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Westlake Legal Group > Boards of Directors

One Family Built Forever 21, and Fueled Its Collapse

Westlake Legal Group 00forever21-01-facebookJumbo One Family Built Forever 21, and Fueled Its Collapse Shopping Centers and Malls Shopping and Retail Forever 21 Fashion and Apparel E-Commerce Chang, Jin Sook Chang, Do Won Boards of Directors Bankruptcies

When Forever 21 filed for bankruptcy last month, the fast fashion chain described its history in documents that read, at times, like a pitch for a memoir or a Netflix special.

Photos of the company’s husband and wife founders, Do Won and Jin Sook Chang, and their two daughters appeared under headings like “Forever Striving: A Story of Grit, Determination, and Passion.” The filing emphasized the improbable success of the Changs, who immigrated to the United States from South Korea in 1981 and built a multibillion-dollar business from scratch.

There were references to the daughters’ undergraduate degrees from “Ivy League universities” — both are top executives at the company — and summer breaks spent at Forever 21 stores. A definition of the American dream, as explained by Investopedia.com, even appeared on one page.

The Changs were indeed a unique success story, and Forever 21 was far from a run-of-the-mill family operation. At its peak, the retailer brought in more than $4 billion in annual sales and employed more than 43,000 people worldwide in hundreds of stores. Now it is leaving 40 countries and closing up to 199, or more than 30 percent, of its stores in the United States as part of its bankruptcy, and former employees and industry experts are pointing to the Changs’ insular management style as a significant reason for the collapse. They cite disastrous real estate deals and the chain’s bungled merchandising strategy in recent years.

“On the founder side, this hubris thing is pretty common, but it’s particularly deadly if you’ve been successful for a long time,” said Erik Gordon, a management expert at the University of Michigan Ross School of Business. “They didn’t have a board of directors to give them a reality check, they didn’t have equity analysts to give them a reality check.”

He added: “You can live in your self-created bubble for a lot longer, but then the bubble pops.”

The bankruptcy filing provides a rare glimpse inside a retailer that has been intensely secretive and privately held for decades. Six former employees, including three executives, also spoke to The New York Times about their experiences at Forever 21 on the condition of anonymity, citing nondisclosure agreements.

Forever 21’s missteps, combined with industrywide changes in consumer tastes and shopping habits, will have far-reaching effects for thousands of people who work for the company, its vendors and malls. The chain says it will still operate hundreds of stores, along with its website. Through a spokeswoman, the Chang family declined to comment for this article.

Forever 21 — named because Mr. Chang considered 21 to be “the most enviable age” — was built on the idea of identifying apparel trends, then working with vendors to bring those products to stores quickly at cut-rate prices. From its early days, Mr. Chang, who is still the company’s chief executive, oversaw landlord and vendor relationships while Mrs. Chang led design and merchandising.

Former employees say that the top floor of the company’s Los Angeles headquarters was viewed as Mr. Chang’s world, where corporate strategy unfolded and people kept quiet outside his office, while the bottom floor was Mrs. Chang’s domain of buyers and planners, who showed their bags to security when leaving the building. Three former employees said that, as recently as this year, Mr. Chang was personally signing off on employee expenses and questioning executives about receipts for lunches or Uber rides.

The couple’s daughters eventually joined the executive ranks. The oldest, Linda, is the executive vice president and has been viewed as Mr. Chang’s successor; her sister, Esther, is vice president of merchandising.

The Changs never took Forever 21 public, unlike their biggest fast-fashion rivals, “declining numerous opportunities that would facilitate generational wealth,” the filing said.

Their inner circle included another Korean-American couple: Alex Ok, Forever 21’s president and a former supplier, and his wife, SeongEun Kim, who works in merchandising. Internally, some referred to Mrs. Chang and Mrs. Ok as the “Missuses,” a powerful pair who directed the tens of thousands of styles that landed in Forever 21’s bustling stores. The filing showed that the Chang family owned 99 percent of equity in the chain, while Mr. Ok held 1 percent.

As the business expanded, the Changs struggled with their desire to hire experienced executives and their distrust of outsiders, five of the employees said. In recent years, they said, Forever 21 eagerly recruited experts to overhaul parts of the business, then later ignored their recommendations on everything from new technology to marketing.

Some were reminded of that dynamic after the singer Ariana Grande filed a lawsuit against Forever 21 in September. The company’s marketers had urged it to partner with Ms. Grande for a holiday campaign in 2014, according to two former employees, but management hired the rapper Iggy Azalea instead. Now, Ms. Grande is far more popular, and Forever 21 is defending itself against claims that it used a look-alike model of the singer in online ads.

The Changs’ Christian faith played a role in the way they ran the company. Forever 21’s bright yellow shopping bags are stamped with “John 3:16,” a reference to a Bible verse. Mr. Chang has said the verse “shows us how much God loves us,” and hoped others would learn of that love. Former employees said Bibles were sometimes visible in conference rooms and on Mr. Chang’s desk. It was not unusual for department leaders to have ties to the family or their church but no experience working for another retailer, employees said.

“Every once in a while, when we hired someone who had been there, we’d learn that they were never allowed to see the totality of the business performance and they were only given reporting on their specific sector,” said Margaret Coblentz, a former e-commerce director at Charlotte Russe. Rivals saw Forever 21 “as both monolithic and inscrutable,” she added.

But Forever 21 made its biggest mistakes in real estate. In the years before and after the recession, the company expanded aggressively and decided to open huge flagship stores, setting up in cavernous spaces once occupied by Mervyn’s, the bankrupt department store, as well as Borders, Sears and Saks. Its former head of real estate told Bloomberg Businessweek in 2011 that “having really big stores has always been Mr. Chang’s dream.”

The stores became hard to fill with new merchandise, then turn over, however, and saddled Forever 21 with long leases just as technology was beginning to wreak havoc on American malls. Seven of the leases at the old Mervyn’s stores were not set to expire until 2027 or 2028, which is longer than a typical lease, according to internal documents obtained by The Times.

In an interview conducted last month, when the company filed for bankruptcy, Linda Chang acknowledged issues with the larger stores. “Having to fill those boxes on top of having to deal with the complexities of expanding internationally did stress our merchant organization,” she said.

She also cited shifts in mall traffic and the rise of e-commerce as challenges, and said that the bankruptcy was “a strategic move on our part.”

Mr. Chang, who sought to sign each lease and design every store himself even as the count soared past 500, was loath to close even underperforming locations, and at times, would simply move a store to another spot in the same mall, two former employees said.

“Forever 21’s problem is not the malls — it’s that they didn’t get out of the malls earlier,” Mr. Gordon, the management expert, said. “If they want to point a finger, they need to stand in front of a mirror and point it at themselves.”

The retailer also raced into expensive, massive new stores overseas without local expertise, as it surged from seven international stores in 2005 to 262 a decade later. Two employees said that the chain often did not understand local labor laws and made mistakes, like failing to recognize that customers in some European countries shopped for winter merchandise earlier in the year than American consumers. One employee said the chain moved into Germany without realizing stores in the country typically closed on Sundays. It didn’t help that many of these areas were familiar turf for H&M, which is based in Sweden, and Zara, whose owner is in Spain.

Forever 21 said in the filing that most of its international locations were unprofitable as of 2015 and that its stores in Canada, Europe and Asia were losing an average of $10 million per month in the past year. Overall, the annual occupancy cost of Forever 21’s stores was $450 million.

“They’ve gotten into categories and expression of fashion that are not closely aligned with their fast-fashion customer’s preferences,” said Mark A. Cohen, the director of retail studies at Columbia Business School. “They never built the intelligence into the business that would have cautioned them from this real estate orgy and would have kept them from the kind of exposure that they have now.”

Yet even as its errors abroad became clear, Mr. Chang and his real estate counterparts bet on even more United States stores. An internal playbook from 2015 described the retailer’s plans for a new strip mall chain called F21 Red that would target mothers under 35. Its $1.80 camisoles and $7.80 jeans were meant to swipe at the Irish retailer Primark, which entered the United States that year.

The playbook showed that six stores were already open, and that Forever 21 planned to open 35 more that year, including in regular malls, which was a surprise to the employees who had planned F21 Red. By 2017, several new F21 Red stores were posting sales that were around 50 percent below company projections, internal sales reports show.

That year, Forever 21 also introduced a beauty chain, Riley Rose, that was viewed as the company’s next wave of growth and sought to capitalize on the boom in Korean skin care products. It was created by Linda and Esther Chang and called “ground-breaking” in the bankruptcy filing, which grouped its sales with the slumping international division.

While former employees praised the sisters’ work ethic, they said that Riley Rose, which had 15 stores this year, was an expensive gamble in high-priced malls and struggled to maintain vendor relationships. The company told The Times last month that Riley Rose may end up as a store within Forever 21 locations. It has filed to reject leases for nine previously planned Riley Rose locations.

Mrs. Chang’s side of the business was also making errors with the sprawling store base. Merchandising was based on the previous year’s sales, and Forever 21 bought too little inventory in 2017, then too much in 2018, the filing said. It also duplicated merchandise by designing for “styles” like weekend or work looks, rather than categories like tops or dresses.

