Nissan chairman Carlos Ghosn, one of the world’s best-known businessmen, was reportedly under arrest in Japan on Monday in a shocking fall from grace linked to allegations of financial misconduct.
Japanese media said Ghosn had been arrested after being questioned by Japanese prosecutors for various improprieties including under-reporting his income.
Nissan said it had been investigating its chairman for months and would now move to fire him.
The news sent shockwaves through the auto industry, where Ghosn is a towering figure who is credited with turning around several major manufacturers and leads an alliance of Nissan, Renault and Mitsubishi.
French President Emmanuel Macron said Paris would be “extremely vigilant” about Renault’s stability after Ghosn’s arrest.
In a statement, Nissan said it had begun investigating Ghosn and its Representative Director Greg Kelly after receiving a whistleblower report and had uncovered misconduct going back several years.
The Tokyo prosecutor’s office had no comment on the reports about Ghosn. Mitsubishi and Renault also declined comment.
“The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation,” Nissan said.
“Also, in regards to Ghosn, 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 company said it had provided information to Japanese prosecutors and would recommend that the board of directors “promptly remove Ghosn from his positions” along with Kelly.
The astonishing news first emerged Monday evening, when the Asahi Shimbun newspaper reported Ghosn was being questioned by prosecutors and was likely to face arrest.
Japanese media later said Tokyo prosecutors were raiding Nissan’s headquarters in the city of Yokohama.
The Kyodo news agency said Ghosn was suspected of understating his income by 5 billion yen, or around $44 million, over five years from 2011. It also reported that Kelly had been arrested.
Renault shares plunged more than 12 percent in late morning trading in Paris on the news, which emerged after the end of the Tokyo session.
– ‘Man of charisma’ –
Ghosn’s arrest would “rock the Renault-Nissan-Mitsubishi alliance as he is the keystone of the alliance,” said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.
“He is the man of charisma for the alliance. It is likely to have a negative impact on its brand image,” he told AFP.
“It’s the future of the alliance that seems in play, because the thing holding it together seemed to be Ghosn himself,” said Daniel Larrouturou, a senior executive at investment firm Diamant bleu Gestion.
Nicknamed Le Cost Killer, Brazil-born Ghosn, 64, is known for overhauling Renault and Nissan starting in the nineties.
Renault came to the rescue of the then-ailing Japanese automaker in 1999 and parachuted in Ghosn, who set about slashing costs and jobs in a huge corporate overhaul.
In 2016, Ghosn also took charge at troubled Mitsubishi after Nissan threw it a lifeline, buying a one-third stake for about $2.2 billion as it wrestled with a mileage-cheating scandal that hammered sales.
He is credited with saving Nissan from bankruptcy through a series of hardnosed measures including closing plants and restructuring, and he has instant name recognition in Japan, where he is a rare, high profile foreign executive.
Ghosn has been regarded as the glue holding together the sprawling alliance of Nissan, Renault and Mitsubishi, and questions have been raised in the past about how his eventual departure might affect the coalition.
But he has also faced opposition, including over his pay, with his compensation package Renault prompting a spat with shareholders and criticism from France’s then-economy minister Emmanuel Macron.
Bloomberg reported Ghosn took home $6.5 million in the most recent fiscal year from Nissan, in addition to $8.5 million from Renault and about $2 million from Mitsubishi in the latest period.
Ghosn has not yet commented on the allegations. Nissan is expected to hold a press conference later today.