Nissan Chairman Carlos Ghosn arrested for under-reporting income

Gladys Abbott
November 20, 2018

YOKOHAMA, Japan Nissan Motor's chairman Carlos Ghosn has been arrested and will be dismissed for alleged under-reporting of his income and misuse of company funds, the company said 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.

That's right... Carlos Ghosn is under investigation by both Nissan and Tokyo prosecutors for what they have called "significant acts of misconduct". With Ghosn now likely removed from Nissan and also potentially from Renault, we are likely to see separate CEOs with separate objectives, making the probably of the merger more distant "with the evaporation of that hope reflected in today's sudden devaluation".

Renault said its board would meet "shortly", after Ghosn was detained over allegations including underreporting his income.

It was a stunning development that will pose a daunting test for the Nissan-Renault-Mitsubishi alliance, one of the world's biggest automakers.

Nissan's official statement said that, based on a whistleblower report, "Nissan Motor Co Ltd (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company's representative director and chairman Carlos Ghosn and representative director Greg Kelly".

Ghosn, 64, is described by the Guardian as "one of the world's most powerful auto bosses" who "has managed the seemingly impossible job of running one carmaker in Japan, and another in France".

While there could be some scrutiny of the relationships between the companies, they're so intertwined now that cutting them apart would be hard, said Kelley Blue Book analyst Michelle Krebs.

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. A record 140 million Nissan shares were traded on Tuesday, accounting for nearly 6pc of all trading on the Tokyo exchange's main board. France owns a 15 percent stake in Renault.

Renault shares PLUNGE as chief Carlos Ghosn 'faces arrest in Japan'

Mr Saikawa said he would propose at a board meeting on Thursday to remove Mr Ghosn.

Kelly was also arrested on November 19 on suspicion of conspiring with Ghosn to under-report the Nissan chairman's income on annual securities reports.

Nissan confirmed the subject of the investigation Monday and said it was cooperating with prosecutors.

Neither Mr Ghosn or Mr Kelly have made any public comment on the reports. Mr Ghosn remained in that post until a year ago.

A Brazilian-born French national, Ghosn was educated in Lebanon and in Paris before spending 18 years at tire maker Michelin, rising up the ranks to run its North American division.

Ghosn was an unusual business leader because he served as chief executive of Nissan and also of Renault starting in 2005.

Ousting Ghosn will pose questions about an alliance that he personally shaped and had pledged to consolidate with a deeper tie-up, before eventually stepping back from its operational leadership.

As auto markets in western Europe and Japan struggled, Ghosn championed a cheap car for the masses in emerging markets and embraced the electric vehicle before many others.

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