Forever 21 had about 6,400 full-time employees and 26,400 part-time employees when it filed, numbers that will likely shrink throughout the bankruptcy process. Forever 21 said that it would change how it merchandises, winnow its operations to the United States, Mexico and Latin America, aim to increase e-commerce sales to more than just 16 percent of the business and take other cost-cutting measures. When it filed, the company owed $347 million to its vendors.

And the Chang family will be listening to new voices. Its board of directors will grow from three members — Mr. Chang, Linda Chang and Mr. Ok — to six, including Forever 21’s former head of real estate, a lawyer and the former chief executive of Things Remembered. It also said that it had added several new managers in recent months, including a new chief financial officer. Mr. Chang remains the chief executive.

“Forever 21 has basically been a one-trick pony,” Mr. Cohen said. “The founder and his wife did remarkably well until the business got too big for them to continue to do remarkably well by themselves.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

WeWork Considers Rescue Plans From SoftBank and JPMorgan

Westlake Legal Group 14WEWORK-HFO-facebookJumbo WeWork Considers Rescue Plans From SoftBank and JPMorgan WeWork Companies Inc SoftBank Capital Real Estate (Commercial) Neumann, Adam JPMorgan Chase&Company Initial Public Offerings Co-Working Boards of Directors

The board of WeWork, the cash-starved purveyor of shared office space, is weighing competing financial rescue packages from SoftBank and a financial consortium led by JPMorgan Chase, according to two people with knowledge of the matter.

SoftBank, a Japanese technology giant that is already the largest outside shareholder in WeWork, is offering to take a controlling stake in the company by accelerating a $1.5 billion investment it had planned to make next year and by buying up to $3 billion in shares held by other investors, the people said. SoftBank is also offering to put together loans totaling $5 billion from a consortium of financial institutions, including SoftBank.

The JPMorgan proposal consists of several parts, including new bonds, some of which would carry high interest rates, according to people with knowledge of its plans.

The potential cash infusion comes at a critical time for WeWork, which scrapped an initial public offering and ousted its charismatic chief executive last month after Wall Street balked at its huge losses and unconventional corporate governance structure.

WeWork, once considered one of the world’s most celebrated start-ups, was valued by SoftBank at $47 billion in January but had considered selling shares in its initial public offering at a valuation as low as $15 billion. SoftBank’s latest offer to the company values it at a little less than $8 billion.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

WeWork Considers Rescue Plans From SoftBank and JPMorgan

Westlake Legal Group 14WEWORK-HFO-facebookJumbo WeWork Considers Rescue Plans From SoftBank and JPMorgan WeWork Companies Inc SoftBank Capital Real Estate (Commercial) Neumann, Adam JPMorgan Chase&Company Initial Public Offerings Co-Working Boards of Directors

The board of WeWork, the cash-starved purveyor of shared office space, is weighing competing financial rescue packages from SoftBank and a financial consortium led by JPMorgan Chase, according to two people with knowledge of the matter.

SoftBank, a Japanese technology giant that is already the largest outside shareholder in WeWork, is offering to take a controlling stake in the company by accelerating a $1.5 billion investment it had planned to make next year and by buying up to $3 billion in shares held by other investors, the people said. SoftBank is also offering to put together loans totaling $5 billion from a consortium of financial institutions, including SoftBank.

The JPMorgan proposal consists of several parts, including new bonds, some of which would carry high interest rates, according to people with knowledge of its plans.

The potential cash infusion comes at a critical time for WeWork, which scrapped an initial public offering and ousted its charismatic chief executive last month after Wall Street balked at its huge losses and unconventional corporate governance structure.

WeWork, once considered one of the world’s most celebrated start-ups, was valued by SoftBank at $47 billion in January but had considered selling shares in its initial public offering at a valuation as low as $15 billion. SoftBank’s latest offer to the company values it at a little less than $8 billion.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Hunter Biden to Leave Chinese Company Board, Addressing Appearance of Conflict

Westlake Legal Group 13xp-bidenchina-facebookJumbo Hunter Biden to Leave Chinese Company Board, Addressing Appearance of Conflict Trump-Ukraine Whistle-Blower Complaint and Impeachment Inquiry Presidential Election of 2020 Boards of Directors Biden, Joseph R Jr Biden, Hunter Appointments and Executive Changes

ALTOONA, Iowa — Hunter Biden, whose overseas business dealings have drawn relentless attacks from President Trump and posed a threat to the candidacy of his father, Joseph R. Biden Jr., intends to step down from the board of a Chinese company, BHR, by the end of the month, his lawyer said in a statement on Sunday.

The statement also said that if Mr. Biden were to be elected president, his son would “agree not to serve on boards of, or work on behalf of, foreign-owned companies.”

The decision is the first action the pro-Biden camp has taken that appears to acknowledge the extent to which Hunter Biden’s business practices have created an untenable problem for his father’s 2020 campaign. With the fourth Democratic primary debate only two days away, political strategists said Hunter Biden’s decision to leave the Chinese company could help defuse the issue at a time when some of Mr. Biden’s lower-polling Democratic rivals have suggested his son’s work overseas raises questions about conflict of interest.

“Hunter’s decision won’t stop Trump from spreading debunked conspiracy theories about the past,” said David Axelrod, President Barack Obama’s former chief strategist. “But it does give Joe Biden an answer he didn’t have about potential conflicts of interest moving forward.”

There is no evidence Mr. Biden acted improperly to aid his son’s overseas financial dealings in China and Ukraine. Still, many on the Biden team have been gravely concerned about Mr. Trump’s ability to inflict damage with a barrage of baseless claims of corruption against the Biden family, some of which were included in an expansive pro-Trump advertising campaign.

Mr. Biden has consistently ranked as one of the Democratic Party’s leading presidential candidates. But his advantage has slipped in some recent polls, and his fund-raising has lagged his top rivals. Over the last two weeks he has begun to vigorously fight back against Mr. Trump’s criticisms and last week, in a fiery address in New Hampshire, he called for the first time for Mr. Trump to be impeached.

“You go to three foreign governments, not just all about me — three foreign governments, and ask them to come in and interfere in the sovereignty, the sacredness of the American electoral process?” Mr. Biden said Sunday at a union gathering in Altoona, apparently alluding to Mr. Trump’s dealings with Russia, as well as with Ukraine and China. “Come on. Come on. This is outrageous. If in fact the House doesn’t move, let the facts fall where they may, then what does the next unethical president, if we elect one, what does that say they can do?”

The statement on Sunday from Hunter Biden’s lawyer, George Mesires, said his client had served only as a member of the board of directors of BHR, an equity investment fund manager, “which he joined based on his interest in seeking ways to bring Chinese capital to international markets.” It was an unpaid position. Mr. Mesires has previously said Hunter Biden became an investor in 2017, taking a 10 percent stake in BHR.

Mr. Trump has said with no evidence that Mr. Biden’s son used political ties to induce China to invest $1.5 billion in a fund he was involved in, an assertion Mr. Biden has denied.

The statement had been in the works for weeks, one Biden adviser said. Separately, a person familiar with the decision said it came at Hunter Biden’s initiative, not his father’s.

Mr. Trump has directed his broadsides against Hunter Biden as he faces an impeachment inquiry in the House, which was spurred by the president’s phone call to the president of Ukraine urging the government to investigate Hunter Biden’s financial dealings there. Subsequently, Mr. Trump publicly called for China to look into Hunter Biden’s financial dealings in that country.

Aides say Mr. Biden has been bracing for weeks for questions about his son at Tuesday’s CNN/New York Times debate. His allies and advisers say that any Democrat who broaches the subject is playing into Mr. Trump’s hands and hurting the party’s cause, and some have suggested Mr. Biden is prepared to make that case if he faces personal attacks, though several of his more prominent opponents have so far been careful to avoid criticizing Mr. Biden’s family.

Still, the national focus on Mr. Biden’s family has become a political vulnerability, some Democrats say, moving him off his campaign message and forcing him to play defense as he faces questions about conflicts of interest.

“It becomes a distraction, and that’s what hurt Hillary Clinton in 2016,” said Bret Nilles, the Democratic Party chairman in Linn County, Iowa, alluding to the scrutiny of Mrs. Clinton’s email practices while she was secretary of state.

The Biden campaign’s strategy has been to push back firmly on Mr. Trump’s claims, and to argue that the president is attacking Mr. Biden because he is concerned about running against him in a general election.

“They can also say, for Democrats who are nervous about it, ‘Hunter’s taken a step to say he won’t be on these boards if the vice president is elected president,’ and they could say, ‘We’ve addressed it and it’s time to move on,’” said Jennifer Palmieri, who was Mrs. Clinton’s communications director in the 2016 presidential campaign. “There are these campaign rituals you have to go through when your campaign does hit a perilous patch like this in order to signal to the press you’re handling it right, and to reassure supporters.”

At the union gathering here on Sunday, Mr. Biden began his remarks by praising Mayor Pete Buttigieg of South Bend, Ind., for a morning television appearance where he defended “me and my family against these outrageous, lying ads” from Mr. Trump.

“That’s a good man,” he said of Mr. Buttigieg, to applause.

His campaign didn’t respond to several follow-up questions about the younger Mr. Biden’s decision, including about why Hunter Biden didn’t recuse himself earlier.

