Nissan Chairman Carlos Ghosn, one of the auto industry’s most high-profile executives, has been arrested in Japan after alleged financial violations. An initial investigation has revealed “significant acts of misconduct” over many years by him and another top executive.
The shocking news ripped through the powerful global alliance, after which stocks of Renault and Nissan fell significantly. Ghosn was serving as Chairman for both the companies.
According to Nissan, Ghosn and another senior executive, Greg Kelly, had been reporting compensation amounts in the Tokyo Stock Exchange securities report for many years, that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation.
“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.”
Hiroto Saikawa, the chief executive and only remaining survivor of the firm’s top three executives, will propose to the board that Ghosn and Kelly be dismissed, citing “clear violations of the duty of care as directors”.
Brazilian-born, of Lebanese descent and a French citizen, Carlos Ghosn, is a rare foreign top executive in Japan, and often regarded as one of the leading figures in the car industry, having turned Nissan around from near bankruptcy in the late 90s.
Ghosn was the key figure behind the alliance between Nissan and Renault in 1999, joined by Mitsubishi in 2016, creating a top-four car firm through a series of interlinked shareholdings. The alliance, which sold 10.6m cars in 2017, has more than 450,000 employees worldwide.
The arrest of Ghosn is adding to tougher times for Nissan in Japan as the automaker is already entwined in falsified emissions and fuel economy data scandal for multiple times within a year. Nissan is among several major Japanese companies (including Mitsubishi, Mazda, Subaru, Yamaha & Suzuki) recently caught in product data tampering, which has tarnished Japan’s manufacturing industry and its reputation for high-quality, and efficient vehicle production.