Nissan chairman Carlos Ghosn arrested over financial law violation

Kyodo News

Posted at Nov 19 2018 08:20 PM | Updated as of Nov 20 2018 09:16 AM

TOKYO—Carlos Ghosn, chairman of the alliance of Nissan Motor Co., Renault SA and Mitsubishi Motors Corp., was arrested Monday on suspicion of understating his salary by a total of $44 million over five years from 2011 in violation of a Japanese financial law, investigative sources said.

Nissan said in a statement that an internal probe over several months, following a whistleblower report, had found that the Brazilian-born 64-year-old executive had for many years understated his income in reports submitted to the Tokyo Stock Exchange and had conducted other "significant acts of misconduct" including misusing company funds for personal purposes.

Tokyo prosecutors believe Ghosn's underreporting of his remuneration constitutes a violation of the Financial Instruments and Exchange Act. They raided Nissan's headquarters in Yokohama, near Tokyo.

Nissan said CEO Hiroto Saikawa will promptly propose dismissing Ghosn as chairman and representative director, as well as representative director Greg Kelly who was also arrested on suspicion of violation of the financial law, at a board meeting.

The automaker said Kelly is confirmed to have had "deep involvement" in the misconduct. Nissan will fully cooperate with the investigation, it said.

The carmaker -- part of the world's largest automaking alliance -- said it will hold a press conference later Monday.

Nissan paid Ghosn 1.098 billion yen for the financial year ended March 2017, and 735 million yen for the following year, according to Nissan's annual securities reports.

Ghosn became the chief operating officer of Nissan in 1999 to lead the Japanese carmaker's turnaround under a capital alliance with Renault.

He became the president of Nissan in 2000, shocking the Japanese business world by spearheading a recovery through plant closures and other drastic restructuring measures, earning a reputation as an aggressive cost-cutter.

His management style stood out in the Japanese business world for his focus on numerical "commitment" targets and severe reforms.

Under his nearly two-decade tenure, Nissan moved away from conventional practices in the Japanese auto industry. For instance, it negotiated aggressively with steelmakers to lower steel sheet purchase costs, triggering fierce competition among major steel companies.

Ghosn, who holds French citizenship, assumed the post of CEO at a shareholders meeting in June 2001, at which time he said he would stay at the helm until Nissan's full recovery.

He became Renault's CEO in 2005, pressing for further streamlining through joint procurement and development under the Nissan-Renault alliance.

After Mitsubishi Motors' sales plummeted in the wake of fuel data manipulation scandal, Nissan took control of the smaller Japanese automaker in 2016 by purchasing a big equity stake.

Ghosn then became chairman of the board of that automaker as well, and vowed to revive it by integrating Mitsubishi Motors into the Renault-Nissan manufacturing alliance.

In the first half of 2018, the alliance formed by Nissan, Renault and Mitsubishi Motors became the world's largest auto seller, outselling Volkswagen.

The alliance sold 5.54 million vehicles worldwide in the first six months, up 5 percent from the same period last year, according to data from the three companies.

The figure outstripped the 5.52 million vehicles sold by the Volkswagen group, the world's largest automaker for two consecutive years through 2017. The group includes the Audi and Porsche brands.