The last few weeks have been a challenging time for Mr. Biden, aides and allies have said. The Biden family, which is close-knit, has endured painful losses over the years, including the death in 2015 of Mr. Biden’s elder son Beau Biden; Hunter Biden is the former vice president’s only surviving son.

“Before he decided to run, we sat down and had a conversation about how hard it was going to be because we know Donald Trump, we saw what he did in 2016,” said Senator Chris Coons, Democrat of Delaware and a close Biden ally. “It’s different when it starts and it’s different when it picks up steam and it’s different when it’s, you know, a direct attack on you and your family.”

But, he said, Mr. Biden is “not going to be surprised” by any attacks on the debate stage on Tuesday, even highly personal ones.

Many Democrats think the Trump children, for their part, warrant tough scrutiny, given their own business dealings overseas.

In the weeks since news broke that Mr. Trump urged the Ukrainians to look into the Bidens, Mr. Biden has held only a handful of public events, spending significant time at fund-raisers as the third quarter of the year drew to a close. He finished the quarter having raised about $10 million less than his two top rivals, Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont.

Mr. Biden has also toggled between responding sharply to Mr. Trump and working to pivot back to policy, though he has ramped up his criticisms of Mr. Trump forcefully in recent weeks, and is expected to make the president a major focus of his debate appearance on Tuesday, a Biden adviser said.

Jonathan Martin contributed reporting.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Hunter Biden to Leave Chinese Company Board, Addressing Appearance of a Conflict

Westlake Legal Group 13xp-bidenchina-facebookJumbo Hunter Biden to Leave Chinese Company Board, Addressing Appearance of a Conflict Trump-Ukraine Whistle-Blower Complaint and Impeachment Inquiry Presidential Election of 2020 Boards of Directors Biden, Joseph R Jr Biden, Hunter Appointments and Executive Changes

ALTOONA, Iowa — Hunter Biden, whose overseas business dealings have drawn relentless attacks from President Trump and posed a threat to the candidacy of his father, Joseph R. Biden Jr., intends to step down from the board of a Chinese company, BHR, by the end of the month, his lawyer said in a statement on Sunday.

The statement also said that if Mr. Biden were to be elected president, his son would “agree not to serve on boards of, or work on behalf of, foreign-owned companies.”

The decision is the first action the pro-Biden camp has taken that appears to acknowledge the extent to which Hunter Biden’s business practices have created an untenable problem for his father’s 2020 campaign. With the fourth Democratic primary debate only two days away, political strategists said Hunter Biden’s decision to leave the Chinese company could help defuse the issue at a time when some of Mr. Biden’s lower-polling Democratic rivals have suggested his son’s work overseas raises questions about conflict of interest.

“Hunter’s decision won’t stop Trump from spreading debunked conspiracy theories about the past,” said David Axelrod, President Barack Obama’s former chief strategist. “But it does give Joe Biden an answer he didn’t have about potential conflicts of interest moving forward.”

There is no evidence Mr. Biden acted improperly to aid his son’s overseas financial dealings in China and Ukraine. Still, many on the Biden team have been gravely concerned about Mr. Trump’s ability to inflict damage with a barrage of baseless claims of corruption against the Biden family, some of which were included in an expansive pro-Trump advertising campaign.

Mr. Biden has consistently ranked as one of the Democratic Party’s leading presidential candidates. But his advantage has slipped in some recent polls, and his fund-raising has lagged his top rivals. Over the last two weeks he has begun to vigorously fight back against Mr. Trump’s criticisms and last week, in a fiery address in New Hampshire, he called for the first time for Mr. Trump to be impeached.

“You go to three foreign governments, not just all about me — three foreign governments, and ask them to come in and interfere in the sovereignty, the sacredness of the American electoral process?” Mr. Biden said Sunday at a union gathering in Altoona, apparently alluding to Mr. Trump’s dealings with Russia, as well as Ukraine and China. “Come on. Come on. This is outrageous. If in fact the House doesn’t move, let the facts fall where they may, then what does the next unethical president, if we elect one, what does that say they can do?”

The statement on Sunday from Hunter Biden’s lawyer, George Mesires, said his client had served only as a member of board of directors of BHR, an equity investment fund manager, “which he joined based on his interest in seeking ways to bring Chinese capital to international markets.” It was an unpaid position. Mr. Mesires has previously said Hunter Biden became an investor in 2017, taking a 10 percent stake in BHR.

Mr. Trump has said with no evidence that the younger Mr. Biden used political ties to induce China to invest $1.5 billion in a fund he was involved in, an assertion Joseph Biden has denied.

The statement had been in the works for weeks, one Biden adviser said. Separately, a person familiar with the decision said it came at Hunter Biden’s initiative, not his father’s.

Mr. Trump has directed his broadsides against Hunter Biden as he faces an impeachment inquiry in the House, which was spurred by the president’s phone call to the president of Ukraine urging the government to investigate Hunter Biden’s financial dealings there. Subsequently, Mr. Trump publicly called for China to look into Hunter Biden’s financial dealings in that country.

Aides say Mr. Biden has been bracing for weeks for questions about his son onstage at Tuesday’s CNN/New York Times debate. His allies and advisers say that any Democrat who broaches the subject is playing into Mr. Trump’s hands and hurting the party’s cause, and some have suggested Mr. Biden is prepared to make that case if he faces personal attacks, though several of his more prominent opponents have so far been careful to avoid criticizing Mr. Biden’s family.

Still, the national focus on Mr. Biden’s family has become a political vulnerability, some Democrats say, moving him off his campaign message and forcing him to play defense as he faces questions about conflicts of interest.

“It becomes a distraction, and that’s what hurt Hillary Clinton in 2016,” said Bret Nilles, the Democratic Party chairman in Linn County, Iowa, alluding to the scrutiny of Mrs. Clinton’s email practices while she was secretary of state.

The Biden campaign’s strategy has been to push back firmly on Mr. Trump’s claims, and to argue that the president is attacking Mr. Biden because he is concerned about running against him in a general election.

“They can also say, for Democrats who are nervous about it, ‘Hunter’s taken a step to say he won’t be on these boards if the vice president is elected president,’ and they could say, ‘we’ve addressed it and it’s time to move on,’” said Jennifer Palmieri, who was Mrs. Clinton’s communications director in the 2016 presidential campaign. “There are these campaign rituals you have to go through when your campaign does hit a perilous patch like this in order to signal to the press you’re handling it right, and to reassure supporters.”

At the union gathering here on Sunday, Mr. Biden began his remarks by praising Mayor Pete Buttigieg of South Bend, Ind., for a morning television appearance where he defended “me and my family against these outrageous, lying ads” from Mr. Trump.

“That’s a good man,” he said of Mr. Buttigieg, to applause.

His campaign didn’t respond to several follow-up questions about the younger Mr. Biden’s decision, including about why Hunter Biden didn’t recuse himself earlier.

The last few weeks have been a challenging time for Mr. Biden, aides and allies have said. The Biden family, which is close-knit, has endured painful losses over the years, including the death in 2015 of Mr. Biden’s elder son Beau Biden; Hunter Biden is the former vice president’s only surviving son.

“Before he decided to run, we sat down and had a conversation about how hard it was going to be because we know Donald Trump, we saw what he did in 2016,” said Senator Chris Coons, Democrat of Delaware and a close Biden ally. “It’s different when it starts and it’s different when it picks up steam and it’s different when it’s, you know, a direct attack on you and your family.”

But, he said, Mr. Biden is “not going to be surprised” by any attacks on the debate stage on Tuesday, even highly personal ones.

Many Democrats think the Trump children, for their part, warrant tough scrutiny, given their own business dealings overseas.

In the weeks since news broke that Mr. Trump urged the Ukrainians to look into Mr. Biden’s family, he has held only a handful of public events, spending significant time at fund-raisers as the third quarter of the year drew to a close. He finished the quarter having raised about $10 million less than his two top rivals, Elizabeth Warren and Bernie Sanders.

Mr. Biden has also toggled between responding sharply to Mr. Trump and working to pivot back to policy, though he has ramped up his criticisms of Mr. Trump forcefully in recent weeks, and is expected to make the president a major focus of his debate appearance on Tuesday, a Biden adviser said.

Jonathan Martin contributed reporting.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Hunter Biden to Leave Chinese Company Board, His Lawyer Says

Westlake Legal Group 13xp-bidenchina-facebookJumbo Hunter Biden to Leave Chinese Company Board, His Lawyer Says Trump-Ukraine Whistle-Blower Complaint and Impeachment Inquiry Presidential Election of 2020 Boards of Directors Biden, Joseph R Jr Biden, Hunter Appointments and Executive Changes

Hunter Biden, son of Joseph R. Biden Jr., the former vice president and a Democratic presidential candidate, intends to step down from the board of a Chinese company by the end of the month, according to a statement from his lawyer.

Hunter Biden’s lawyer, George Mesires, said in a statement on Sunday that Mr. Biden would resign from the company, BHR, an equity investment fund manager.

The statement added that if Joseph Biden were to be elected president, his son would “agree not to serve on boards of, or work on behalf of, foreign-owned companies.”

