Sat | Dec 15, 2018

Nissan chairman arrested in probe of financial misconduct

Published:Tuesday | November 20, 2018 | 12:00 AM
Renault and Nissan Motor Company's chairman Carlos Ghosn.

Nissan Chairman Carlos Ghosn, who became one of the auto industry's most powerful executives by engineering a turnaround at the Japanese manufacturer, was arrested Monday and will be fired for allegedly under-reporting his income and misusing company funds, the automaker said.

The scandal reverberated across the globe and abruptly threw into question Ghosn's future as leader of the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million cars last year, more than any other manufacturer.

Nissan CEO Hiroto Saikawa said Ghosn was taken into custody after being questioned by prosecutors upon arriving in Japan earlier in the day. Ghosn is of French, Brazilian and Lebanese background and lives in both France and Japan.

Nissan said Ghosn, 64, and another senior executive, Greg Kelly, were accused of offences involving millions of dollars that were discovered during a months-long investigation set off by a whistle-blower. Kelly was also arrested.

"Beyond being sorry, I feel great disappointment, frustration, despair, indignation and resentment," Saikawa said, apologising for a full seven minutes at the outset of a news conference.

Yokohama-based Nissan Motor said it is cooperating with prosecutors in their investigation.

 

VOTE ON DISMISSAL

 

Saikawa said Nissan's board will vote Thursday on dismissing Ghosn and Kelly, whom he described as the mastermind of the alleged abuses.

"This is an act that cannot be tolerated by the company," he said. "This is serious misconduct."

Saikawa said three major types of misconduct were found: under-reporting income to financial authorities, using investment funds for personal gain, and illicit use of company expenses.

He said that because of the continuing investigation, he could not disclose many details. But he promised to tighten internal controls, saying the problems may have happened because too much power was concentrated in one person.

Ghosn officially still leads the Renault-Nissan-Mitsubishi alliance as CEO and chairman. But experts said it is unlikely he will be able to stay on there or at Renault, where he is also CEO. Renault said its board will hold an emergency meeting soon.

The companies in the alliance own parts of each other and share investments in new technologies, among other things. Renault owns 43 per cent of Nissan, which owns 15 per cent of Renault and 34 per cent of Mitsubishi.

Ghosn was at Nissan for 19 years and signed a contract this year that would have run through to 2022. His compensation, high by Japanese standards, has been a source of controversy over the years.

According to NHK and the Kyodo News Service, Nissan paid Ghosn nearly •10 billion (US$89 million) over five years through to March 2015, including salary and other income, but he reported receiving only about half that amount.

AP