Nissan chairman held on financial misconduct charges, to be fired

Roman Schwartz
November 20, 2018

Ghosn, 64, and Representative Director Greg Kelly had been officially reporting lower compensation "to reduce the disclosed amount", Nissan said in a statement.

Chairman Carlos Ghosn have expanded their search for hidden income to include expensive homes bought overseas by subsidiaries of the Japanese automaker, sources said.

Nissan Motor Co.'s high-flying chairman Carlos Ghosn was arrested overnight and will be dismissed after he allegedly under-reported his income and engaged in other misconduct, the company said.

Prosecutors confirmed Ghosn had conspired with Kelly to report income of ¥4.9 billion (US$44.5 million) over five years when his actual income for that period had been almost ¥10 billion.

Nissan says that based on a whistleblower report, an internal investigation was conducted over the past several months into the actions of the two men.

The statement came after local media reported that Ghosn was to be questioned on Monday night by prosecutors in Tokyo and was to be arrested on violation of financial regulations including misreporting his income.

Ghosn was appointed CEO of Nissan in 2001 following his successful efforts to restructure the French auto giant Renault, and transitioned previous year into a role as board chairman.

The Nissan-Renault-Mitsubishi group is among the biggest auto alliances in the world, selling about 10 million vehicles a year. The two executives were accused of conspiring to underreport Ghosn's salary for a number of years and using company assets for personal purposes. Of French, Brazilian and Lebanese background, he lives in both Japan and France, where he earlier turned Renault around, making it a global player.

Japanese government officials scrambled to insist that the alliance of Nissan, Mitsubishi and Renault that Ghosn oversaw would not be affected by his astonishing downfall.

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At a press conference on Monday, the Nissan CEO said he felt "despair, indignation, and resentment". The automaker also reports that it has been cooperating fully with Japanese investigators throughout the investigation. Kelly was also arrested.

"This is an act that can not be tolerated by the company", he said.

"Nissan's lengthy over-reliance on Mr. Ghosn's expertise could be described as a negative".

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.

"Carlos Ghosn is no longer in a position capable of leading Renault", Le Maire told France Info radio.

Mr Saikawa said Nissan would now try to "stabilise the situation, and normalise day-to-day operations" for staff and business partners.

Ghosn added Mitsubishi to the alliance two years ago after the tiny automaker was caught in a gas-mileage cheating scandal.

Ghosn is one of the highest-paid executives, if not the highest-paid, in Japan, but is believed to have under-reported his incomes over the last couple of years by millions of dollars and used corporate assets for personal use.

The manager, who declined to be identified as he was not permitted to speak to the media, said he was also anxious Ghosn's departure could hit sales as fans of the charismatic leader abandon the company and corporate customers bound by compliance rules put orders on hold due to the scandal.

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