The role of the younger Mr. Biden in foreign companies has been a source of political grist for President Trump, who this month publicly urged China to investigate the Bidens’ role.

In Ukraine, Hunter Biden earned $50,000 a month on the board of an energy company.

As vice president, his father pressured Ukraine to fire a prosecutor whose office oversaw investigations into the company’s owner. But by the time the elder Mr. Biden acted, there was no public evidence that the prosecutor was pursuing an investigation, and no evidence has surfaced that the vice president, who was carrying out Obama administration policy, was motivated by his son’s business interests.

In an interview with reporters, Mr. Trump called for both Ukraine and China to investigate.

“China should start an investigation into the Bidens, because what happened in China is just about as bad as what happened with Ukraine,” Mr. Trump said.

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Nissan’s Crisis Goes Much Deeper Than Carlos Ghosn

TOKYO — An outside law firm investigating problems at Nissan, the troubled Japanese automaker, this summer discovered some potentially explosive information.

Hari Nada, a powerful Nissan insider who was behind the ouster last year of Nissan’s chairman, Carlos Ghosn, over compensation issues, had been improperly overpaid himself, the firm found. A second insider involved in the corporate coup was responsible, the firm said, and had briefed Mr. Nada on what he had done.

A senior Nissan compliance officer planned to share the findings with the company’s board of directors, according to people familiar with the situation.

But the full board never heard the details of the findings, according to people who attended the board’s last meeting on Sept. 9. Moments after the meeting ended, Nissan issued a statement that cleared an unnamed group of executives of misconduct.

In the weeks after the law firm delivered its findings, Nissan sidelined two senior in-house lawyers who had handled issues of misconduct at the company, including the one who hired the outside law firm, according to people briefed on the moves. Both had warned Nissan executives that Mr. Nada had continued influencing inquiries into the company’s problems, these people said, even after recusing himself to avoid conflicts of interest.

The series of events, most of which have not been previously disclosed, paint a picture of a major global automaker hobbled by distrust and deep conflicts of interest among top executives. Nearly one year after Mr. Ghosn was arrested by the Japanese authorities, shaking the global auto industry, Nissan remains riven by corporate intrigue that has left members of its own board and Renault of France, which owns a 43 percent stake in the Japanese company, in the dark. The automaker has also reported a deep plunge in profits as sales have plummeted and announced plans to lay off as many as 12,500 employees worldwide.

ImageWestlake Legal Group merlin_155271687_4202e399-38bd-4e9c-9555-e4ea3c44ad8e-articleLarge Nissan’s Crisis Goes Much Deeper Than Carlos Ghosn Securities and Commodities Violations Saikawa, Hiroto Renault SA Nissan Motor Co Nada, Hari Kelly, Greg (Nissan Executive) Japan Ghosn, Carlos Frauds and Swindling Falsification of Data Executive Compensation Boards of Directors Automobiles

Carlos Ghosn, Nissan’s former chairman, center, arrives at Tokyo District Court for a hearing in May. Nearly a year after his arrest, the automaker remains riven by corporate intrigue.CreditRen Onuma/Kyodo News, via Associated Press

The findings from the outside law firm, which were reviewed by The New York Times, could also raise questions about the credibility of crucial witnesses against Mr. Ghosn, who has been charged with trying to conceal his pay level from regulators, among other charges, and Greg Kelly, a former senior Nissan executive charged with helping him. Both men say they are innocent.

Nissan said that the executives whose pay issues came to light after Mr. Ghosn’s ouster were “unaware that improper methods were used” to increase their compensation and that there was “no reason to suspect” that they broke the law. A Nissan spokeswoman said the company possessed a more recent version of the findings from the outside law firm, but Nissan declined to make that version available.

Christina Murray, then the head of Nissan’s internal audit and compliance offices, hired the law firm, Anderson Mori and Tomotsune, this past summer. Ms. Murray had been leading an examination into misconduct at the company since last year. In late August, the firm delivered a report on its findings addressed to Ms. Murray.

Hari Nada, the head of Nissan’s legal department and security office. An outside law firm found that he had been improperly overpaid.CreditNissan Motor Co.

Mr. Nada, the head of Nissan’s legal department and security office, had in 2017 received about $280,000 in “unjust enrichment,” the firm found.

The Nissan spokeswoman said that the more recent version of the law firm’s findings had included a different, lower amount for Mr. Nada’s overpayment. Nissan declined to release further details or to explain the discrepancy. “As the investigation progressed, updates were made,” it said.

Toshiaki Onuma, a senior Nissan administrator, changed the payout dates for stock-based compensation, the firm found, improperly increasing pay for Mr. Nada and others. The firm did not say why Mr. Onuma changed the dates.

Both Mr. Nada and Mr. Onuma were deeply involved in Mr. Ghosn’s fall and are widely expected to be central witnesses in his trial. The two have struck cooperation agreements with Japanese prosecutors, according to Mr. Ghosn’s lawyers and Nissan documents reviewed by the Times. Japanese prosecutors have not made details of the agreements public.

It is not clear what happened to the law firm’s findings after it delivered its report. But shortly after, Motoo Nagai, a Nissan director who heads the company’s audit committee, told Ms. Murray that she could no longer participate in any investigations involving Mr. Nada, according to an email reviewed by the Times. She subsequently resigned. Her last day in the office was Aug. 30, and she officially left the company on Sept. 9. She had planned to present the results of her yearlong investigation to the full board that day, said the people familiar with the plans.

Mr. Nagai has told reporters that Ms. Murray had been contemplating resigning since July and that the timing was coincidental. The company has said she resigned for personal reasons.

The board’s meeting on Sept. 9 focused on Hiroto Saikawa, Mr. Ghosn’s successor as chief executive. The board unanimously asked for his resignation, and he resigned that day. He had admitted earlier that month that he received about $440,000 in improper share-based compensation. Mr. Saikawa said he had not realized that the overpayment was “against the rules” and vowed to return the money.

But some directors at the meeting demanded more information about the compensation of other executives and were growing frustrated with a lack of it, said people who were there. Days before, Bloomberg News reported that Mr. Nada had received overpayments, without specifying the amount or how. Jean-Dominique Senard, the chairman of Nissan’s French partner, Renault, and other board members asked why they were learning about top executives’ pay issues from media reports.

In its statement, Nissan said the law firm’s findings had been “reflected” in a broader report shared with the board after the meeting. But that broader report named only directors, not executives, who received improper compensation, according to people aware of its contents. It did not identify the executives, like Mr. Nada, who received that compensation nor say how much they received or how they received it, the people said. Some members of the board were not aware that the firm had been hired, they said.

Hiroto Saikawa, the chief executive of Nissan, at a news conference in September announcing his resignation. He had admitted earlier that he received about $440,000 in improper share-based compensation.CreditKimimasa Mayama/EPA, via Shutterstock Members of Nissan’s board, from left, Keiko Ihara, Yasushi Kimura, Masakazu Toyoda and Motoo Nagai at a news conference after their meeting on Sept. 9. The board voted unanimously that day to accept Mr. Saikawa’s resignation.CreditKyodo, via Associated Press Images

When the board meeting ended, Nissan released a statement that said that in addition to Mr. Saikawa six other directors and executives, whom it did not identify, had received extra compensation. Nissan added that they had been unaware of the “improper methods used” to increase their pay.

The findings by Anderson Mori and Tomotsune said five executives and directors, including Mr. Nada, were overpaid. It is not clear whether the six cited by Nissan overlapped with the five named by the law firm. Nissan declined to discuss their identities, citing privacy issues.

Mr. Onuma told the firm’s investigators that he had “explicitly explained” to Mr. Nada that he had changed the date for stock-based compensation to increase Mr. Nada’s pay, according to the law firm’s report. Investigators also cited an email to Mr. Nada that they said showed Mr. Onuma explaining the change.

The law firm said it was unable to verify what Mr. Onuma said because Mr. Nada refused to be interviewed.

Mr. Nada refused to talk to the law firm unless Mr. Nagai was present and given full authority over the interview, as well as its results. The law firm called Mr. Nada’s demands “unusual and inappropriate” and left the question of how to proceed with Mr. Nagai.

In a statement, Nissan said that “all subjects of the investigation were interviewed appropriately” by Anderson Mori and Tomotsune. It declined to provide further details.

The firm also found that Mr. Onuma had adjusted the compensation of Itaru Koeda, a former Nissan director, by about $93,000, and the compensation of Arun Bajaj, a former executive in Nissan’s human resources department, by $46,000. The men said they were unaware of Mr. Onuma’s actions, the firm said.

The law firm wrote that overpayments to two other executives, including Asako Hoshino, Nissan’s most senior female executive, were “relatively innocent” and resulted from what appeared to be miscommunication.

Asako Hoshino, an executive vice president at Nissan, is the company’s most senior female executive.  CreditChristopher Jue/European Pressphoto Agency

As investigators inside and outside Nissan have explored the problems with how the company is run, people within both the Japanese company and Renault have begun to focus on Mr. Nada’s role within the company. He has remained the head of Nissan’s legal department despite his cooperation agreement with prosecutors and his role as a potential witness in Mr. Ghosn’s trial. Some within Nissan and its board see this as a troubling conflict of interest, say people familiar with the concerns.

