Disagreements, divorce and downfall.
Nissan did not like having so little control over its increasingly significant UK business and found Botnar’s forceful style of negotiation distasteful. In 1990 the Japanese company offered to buy Botnar out, or at least take a stake in Nissan UK, but Botnar demurred, determined to retain full control over the franchise. To this end, he refused to renew contracts with the independent dealers that had been key to the company’s early sales growth and began replacing them with his own dealerships.
These dealerships, owned by a Nissan UK subsidiary company, the Automotive Finance Group, were large and aggressively managed, with onerous sales targets. Botnar showed little patience with any dealership manager who failed to achieve these targets. They were radically different from the friendly local dealerships they had replaced.
Botnar’s disloyalty to the independent dealerships and his aggressive business practices were viewed with distaste by Nissan senior executives as it ran counter to the cultural norms of the company. Nissan also increasingly disliked Botnar’s pile ‘em high, sell ‘em cheap approach to marketing, believing that it was undermining buyers’ perception of what the company believed was an increasingly sophisticated and class-competitive range of cars.
The difference in approach came to a head when the Bluebird was replaced by the Primera in September 1990. The new car was a generational leap forward in terms of engineering, styling, quality and dynamics. The automotive press compared it favourably to the Peugeot 405, regarded as the best handling D-segment saloon at that time. Nissan was naturally delighted with the Primera’s reception and instructed Botnar that the car was to be marketed on quality and not discounted. A stand-off ensued, which made the UK launch of the Primera into, at best, a non-event and, at worst, a farce. Consequently, initial UK sales were derisory, fewer than 2,000 in the first three months, and Nissan was furious.
In December 1990, Botnar held a party at London’s Savoy Hotel to celebrate the 20th anniversary of Nissan UK Ltd. He also announced that the company would be donating £8 million to the Great Ormond Street Hospital for Children to mark the anniversary. The celebrations would be short-lived, however. Pushed to breaking point by Botnar’s behaviour, Nissan issued a formal termination of the Nissan UK franchise in the same month, giving the company one year’s notice. Botnar responded by suing for breach of contract, but an existential threat was about to intervene.
In the early morning of Wednesday, 26th June 1991, 135 police officers and investigators from the UK Inland Revenue raided thirteen locations related to Nissan UK, including the company’s headquarters in Worthing, East Sussex and the homes of Octav Botnar, Michael Hunt, the company’s Managing Director(1), and Frank Shannon, its former Finance Director and Company Secretary.
The investigators removed vanloads of documents from the premises. They suspected that Nissan UK had been using overseas intermediary companies to depress its reported UK profits over a number of years, hence evading corporation tax. Hunt and Shannon were later arrested and charged with tax fraud. Botnar would also have been arrested, but he had fled to Switzerland and refused to return to face charges.
Shannon admitted his part in the alleged fraud and Hunt, who pleaded not guilty, went on trial in June 1993 at Southwark Crown Court in London. He refused to take the stand to give evidence. At the trial, the mechanism for the fraud was explained to the Jury. In 1982, Nissan UK had appointed Scansiris, a Norwegian company run by Tore Thorsen, as its shipping agent for the imported cars. Scansiris contracted with Nissan Motor Car Carrier (NMCC) Nissan’s in-house transport division, for the delivery of the cars at NMCC’s normal commercial rates.
Scansiris then fraudulently invoiced Nissan UK for significantly inflated sums for the cars’ transport. The fraudulent invoices were for around 40% over what NMCC was charging Scansiris, roughly averaging around £115 per car. This was a relatively small amount and unlikely to attract attention, but was multiplied many thousands of times every year. Payment of these inflated invoices depressed Nissan UK’s taxable profits. The excess sums paid were laundered through a network of secret Swiss bank accounts before ultimately being paid out to those involved in the fraud. The total value of the fraud was estimated at around £200 million and the loss to the UK treasury was put at around £56 million initially, or £92 million including accrued interest to the date of the trial.
Hunt was found guilty by a majority 10:2 verdict of this charge. He was cleared of a second charge relating to a Dutch shipping agent that preceded Scansiris, which had allegedly operated in the same fraudulent manner from 1975 to 1982. Hunt was jailed for eight years, Shannon for three years, and both were disbarred from holding company directorships for ten years. In his evidence, Shannon claimed that he only went along with the fraud because of a “reign of terror” by the imperious and autocratic Botnar. Thorsen was also arrested and charged for his part in the fraud but fled to Norway and refused to participate, even as a witness in the trial.
Botnar never returned to face charges(2), citing his ill-health and continued to protest his innocence. He nevertheless paid the Inland Revenue £59 million in settlement, but then launched a lawsuit against the authority for malicious prosecution and damages. Botnar was suffering from stomach cancer and died at the age of 84 on 11thJuly 1998. His legal case was never heard.
