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Nissan ousts chairman and Renault CEO Ghosn on financial violations

20 November, 2018, 19:49 | Author: Lawrence Cooper
  • Renault shares PLUNGE as chief Carlos Ghosn 'faces arrest in Japan'

Tokyo prosecutors confirmed in a statement on Tuesday that they had arrested Ghosn the previous day over allegations of financial misconduct.

Ghosn's slow retreat from his roles at each company-including stepping down as Nissan's CEO a year ago and suggesting he may step down from his post as CEO of Renault before the scheduled end of his term in 2022-have sparked rumors that he wasn't on board with plans for further integration and might be thinking of leaving the alliance anyway.

The extent of the misconduct allegations, or the arrest charges, were unclear as of Monday morning.

A press release by the prosecutor's office in Tokyo said Mr Ghosn and Mr Kelly collaborated to under-report Mr Ghosn's income as 4.99 billion yen even though it actually was nearly 10 billion yen, submitting falsified securities statements to the regional finance bureau.

Ghosn had been criticized for his salary of about $9 million ー exorbitant by Japanese standards.

"Nissan's Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director". A second Nissan executive, Greg Kelly, was also suspected of collaborating with him.

If the misconduct continued for years, as Saikawa said, analysts question how this could have passed undetected for so long, unless internal auditors and senior management turned a blind eye.

Ghosn's exact whereabouts are still unconfirmed, and he can be held in custody for up to 23 days without being charged under Japanese law.

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Companies in the alliance own parts of each other and share investments in new technologies, among other things. Ghosn is accused of underplaying his compensation in Tokyo Stock Exchange securities reports, in addition to using company assets for personal use.

Prosecutors said on Tuesday that they were holding Mr Ghosn for allegedly collaborating to falsify securities statements and under report Mr Ghosn's income. Renault has more than a 43-percent fully voting stake in Nissan, while Nissan has a 15-percent non-voting stake in Renault. Ghosn was reportedly arrested by Japanese authorities Monday.

Nissan did not comment on the scope of the alleged misdealing, but other Japanese news agencies reported that Ghosn underreported his income by $44.3 million (5 billion yen) over five years.

He is credited with saving Nissan from bankruptcy through measures including closing plants and restructuring, and he has instant name recognition in Japan, where he is a rare high-profile foreign executive.

He served as Nissan's chief executive from 2001 until April 2017, becoming chief executive of Renault in 2005, leading the two major automakers simultaneously. In 2016, he also became chairman of Mitsubishi Motors, another one of Japan's large carmakers.

Renault shares plunged more than 13 percent on the shock news.

"I have to say that this is a dark side of the Ghosn era which lasted for a long time", he said, adding he was still debating whether Mr Ghosn was "a charismatic figure or a tyrant".

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