Mr. Nada recused himself in April from matters involving investigations at the top, according to people familiar with the situation. But, they said, Mr. Nada has continued to use his position and a team of loyal employees to influence those matters directly and indirectly.

Ms. Murray, the former compliance chief, repeatedly expressed concerns over what she described as Mr. Nada’s continued influence over the investigations and related legal matters, according to people she spoke with and emails reviewed by the Times.

Nissan’s internal and outside legal advisers have also questioned Mr. Nada’s role within the company.

During the Sept. 9 board meeting, six of the board’s seven independent directors — everyone except Mr. Nagai — were given a letter written by a senior Nissan lawyer, Ravinder Passi, with a legal memo attached, that outlined potential conflicts of interest within Nissan’s top ranks. Mr. Passi’s letter was previously reported by The Wall Street Journal.

The memo, which was reviewed by the Times, had been commissioned by Mr. Passi and written by two outside law firms, Cleary, Gottlieb, Steen and Hamilton, based in New York, and a Japanese firm, Mori Hamada and Matsumoto. It said executives involved in Mr. Ghosn’s alleged wrongdoing “should not be involved in decision making” related to those accusations. It also cited deals struck by Mr. Nada and Mr. Onuma with prosecutors to cooperate in their case against Mr. Ghosn in exchange for immunity from criminal liability.

The memo was dated July 23. In his Sept. 9 letter to the six outside directors, Mr. Passi said he had shared the memo on July 25 with Mr. Nagai, the chairman of the board’s audit committee. Mr. Passi wrote he had not been able to find out whether board members had seen the memo but felt “duty bound” to bring it to their attention.

Since July, Mr. Passi said in his letter, the problem of conflicts of interest within the company’s top ranks had “become more acute.”

Shortly after the board meeting, Mr. Nada wrote in an email to the company’s legal department that Mr. Passi would no longer handle any legal matters related to the Ghosn investigation. Instead, Kathryn Carlile, one of Mr. Nada’s former assistants, would take over, said the email, which was reviewed by the Times.

That surprised some board members and Nissan employees who saw Ms. Carlile as loyal to Mr. Nada, said people familiar with their thinking. In its statement, Nissan said Mr. Passi had been removed from those matters because of potential conflicts of interest. It did not specify the conflicts.

In his email, Mr. Nada said the legal team should make arrangements to brief Ms. Carlile on related issues “as soon as possible.” The email ended, “Best regards, Hari.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Nissan’s Crisis Goes Much Deeper Than Carlos Ghosn

TOKYO — An outside law firm investigating problems at Nissan, the troubled Japanese automaker, this summer discovered some potentially explosive information.

Hari Nada, a powerful Nissan insider who was behind the ouster last year of Nissan’s chairman, Carlos Ghosn, over compensation issues, had been improperly overpaid himself, the firm found. A second insider involved in the corporate coup was responsible, the firm said, and had briefed Mr. Nada on what he had done.

A senior Nissan compliance officer planned to share the findings with the company’s board of directors, according to people familiar with the situation.

But the full board never heard the details of the findings, according to people who attended the board’s last meeting on Sept. 9. Moments after the meeting ended, Nissan issued a statement that cleared an unnamed group of executives of misconduct.

In the weeks after the law firm delivered its findings, Nissan sidelined two senior in-house lawyers who had handled issues of misconduct at the company, including the one who hired the outside law firm, according to people briefed on the moves. Both had warned Nissan executives that Mr. Nada had continued influencing inquiries into the company’s problems, these people said, even after recusing himself to avoid conflicts of interest.

The series of events, most of which have not been previously disclosed, paint a picture of a major global automaker hobbled by distrust and deep conflicts of interest among top executives. Nearly one year after Mr. Ghosn was arrested by the Japanese authorities, shaking the global auto industry, Nissan remains riven by corporate intrigue that has left members of its own board and Renault of France, which owns a 43 percent stake in the Japanese company, in the dark. The automaker has also reported a deep plunge in profits as sales have plummeted and announced plans to lay off as many as 12,500 employees worldwide.

ImageWestlake Legal Group merlin_155271687_4202e399-38bd-4e9c-9555-e4ea3c44ad8e-articleLarge Nissan’s Crisis Goes Much Deeper Than Carlos Ghosn Securities and Commodities Violations Saikawa, Hiroto Renault SA Nissan Motor Co Nada, Hari Kelly, Greg (Nissan Executive) Japan Ghosn, Carlos Frauds and Swindling Falsification of Data Executive Compensation Boards of Directors Automobiles

Carlos Ghosn, Nissan’s former chairman, center, arrives at Tokyo District Court for a hearing in May. Nearly a year after his arrest, the automaker remains riven by corporate intrigue.CreditRen Onuma/Kyodo News, via Associated Press

The findings from the outside law firm, which were reviewed by The New York Times, could also raise questions about the credibility of crucial witnesses against Mr. Ghosn, who has been charged with trying to conceal his pay level from regulators, among other charges, and Greg Kelly, a former senior Nissan executive charged with helping him. Both men say they are innocent.

Nissan said that the executives whose pay issues came to light after Mr. Ghosn’s ouster were “unaware that improper methods were used” to increase their compensation and that there was “no reason to suspect” that they broke the law. A Nissan spokeswoman said the company possessed a more recent version of the findings from the outside law firm, but Nissan declined to make that version available.

Christina Murray, then the head of Nissan’s internal audit and compliance offices, hired the law firm, Anderson Mori and Tomotsune, this past summer. Ms. Murray had been leading an examination into misconduct at the company since last year. In late August, the firm delivered a report on its findings addressed to Ms. Murray.

Hari Nada, the head of Nissan’s legal department and security office. An outside law firm found that he had been improperly overpaid.CreditNissan Motor Co.

Mr. Nada, the head of Nissan’s legal department and security office, had in 2017 received about $280,000 in “unjust enrichment,” the firm found.

The Nissan spokeswoman said that the more recent version of the law firm’s findings had included a different, lower amount for Mr. Nada’s overpayment. Nissan declined to release further details or to explain the discrepancy. “As the investigation progressed, updates were made,” it said.

Toshiaki Onuma, a senior Nissan administrator, changed the payout dates for stock-based compensation, the firm found, improperly increasing pay for Mr. Nada and others. The firm did not say why Mr. Onuma changed the dates.

Both Mr. Nada and Mr. Onuma were deeply involved in Mr. Ghosn’s fall and are widely expected to be central witnesses in his trial. The two have struck cooperation agreements with Japanese prosecutors, according to Mr. Ghosn’s lawyers and Nissan documents reviewed by the Times. Japanese prosecutors have not made details of the agreements public.

It is not clear what happened to the law firm’s findings after it delivered its report. But shortly after, Motoo Nagai, a Nissan director who heads the company’s audit committee, told Ms. Murray that she could no longer participate in any investigations involving Mr. Nada, according to an email reviewed by the Times. She subsequently resigned. Her last day in the office was Aug. 30, and she officially left the company on Sept. 9. She had planned to present the results of her yearlong investigation to the full board that day, said the people familiar with the plans.

Mr. Nagai has told reporters that Ms. Murray had been contemplating resigning since July and that the timing was coincidental. The company has said she resigned for personal reasons.

The board’s meeting on Sept. 9 focused on Hiroto Saikawa, Mr. Ghosn’s successor as chief executive. The board unanimously asked for his resignation, and he resigned that day. He had admitted earlier that month that he received about $440,000 in improper share-based compensation. Mr. Saikawa said he had not realized that the overpayment was “against the rules” and vowed to return the money.

But some directors at the meeting demanded more information about the compensation of other executives and were growing frustrated with a lack of it, said people who were there. Days before, Bloomberg News reported that Mr. Nada had received overpayments, without specifying the amount or how. Jean-Dominique Senard, the chairman of Nissan’s French partner, Renault, and other board members asked why they were learning about top executives’ pay issues from media reports.

In its statement, Nissan said the law firm’s findings had been “reflected” in a broader report shared with the board after the meeting. But that broader report named only directors, not executives, who received improper compensation, according to people aware of its contents. It did not identify the executives, like Mr. Nada, who received that compensation nor say how much they received or how they received it, the people said. Some members of the board were not aware that the firm had been hired, they said.

Hiroto Saikawa, the chief executive of Nissan, at a news conference in September announcing his resignation. He had admitted earlier that he received about $440,000 in improper share-based compensation.CreditKimimasa Mayama/EPA, via Shutterstock Members of Nissan’s board, from left, Keiko Ihara, Yasushi Kimura, Masakazu Toyoda and Motoo Nagai at a news conference after their meeting on Sept. 9. The board voted unanimously that day to accept Mr. Saikawa’s resignation.CreditKyodo, via Associated Press Images

When the board meeting ended, Nissan released a statement that said that in addition to Mr. Saikawa six other directors and executives, whom it did not identify, had received extra compensation. Nissan added that they had been unaware of the “improper methods used” to increase their pay.

The findings by Anderson Mori and Tomotsune said five executives and directors, including Mr. Nada, were overpaid. It is not clear whether the six cited by Nissan overlapped with the five named by the law firm. Nissan declined to discuss their identities, citing privacy issues.

