Nissan chairman arrested in Japan for financial misconduct

Dwayne Harmon
November 20, 2018

Nissan explained that, for many years, Ghosn and representative director Greg Kelly under-reported their respective income in reports filed to the Tokyo Stock Exchange securities.

The automaker has also confirmed that "numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly's deep involvement has also been confirmed".

The Tokyo prosecutor's office had no comment on reports it was questioning Ghosn, who also heads an alliance of Renault, Nissan and Mitsubishi.

Karen Brenner, clinical professor of business at New York University Stern School of Business, says the Ghosn situation shows that "boards have to be really alert, especially in good times".

He is Chairman and chief executive of the Renault-Nissan Alliance, one of the world's largest automotive groups.

In the latest furore over his finances, Japan's Nissan Motor Co Ltd said on Monday it planned to oust Ghosn as chairman after alleging he had made personal use of company assets, among other acts of suspected misconduct.

Ghosn, 64, was born in Brazil of Lebanese descent, and educated at elite colleges in France, where he started in industry at tyremaker Michelin.

"Nissan, Renault and Mitsubishi all see merits of the alliance, which is formed in a quite complicated way with overlaps of various management members", he said.

Saikawa reiterated Nissan's commitment to the venture, while a Renault statement expressed "dedication to the defense of Renault's interest in the alliance".

Ghosn's alleged improprieties also raise questions over governance at the alliance in which the three partners' boards are all chaired by a single executive. "I have never tolerated any wavering from that principle, I will never accept any interference", he once said.

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Regardless of the tumultuous road ahead, Sugiura said Nissan's sales are unlikely to be damaged by the Ghosn news.

The stunning announcement about one of the global auto industry's highest-profile leaders slammed the stocks of Nissan (NSANY) and Renault (RNSDF), two of the carmakers that Ghosn leads.

When the top of Renault is concurrently serving as the top of Nissan with 43 percent of shares, one person has too much authority and that was the problem.

Known as "Le Cost Killer", Ghosn is credited with reviving Nissan and has remained popular despite the massive job cuts that he brought and recent controversy over his lucrative pay package.

Then came Carlos Ghosn, a Renault executive who helped to orchestrate an unprecedented transcontinental alliance, combining parts of both companies to share engineering and technology costs.

Nissan CEO Hiroto Saikawa reportedly will meet with the Nissan board Thursday to propose Ghosn and Kelly's ouster.

Nissan accusations may make it impossible for Ghosn to continue in role as Renault CEO.

Together, Renault, Nissan and Mitsubishi employ more than 470,000 people in almost 200 countries, according to the alliance's website.

Ghosn served as Nissan's chief executive from 2001 until April 2017, becoming chief executive of Renault in 2005, leading the two major automakers simultaneously.

The infractions are said to have occurred "over many years".

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