Carlos Ghosn, chairman of Nissan and CEO of Renault SA, arrested over financial violations in Japan

  • Ghosn has received numerous paychecks totalling tens of millions of dollars for his multiple roles within the Renault-Nissan-Mitsubishi alliance
PUBLISHED : Monday, 19 November, 2018, 8:38pm
UPDATED : Monday, 19 November, 2018, 8:38pm

Nissan Chairman Carlos Ghosn has been arrested over suspected financial violations and is set to be removed from his post after an investigation into his alleged misconduct.

Ghosn, among the most prominent leaders in the auto industry globally and also the CEO of Renault SA, was detained over a suspected breach of Japanese financial law, according to national broadcaster NHK.

Based on a whistle-blower tip, Nissan has been conducting an internal investigation over the past several months into suspected financial misconduct involving Ghosn and director Greg Kelly, the company said on Monday. It is seeking both their removals.

“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.”

Nissan said it has been providing information to the Japanese prosecutors and is cooperating fully with their investigation.

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The company is set to hold a press conference at 9pm in Tokyo. A representative for the Tokyo prosecutors said they do not comment on individual cases.

A spokesman for Renault declined to comment. Shares of the French carmaker fell as much as 15 per cent in Paris, while Nissan global depository receipts sank more than 11 per cent.

Ghosn, 64, built the three-way union of Renault, Nissan and Mitsubishi Motors Corp. He said in September that he will continue to pare back his roles at the three individual companies, while continuing to head their alliance.

A spokesman for France’s finance ministry declined to comment on the report. The country owns about 15 per cent of Renault and supported Ghosn’s renewal at the helm of the French carmaker.

Significant acts of misconduct have been uncovered

Among the best paid executives in both Japan and France for several years, Ghosn’s compensation has regularly drawn criticism. He has received numerous paychecks in his multiple roles as chairman of the Renault-Nissan-Mitsubishi alliance, CEO of Renault, and chairman of both Nissan and Mitsubishi.

At Nissan, he was paid about 1.1 billion yen (US$10 million) for 2016 and about US$6.5 million in the most recent financial year. He took home about US$8.5 million at Renault and about US$2 million from Mitsubishi in the latest period. At Renault, his package for 2017 was narrowly passed by Renault shareholders, but only after he agreed a 20 per cent reduction.

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Ghosn has been contemplating his career moves as the companies plan to change the pact’s structure, possibly through a merger. He gave up his role as CEO of Nissan last year and has said that he may step down as CEO of Renault before his four-year term ends in 2022, fuelling speculation the alliance could lose its architect and main leader for the past two decades.

The carmakers have given themselves two years to decide on a possible merger between them or find an alternative mechanism to enhance their partnership, it was reported in July. Ghosn said in September that the companies will “clarify everything” within the first half of his current term as Renault CEO.