Mr. Onuma told the firm’s investigators that he had “explicitly explained” to Mr. Nada that he had changed the date for stock-based compensation to increase Mr. Nada’s pay, according to the law firm’s report. Investigators also cited an email to Mr. Nada that they said showed Mr. Onuma explaining the change.

The law firm said it was unable to verify what Mr. Onuma said because Mr. Nada refused to be interviewed.

Mr. Nada refused to talk to the law firm unless Mr. Nagai was present and given full authority over the interview, as well as its results. The law firm called Mr. Nada’s demands “unusual and inappropriate” and left the question of how to proceed with Mr. Nagai.

In a statement, Nissan said that “all subjects of the investigation were interviewed appropriately” by Anderson Mori and Tomotsune. It declined to provide further details.

The firm also found that Mr. Onuma had adjusted the compensation of Itaru Koeda, a former Nissan director, by about $93,000, and the compensation of Arun Bajaj, a former executive in Nissan’s human resources department, by $46,000. The men said they were unaware of Mr. Onuma’s actions, the firm said.

The law firm wrote that overpayments to two other executives, including Asako Hoshino, Nissan’s most senior female executive, were “relatively innocent” and resulted from what appeared to be miscommunication.

Asako Hoshino, an executive vice president at Nissan, is the company’s most senior female executive.  CreditChristopher Jue/European Pressphoto Agency

As investigators inside and outside Nissan have explored the problems with how the company is run, people within both the Japanese company and Renault have begun to focus on Mr. Nada’s role within the company. He has remained the head of Nissan’s legal department despite his cooperation agreement with prosecutors and his role as a potential witness in Mr. Ghosn’s trial. Some within Nissan and its board see this as a troubling conflict of interest, say people familiar with the concerns.

Mr. Nada recused himself in April from matters involving investigations at the top, according to people familiar with the situation. But, they said, Mr. Nada has continued to use his position and a team of loyal employees to influence those matters directly and indirectly.

Ms. Murray, the former compliance chief, repeatedly expressed concerns over what she described as Mr. Nada’s continued influence over the investigations and related legal matters, according to people she spoke with and emails reviewed by the Times.

Nissan’s internal and outside legal advisers have also questioned Mr. Nada’s role within the company.

During the Sept. 9 board meeting, six of the board’s seven independent directors — everyone except Mr. Nagai — were given a letter written by a senior Nissan lawyer, Ravinder Passi, with a legal memo attached, that outlined potential conflicts of interest within Nissan’s top ranks. Mr. Passi’s letter was previously reported by The Wall Street Journal.

The memo, which was reviewed by the Times, had been commissioned by Mr. Passi and written by two outside law firms, Cleary, Gottlieb, Steen and Hamilton, based in New York, and a Japanese firm, Mori Hamada and Matsumoto. It said executives involved in Mr. Ghosn’s alleged wrongdoing “should not be involved in decision making” related to those accusations. It also cited deals struck by Mr. Nada and Mr. Onuma with prosecutors to cooperate in their case against Mr. Ghosn in exchange for immunity from criminal liability.

The memo was dated July 23. In his Sept. 9 letter to the six outside directors, Mr. Passi said he had shared the memo on July 25 with Mr. Nagai, the chairman of the board’s audit committee. Mr. Passi wrote he had not been able to find out whether board members had seen the memo but felt “duty bound” to bring it to their attention.

Since July, Mr. Passi said in his letter, the problem of conflicts of interest within the company’s top ranks had “become more acute.”

Shortly after the board meeting, Mr. Nada wrote in an email to the company’s legal department that Mr. Passi would no longer handle any legal matters related to the Ghosn investigation. Instead, Kathryn Carlile, one of Mr. Nada’s former assistants, would take over, said the email, which was reviewed by the Times.

That surprised some board members and Nissan employees who saw Ms. Carlile as loyal to Mr. Nada, said people familiar with their thinking. In its statement, Nissan said Mr. Passi had been removed from those matters because of potential conflicts of interest. It did not specify the conflicts.

In his email, Mr. Nada said the legal team should make arrangements to brief Ms. Carlile on related issues “as soon as possible.” The email ended, “Best regards, Hari.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

New Nissan Pay Problems Point to Conflicts at the Top

TOKYO — An outside law firm investigating problems at Nissan, the troubled Japanese automaker, this summer discovered some potentially explosive information.

Hari Nada, a powerful Nissan insider who was behind the ouster last year of Nissan’s chairman, Carlos Ghosn, over compensation issues, had been improperly overpaid himself, the firm found. A second insider involved in the corporate coup was responsible, the firm said, and had briefed Mr. Nada on what he had done.

A senior Nissan compliance officer planned to share the findings with the company’s board of directors, according to people familiar with the situation.

But the full board never heard the details of the findings, according to people who attended the board’s last meeting on Sept. 9. Moments after the meeting ended, Nissan issued a statement that cleared an unnamed group of executives of misconduct.

In the weeks after the law firm delivered its findings, Nissan sidelined two senior in-house lawyers who had handled issues of misconduct at the company, including the one who hired the outside law firm, according to people briefed on the moves. Both had warned Nissan executives that Mr. Nada had continued influencing inquiries into the company’s problems, these people said, even after recusing himself to avoid conflicts of interest.

The series of events, most of which have not been previously disclosed, paint a picture of a major global automaker hobbled by distrust and deep conflicts of interest among top executives. Nearly one year after Mr. Ghosn was arrested by the Japanese authorities, shaking the global auto industry, Nissan remains riven by corporate intrigue that has left members of its own board and Renault of France, which owns a 43 percent stake in the Japanese company, in the dark. The automaker has also reported a deep plunge in profits as sales have plummeted and announced plans to lay off as many as 12,500 employees worldwide.

ImageWestlake Legal Group merlin_155271687_4202e399-38bd-4e9c-9555-e4ea3c44ad8e-articleLarge New Nissan Pay Problems Point to Conflicts at the Top Securities and Commodities Violations Saikawa, Hiroto Renault SA Nissan Motor Co Nada, Hari Kelly, Greg (Nissan Executive) Japan Ghosn, Carlos Frauds and Swindling Falsification of Data Executive Compensation Boards of Directors Automobiles

Carlos Ghosn, Nissan’s former chairman, center, arrives at Tokyo District Court for a hearing in May. Nearly a year after his arrest, the automaker remains riven by corporate intrigue.CreditRen Onuma/Kyodo News, via Associated Press

The findings from the outside law firm, which were reviewed by The New York Times, could also raise questions about the credibility of crucial witnesses against Mr. Ghosn, who has been charged with trying to conceal his pay level from regulators, among other charges, and Greg Kelly, a former senior Nissan executive charged with helping him. Both men say they are innocent.

Nissan said that the executives whose pay issues came to light after Mr. Ghosn’s ouster were “unaware that improper methods were used” to increase their compensation and that there was “no reason to suspect” that they broke the law. A Nissan spokeswoman said the company possessed a more recent version of the findings from the outside law firm, but Nissan declined to make that version available.

Christina Murray, then the head of Nissan’s internal audit and compliance offices, hired the law firm, Anderson Mori and Tomotsune, this past summer. Ms. Murray had been leading an examination into misconduct at the company since last year. In late August, the firm delivered a report on its findings addressed to Ms. Murray.

Hari Nada, the head of Nissan’s legal department and security office. An outside law firm found that he had been improperly overpaid.CreditNissan Motor Co.

Mr. Nada, the head of Nissan’s legal department and security office, had in 2017 received about $280,000 in “unjust enrichment,” the firm found.

The Nissan spokeswoman said that the more recent version of the law firm’s findings had included a different, lower amount for Mr. Nada’s overpayment. Nissan declined to release further details or to explain the discrepancy. “As the investigation progressed, updates were made,” it said.

Toshiaki Onuma, a senior Nissan administrator, changed the payout dates for stock-based compensation, the firm found, improperly increasing pay for Mr. Nada and others. The firm did not say why Mr. Onuma changed the dates.

Both Mr. Nada and Mr. Onuma were deeply involved in Mr. Ghosn’s fall and are widely expected to be central witnesses in his trial. The two have struck cooperation agreements with Japanese prosecutors, according to Mr. Ghosn’s lawyers and Nissan documents reviewed by the Times. Japanese prosecutors have not made details of the agreements public.

It is not clear what happened to the law firm’s findings after it delivered its report. But shortly after, Motoo Nagai, a Nissan director who heads the company’s audit committee, told Ms. Murray that she could no longer participate in any investigations involving Mr. Nada, according to an email reviewed by the Times. She subsequently resigned. Her last day in the office was Aug. 30, and she officially left the company on Sept. 9. She had planned to present the results of her yearlong investigation to the full board that day, said the people familiar with the plans.

Mr. Nagai has told reporters that Ms. Murray had been contemplating resigning since July and that the timing was coincidental. The company has said she resigned for personal reasons.

The board’s meeting on Sept. 9 focused on Hiroto Saikawa, Mr. Ghosn’s successor as chief executive. The board unanimously asked for his resignation, and he resigned that day. He had admitted earlier that month that he received about $440,000 in improper share-based compensation. Mr. Saikawa said he had not realized that the overpayment was “against the rules” and vowed to return the money.

