivered to Beauty Yachts on 27 th June 2017. She was registered here in the BVI on 21 st June 2017. At the time, she was named M/Y Shachou. The Claimants say that ‘Shachou’ has a primary meaning in Japanese as ‘company president’, which was one of the descriptions used of Mr....
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