Octav Botnar’s legacy is a decidedly uneven one. He built Nissan up to be the most successful importer of cars in the UK and owned a network of dealerships across the country that numbered over 200 at its peak. Botnar certainly played an important role in Nissan’s decision to locate its first European manufacturing base in the UK. After thirty-five years, the Washington plant remains a major employer and exporter, with around 7,000 employees and an annual production of around 400,000 vehicles. The plant celebrated the production of its 10 millionth vehicle in June 2019.
The success of the Nissan operation was undoubtedly a factor in encouraging other Japanese automakers to choose the UK as their European base; Toyota in Burnaston, Derbyshire and Honda in Swindon(3), Wiltshire, both opened in 1989.
Botnar is also reported to have donated over £100 million to charitable causes over his lifetime, but it can reasonably be argued that the money was not his to give, given that it was allegedly the gain from one of the largest ever corporate and tax frauds in UK history. What motivated Botnar allegedly to orchestrate such a fraud when he clearly had the talent and skills to run a successful company legitimately will forever remain a mystery.
(1) Hunt was, effectively, Botnar’s deputy and the company’s second-in-command. He held a 14% shareholding in Nissan UK Ltd.
(2) There was no extradition treaty between the UK and Switzerland covering cases of alleged financial fraud.
(3) Sadly, Honda’s Swindon plant was closed down in July 2021 with the loss of around 3,400 jobs because of the company’s declining European sales.
29 thoughts on “The Bridgehead Falls (Part Three)”
The Botnar case was completely unknown to me. I’m sure it must have made headlines outside the UK at the time, but it didn’t stuck with me.
I’m awaere of some studies in the field of psychology that indicate that generally speaking the well off tend to be more selfish. But there will be studies that find a different conclusion too, I reckon. I’m by no means an expert in the field.
As for the Primera P10: My uncle had one. He’s not into cars at all and I don’t think he realized how good that car was. I wasn’t really impressed at the time when he got it, but I drove it for a bit and I instantly loved it. What a fantastic combination of steering feel, comfort, road holding and gear change. Everything just worked so well in that car. I wish there was a car that felt this good today with quiet understated styling. I haven’t driven the current Mazda 3, but that’s probably a car I would really like as well.
The first generation Primera was, in its own quiet way, a revolutionary car. It was Nissan’s proof that their UK-made products could compete with the best Europe had to offer and was made to a frankly astonishing level of quality; in my youth I went on a tour of the factory in Sunderland and was deeply impressed. My father had several Primeras and they were as near to perfect (for a given product type) as, I think, is humanly possible.
Terrific series of articles Daniel; I well remember the news stories about the Botnar fraud and the struggle around Nissan sales in the UK.
Much thanks, Daniel, for this intriguing serial.
There have been a number of Datsuns (including my
wife’s 2000 Sports, and my revered boyracerized 510)
and Nissans in my extended family, and one brother
has a very faithful Maxima. But I need to ask about your
footnote number 3. Our Civic hatch was built in Swindon,
and I also was sad to hear of the closure and the loss of so
many jobs. You attribute it to declining sales, but at the time
it was also blamed on the chaos of Brexit, and the uncertainly
of materials supply that brought on for car production.
Good morning Lorender. Brexit may well have been a factor in the decision, but Honda’s European sales and market share have declined steadily from 158,983 and 1.06% in 2016 to 81,247 and 0.68% in 2020. This was, I believe, the main (or real) reason for the company’s retrenchment.
The Primera P10 was really well built and very reliable, a friend of mine (who curiously has a Bluebird Turbo GTI nowadays) owned a GT a few years ago. The car ran faultless and despite the firm suspension, there wasn´t a single creak or noise inside. My 1997 P11 GT was great, too.
However I read that a certain number of P10s developed a fault in the gearbox, fifth gear “popping out” every now and then. I suppose it was a design failure.
I recall that my uncle’s P10 had a faulty wire connected to the alternator. It left him stranded at the roadside, somewhere in a cold and wet night at 4 am If I remember correctly. It was repaired under warranty. But still, great car.
Thanks for that, Daniel. Honda’s decline in sales,
and in their offerings for the UK market, has been
commented on in DTW I seem to remember. It’s the
same here in Australia, very frustrating, they’re
capable of much more.
In 2009, Honda had a market share of 2.65% on the Dutch market. Now that’s down to 0,25%. And if that isn’t bad enough the market itself is declining as well.
Honda must be interested in emulating Subaru and Mitsubishi. Given the high quality of the product their sales fall is peculiar. Two problems stand out. The Civic is not a Civic any more. I am not sure what to make of it. And the Accord stopped being competitive at least 10 years ago. I had a look at the UK range. One finds a Jazz (I have only seen one of the current itetation since launch and was not even aware it existed still), the EV (nice and specialised), the CR-V hybrid, the Civic 5-door, and the H-RV. It´s a patchy sort of line-up and lacks a bigger flagship. The CUV boom and the decline of the Focus class (I assum it is so) has made making a sensible and comprehensible line-up so much harder.