But some directors at the meeting demanded more information about the compensation of other executives and were growing frustrated with a lack of it, said people who were there. Days before, Bloomberg News reported that Mr. Nada had received overpayments, without specifying the amount or how. Jean-Dominique Senard, the chairman of Nissan’s French partner, Renault, and other board members asked why they were learning about top executives’ pay issues from media reports.

In its statement, Nissan said the law firm’s findings had been “reflected” in a broader report shared with the board after the meeting. But that broader report named only directors, not executives, who received improper compensation, according to people aware of its contents. It did not identify the executives, like Mr. Nada, who received that compensation nor say how much they received or how they received it, the people said. Some members of the board were not aware that the firm had been hired, they said.

Hiroto Saikawa, the chief executive of Nissan, at a news conference in September announcing his resignation. He had admitted earlier that he received about $440,000 in improper share-based compensation.CreditKimimasa Mayama/EPA, via Shutterstock Members of Nissan’s board, from left, Keiko Ihara, Yasushi Kimura, Masakazu Toyoda and Motoo Nagai at a news conference after their meeting on Sept. 9. The board voted unanimously that day to accept Mr. Saikawa’s resignation.CreditKyodo, via Associated Press Images

When the board meeting ended, Nissan released a statement that said that in addition to Mr. Saikawa six other directors and executives, whom it did not identify, had received extra compensation. Nissan added that they had been unaware of the “improper methods used” to increase their pay.

The findings by Anderson Mori and Tomotsune said five executives and directors, including Mr. Nada, were overpaid. It is not clear whether the six cited by Nissan overlapped with the five named by the law firm. Nissan declined to discuss their identities, citing privacy issues.

Mr. Onuma told the firm’s investigators that he had “explicitly explained” to Mr. Nada that he had changed the date for stock-based compensation to increase Mr. Nada’s pay, according to the law firm’s report. Investigators also cited an email to Mr. Nada that they said showed Mr. Onuma explaining the change.

The law firm said it was unable to verify what Mr. Onuma said because Mr. Nada refused to be interviewed.

Mr. Nada refused to talk to the law firm unless Mr. Nagai was present and given full authority over the interview, as well as its results. The law firm called Mr. Nada’s demands “unusual and inappropriate” and left the question of how to proceed with Mr. Nagai.

In a statement, Nissan said that “all subjects of the investigation were interviewed appropriately” by Anderson Mori and Tomotsune. It declined to provide further details.

The firm also found that Mr. Onuma had adjusted the compensation of Itaru Koeda, a former Nissan director, by about $93,000, and the compensation of Arun Bajaj, a former executive in Nissan’s human resources department, by $46,000. The men said they were unaware of Mr. Onuma’s actions, the firm said.

The law firm wrote that overpayments to two other executives, including Asako Hoshino, Nissan’s most senior female executive, were “relatively innocent” and resulted from what appeared to be miscommunication.

Asako Hoshino, an executive vice president at Nissan, is the company’s most senior female executive.  CreditChristopher Jue/European Pressphoto Agency

As investigators inside and outside Nissan have explored the problems with how the company is run, people within both the Japanese company and Renault have begun to focus on Mr. Nada’s role within the company. He has remained the head of Nissan’s legal department despite his cooperation agreement with prosecutors and his role as a potential witness in Mr. Ghosn’s trial. Some within Nissan and its board see this as a troubling conflict of interest, say people familiar with the concerns.

Mr. Nada recused himself in April from matters involving investigations at the top, according to people familiar with the situation. But, they said, Mr. Nada has continued to use his position and a team of loyal employees to influence those matters directly and indirectly.

Ms. Murray, the former compliance chief, repeatedly expressed concerns over what she described as Mr. Nada’s continued influence over the investigations and related legal matters, according to people she spoke with and emails reviewed by the Times.

Nissan’s internal and outside legal advisers have also questioned Mr. Nada’s role within the company.

During the Sept. 9 board meeting, six of the board’s seven independent directors — everyone except Mr. Nagai — were given a letter written by a senior Nissan lawyer, Ravinder Passi, with a legal memo attached, that outlined potential conflicts of interest within Nissan’s top ranks. Mr. Passi’s letter was previously reported by The Wall Street Journal.

The memo, which was reviewed by the Times, had been commissioned by Mr. Passi and written by two outside law firms, Cleary, Gottlieb, Steen and Hamilton, based in New York, and a Japanese firm, Mori Hamada and Matsumoto. It said executives involved in Mr. Ghosn’s alleged wrongdoing “should not be involved in decision making” related to those accusations. It also cited deals struck by Mr. Nada and Mr. Onuma with prosecutors to cooperate in their case against Mr. Ghosn in exchange for immunity from criminal liability.

The memo was dated July 23. In his Sept. 9 letter to the six outside directors, Mr. Passi said he had shared the memo on July 25 with Mr. Nagai, the chairman of the board’s audit committee. Mr. Passi wrote he had not been able to find out whether board members had seen the memo but felt “duty bound” to bring it to their attention.

Since July, Mr. Passi said in his letter, the problem of conflicts of interest within the company’s top ranks had “become more acute.”

Shortly after the board meeting, Mr. Nada wrote in an email to the company’s legal department that Mr. Passi would no longer handle any legal matters related to the Ghosn investigation. Instead, Kathryn Carlisle, one of Mr. Nada’s former assistants, would take over, said the email, which was reviewed by the Times.

That surprised some board members and Nissan employees who saw Ms. Carlisle as loyal to Mr. Nada, said people familiar with their thinking. In its statement, Nissan said Mr. Passi had been removed from those matters because of potential conflicts of interest. It did not specify the conflicts.

In his email, Mr. Nada said the legal team should make arrangements to brief Ms. Carlisle on related issues “as soon as possible.” The email ended, “Best regards, Hari.”

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The Week the C.E.O.s Got Smacked

One wanted to “elevate the world’s consciousness.”

Another aspired to “make a bigger difference around the world.”

A third, speaking of climate change, said, “We owe it to our children to find the right answers.”

This soaring rhetoric did not emanate from motivational speakers or religious leaders. It was uttered by wealthy chief executives hoping to curry favor with a public desperate to be inspired.

Ultimately, their idealism counted for little. Over the past week, the three men behind these lofty sentiments discovered that high-mindedness didn’t protect them from the harsh realities of running a business.

Adam Neumann stepped down as chief executive of WeWork after a botched attempt to take the company public. Devin Wenig left his role as chief of eBay after the company’s board grew impatient with poor performance. And Herbert Diess, the chief executive of Volkswagen, was charged with stock market manipulation and misleading investors. Mr. Diess remains in his job, but all week, smartphone push alerts seemed to ping with the news of executive heads rolling.

Those three executives joined the recently departed chiefs of Juul, Nissan, comScore and HSBC as reminders that at the end of the trading day, corporate chieftains are there to make shareholders money.

That seemingly rudimentary premise — that chief executives are responsible for delivering strong financial returns — has been easy to overlook in recent years. As the business world has engaged more in social and political debates, some C.E.O.s have come to believe that it is no longer enough to simply run a profit and loss statement. Instead, they are trying to inspire employees, combat climate change and take stands on moral issues, too.

“We’re in a world where we need leaders to improve the state of the world, not just the state of the bottom line,” Marc Benioff, the co-chief executive of Salesforce, said in an interview. “Every C.E.O. has this on their mind right now.”

Mr. Benioff was at the vanguard of this shift. In 2015, Salesforce was among the most vocal of the companies protesting a proposed Indiana law that he and other opponents said would permit discrimination against gay people. Since then, brands have begun taking stands more often. Soon after President Trump took office, Google, Microsoft and others protested his immigration policies. That summer, a group of chief executives who had agreed to advise the president disbanded their councils after Mr. Trump blamed “many sides” for the white supremacist violence in Charlottesville, Va.

Last month, the Business Roundtable, a group of influential chief executives, sought to redefine the role of business in society. And after a series of mass shootings, Walmart stepped into the national gun debate by limiting ammunition sales and calling on Congress to increase background checks.

“Companies, and by extension their management teams and their C.E.O.s, have a moral obligation to try to be a force for good,” Dan Schulman, the chief executive of PayPal, recently said. “I don’t think there’s any way that we can shirk that responsibility, and I don’t think there’s any way to fully stand away from the culture wars around us.”

There’s a catch, of course. Before C.E.O.s can change the world, they need to satisfy investors. “You have to deliver performance in your business,” Mr. Benioff said. “That’s table stakes.”

ImageWestlake Legal Group 28CEOS-neumann-articleLarge The Week the C.E.O.s Got Smacked WeWork Companies Inc Wenig, Devin N Volkswagen AG Visa Inc Peloton Neumann, Adam Juul Labs Inc Initial Public Offerings Galloway, Scott Etsy Inc Crane, David W (1959- ) Corporate Social Responsibility Boards of Directors Appointments and Executive Changes

Adam Neumann stepped down as C.E.O. of WeWork after a botched attempt to take the company public.CreditCole Wilson for The New York Times

That’s been easier to do of late. With the stock markets up sharply in recent years and venture capital flowing freely, some companies with mediocre — or even dismal — performance have been able to get by with little more than a good narrative.

But today, as the stock market wobbles and steeply valued start-ups face discerning public investors for the first time, not every company with an inspirational story is standing up to scrutiny.

Mr. Neumann found that out swiftly, when WeWork’s I.P.O. discussions with investors indicated the company might be valued at just $15 billion — a staggering erasure of value since January, when the co-working venture was said to be worth $47 billion. WeWork, known formally as the We Company, became something of a laughingstock in investing circles after issuing a prospectus that began, “We dedicate this to the energy of we — greater than any one of us, but inside all of us.”

“People’s radar for yoga babble is on high alert right now,” said Scott Galloway, a marketing professor at New York University.

And what is yoga babble? “It’s as if my yoga instructor went into investor relations,” Mr. Galloway said.

Devin Wenig left his role as chief executive of eBay after the company’s board grew impatient with poor performance.CreditJacob Kepler/Bloomberg

Another company that is testing the public market’s appetite for aspirational rhetoric and nonexistent profits is Peloton, which makes an internet-connected exercise bike and other gear.

Peloton bills itself as “an innovation company transforming the lives of people around the world.” The hope is that investors will focus more on that mission statement, and less on the fact that it lost $196 million in the last full year.

So far, it’s not working. Peloton started trading on Thursday and promptly fell 11 percent. Wall Street, it seems, is becoming less susceptible to the tech industry’s reality distortion field.

“Peloton is talking about delivering happiness and connecting people,” Mr. Galloway said. “No: You sell exercise equipment.”

But Peloton is hardly alone. Many of the most prominent technology companies today position themselves not so much as best-in-class operators in their category, but as virtual revolutions unto themselves.

Dropbox, an online storage company, says its mission is to “unleash the world’s creative energy by designing a more enlightened way of working.” Lyft, the ride-sharing app, says it aims to “improve people’s lives with the world’s best transportation.” Uber claims to “ignite opportunity by setting the world in motion.”

Spotify says it aims to “unlock the potential of human creativity.” Not to be outdone, Snap says that its social media app will “improve the way people live and communicate.”

Since going public over the last two years, the stock in all five of those companies has plummeted.

“Companies need a mission statement that is concrete enough to describe what they will do, as well as what they won’t do,” said Brad Smith, Microsoft’s president and chief legal officer. “If you promise too much, you risk having something that’s meaningless.”

The fact that utopian mission statements are now so commonplace stems, at least in part, from the fact that company founders are lionized, no matter their antics.

A generation ago, many founders were regarded as brilliant if crazy savants — product geniuses who weren’t to be trusted with operating a real company. The prevailing wisdom was that once a company was mature or went public, a seasoned executive should be brought in to run the show.

That changed after the success of companies like Google, Facebook and Amazon, all of which had founders who managed to turn their creations into world-eating behemoths. Now, tech-company founders are practically untouchable.

“Founders are now assigned this Christ-like association,” Mr. Galloway said. He added that this is not just a question of perception — tech founders often possess powerful voting rights that secure their control of the companies. “They’re given way too much rope to hang themselves and everyone around them.”

Witness Uber, Theranos and WeWork. Their charismatic founders raised billions of dollars and won over A-list investors before crumbling under pressure.

“We’re in a world where we need leaders to improve the state of the world, not just state of the bottom line,” Marc Benioff said.CreditEric Risberg/Associated Press

This shouldn’t have been hard to predict. Though several big tech companies have been similarly idealistic — think Google (“don’t be evil”) and Facebook (“make the world more open and connected”) — they are also wildly profitable.

When, on the other hand, aspirational rhetoric is paired with middling financial performance, there is rarely a happy ending.

The online marketplace Etsy went public in 2015. A quirky company from the outset, Etsy was helmed by Chad Dickerson, a beloved leader who prioritized generous employee benefits and earned the company B-Corp status, signifying a high level of social and environmental responsibility.

“I thought a lot about what, in addition to building shareholder value, a company can contribute to the world,” Mr. Dickerson said.

He didn’t have long to ruminate on such matters. Once Etsy was public, its stock started to fall. Soon, private equity firms were circling and activist investors were agitating for change. The Etsy board, which had been supportive of Mr. Dickerson’s agenda until then, reversed course, and he was unceremoniously fired.

“It’s not Milton Friedman’s 1970s shareholder value world anymore,” Mr. Dickerson said. “Except when it is.”

Last year, Nike made Colin Kaepernick the face of its Just Do It 30th anniversary campaign. “Believe in something. Even if it means sacrificing everything,” the ad read.

Mr. Kaepernick, the former N.F.L. quarterback who became a social justice icon for kneeling during the national anthem to protest police brutality, was a risky choice. Some customers called for a boycott and burned their shoes. Mr. Trump went after the company on Twitter, writing, “What was Nike thinking?” In the days after Nike unveiled its partnership with Mr. Kaepernick, the stock fell, losing $3.3 billion in market value.

For a moment, it looked like Nike had made a real sacrifice, putting its values on the line and paying for it with real money.

Yet after the initial furor died down, the stock rebounded. Online sales at Nike jumped 31 percent in the days after the Kaepernick ad debuted. Analysts upgraded the stock, which reached new highs.

It turns out Nike hadn’t sacrificed anything. One of the great marketers of the last 50 years, the company clearly knew what it was doing. Signing Mr. Kaepernick was a marketing tactic, and in the year since, it has done virtually nothing more with the star.

“There’s a great risk of this type of language being employed in a cyclical and opportunistic way,” Mr. Dickerson said. “I worry that these displays of conviction might actually be a lack of conviction, that it’s actually just based on market analytics.”

Sometimes efforts to support a higher purpose fail doubly, coming off as both opportunistic and ham-handed.

Johnson & Johnson introduced a Listerine mouthwash bottle sheathed in a rainbow flag to celebrate gay pride, drawing ridicule from the L.G.B.T.Q. community. Starbucks has clumsily waded into race relations more than once.

McDonald’s turned its golden arches logo upside down for International Women’s Day last year, “in honor of the extraordinary accomplishments of women everywhere and especially in our restaurants.” Online critics pounced, saying that if the fast food chain valued women so much, it should give them better pay and benefits.

“All of these companies finding their woke values is not a function of their principles,” Mr. Galloway said. “It’s a function of shareholder value.”

And then there are the companies that have decided that it is better to say nothing at all.

Blackstone, the private equity firm, did not sign on to the Business Roundtable statement.

Indra Nooyi, the former chief executive of PepsiCo, said she was willing to engage in third-rail debates only if they were relevant to the company’s broader mission. “Not all companies need to speak up about everything,” she said. “If the lofty rhetoric is not linked inextricably to the core business, you should question it.”

And Visa, the credit card processor, has assiduously stayed out of the social debates roiling the business world. “Our job is not to be dividing the country,” Al Kelly, Visa’s chief executive, said recently in an interview. “Our job is not to lecture people about what to do or what to buy. And the minute you give on guns, then what about soda? What about fur coats? What about birth control pills? What about? What about? What about?”

Mr. Kelly has reason to be worried. After all, when C.E.O.s do push for real, meaningful change, the judgment can be swift and harsh.

In 2015, David Crane was chief executive of NRG, one of the country’s largest power producers — and one of its largest polluters. Mr. Crane believed that NRG had a moral and business imperative to transition to renewable sources of power generation.

His vision for a clean energy company made Mr. Crane the talk of the industry, and animated idealistic employees. But when Mr. Crane asked the board to endorse a plan for NRG to be carbon neutral by 2040, they balked. One board member took him aside and said, “Are you crazy? You can’t say that.”

That director was right. When it became clear to investors that Mr. Crane was serious about his plans, NRG stock started to fall, and Mr. Crane was out.

In the end, it didn’t matter that Mr. Crane believed he was on the right side of history, or that his staff was behind him. “The fact that employees liked it was overwhelmed by the fact that the board didn’t like it, and investors didn’t care,” he said. (Mr. Crane, though, may have simply been ahead of his time. Since he lost his job, the cost of renewable energy has continued to decline, and several large utilities have pledged to become carbon neutral.)

Mr. Dickerson can relate. For all his efforts building Etsy’s culture and advancing environmental causes, his investors just weren’t that interested.

“At the end of the day, it’s still mostly about stock price if you’re a public company C.E.O.,” Mr. Dickerson said. “When the rubber meets the road and you’re sitting in the room with investors, they are looking at spreadsheets and asking you about what the numbers are going to look like.”

It is a lesson that many start-ups are just starting to learn. WeWork, Uber, Lyft, Spotify, Snap and Dropbox all had high hopes of becoming public market darlings. Instead, they’ve become dogs.

To some, the weak public appetite for idealistic, money-losing companies is a failure of imagination. Even on his way out, Mr. Neumann, who will keep a position as nonexecutive chairman, said his belief in the transformative power of WeWork had never been more intense.

“We have an opportunity to expand our global business to more people than ever before,” he said. “I have never believed in our business, our people and our future more.”

For others, however, the tepid response from public investors is a refreshing sign of good judgment.

“The market is prone to fits of sanity,” Mr. Galloway said. “We’re having that right now.”

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