The Honda E looks great, but is let down by range and charging. The Mini Electric, BMW i3, Peugeot e-208 and Fiat 500e are all better in that respect. The Mini is an electrified ICE car and wasn’t conceived as a BEV from the get go. The i3 is much older, but still beats the Honda. I’ve only seen the Honda E once on our roads.
“In his evidence, [Frank] Shannon claimed that he only went along with the fraud because of a “reign of terror” by the imperious and autocratic Botnar.”
That reminds me a story Bob Lutz wrote in Road&Track about a similar kind of management implanted by Ferdinand Piëch in VW, and how he got the “best in class” body shutlines in the Golf IV.
I don´t know if that story is true, but behind every despotic boss there are often employees doing suspect actions by fear of retaliations or being fired…
Being fired isn´t much of a reason to break the law, I´d think we all agree. Fear of firing is a horrible mode of motivation too.
The P10 Primera made a big impression on me because there was an eGT version on the company fleet, which I drove a few times. Miserable at urban speeds, with inferior ergonomics to the Bluebird, it was breathtaking on an open road free of speed cameras. It struck me as having fragile trim, but this wasn’t an issue because it was swapped for a new one again after 12 months. Some time later I considered buying a used “cooking” version with my own money, but the 5 year old car I drove had enough issues to ensure I’ve always steered clear of Sunderland Nissans.
Two years ago I had a few minutes sitting inside a Primera from this period. It felt like Nissan´s take on the BMW 3-series of the same time but a little less finely wrought. It was however very convincing as a sports saloon and felt like one in terms of seating and relations to the controls. The last Primera turned into a totally different beast: striking design and very relaxed in the Citroen/Lancia mould.
This promotional video of the face-lifted version makes the BMW comparison, as well as with others in its segment. It seems that is was, objectively speaking, pretty good.
It was marketed in the US as an Infiniti priced alongside the 3-Series while Nissan offered the original Altima in the mass-market midsize class.
The P11…my GT was great fun to drive, although the P10 seemed a bit nicer to me.
GTs for the spanish market had a ridiculous badge in the rear and in the front wings that read “High Output Engine- Sport Tuned Suspension”. I don´t know what they were thinking of.
Furthermore, they aged badly.
That’s very a detailed and informative badge, b234r! 😁
We should organise a competition to find the most long-winded boot lid badge. Here’s a candidate:
Although it doesn’t (all) appear on the boot lid, there’s another model called the ‘Porsche Panamera Sport Turismo Turbo S E-Hybrid’
My colleagues always mocked the badges on my car when I had a CX Turbo…
There says “Mahindra Goa Turbo 2.5 GLX CRDe 4WD”.
It’s not on a badge, but still: Land Rover Range Rover Evoque 2.0 TD4 E-Capability 4×4 HSE Dynamic
Just thought of this one: Z28 CamaroIROC-Z 5.7 Tuned Port Injection
Hello Daniel. The Primera is a smooth, clear design. I saw one this week, white colour, very nice car. The dashboard is smooth and clear, the interior is very nice. I would like the nose to be a little more complex, but as it is designed echoes the styling of the car.
Indeed it was, gpant. The five-door hatchback version was, I think, a little heavy around the rear quarters, but the four-door was a very well balanced design:
The only serious mistake Nissan made was trying to pass it off in the US market as a ‘European’ Infiniti competitor to Audi, BMW and Mercedes-Benz. It was good, but not that good!
This Primera has a tidy look. What it is missing is just enough clarity to make the design trope emerge from the proportion and blizzard of engineering details. It is almost but not quite as homeopathically watered-down as an early Avensis. I suspect the design brief may have asked designers to subliminally suggest BMW 3-series and Audi 80. There´s nothing in the design that is distinctly Primera but suggestion of the 3 and a soupcon of 80. It´s still attractive yet also on the milquetoast side.
My only reservation about the Primera P10 saloon is the slightly too short rear door, exacerbated by the overly large fixed quarter window and narrow winding glass in the door. An extra 2 to 3″ (50-75mm) in wheelbase and the rear door would make it perfect (or, at least, perfectly generic!)
Daniel I agree, the rear door of the 5 door is large and the metal around it is too much. The 5 door has rear lighs that run vertically in oder to provide a wide opening, while in the 4 door they run horizontally, they give width and lowness to the car. I prefer the 4 door design. It is calm, cultivated and smooth. It is a late 80s design that balances between the 80s and 90s style. Here it was bought by families who are a little more old fashioned, and most of them sold were the 4 door versions. The 5 door versions were less frequent. The wheel design could have been better. I have confused memories of these cars, maybe the Mk1 and the Mk2 versions had similar style, and I can not tell them apart.
The P10 and P11 models are quite difficult to tell apart, but an easy way to distinguish them is that the P10 has a separate front grille between the headlamps but, on the P11, the bonnet turns down to fill the space and has two ‘nostrils’ in its leading edge. Also, the P11 hatchback has split horizontal tail lights, rather than the vertical lights on the P10! 🙂