Nissan says chairman Ghosn to be dismissed for misconduct

Andrew Cummings
November 20, 2018

Nissan said an internal investigation, triggered by a tip-off from a whistleblower, revealed Mr Ghosn engaged in wrongdoing including personal use of company money and under-reporting for years how much he was earning.

Carlos Ghosn's potential ouster as chairman of Nissan after his arrest for alleged violations of Japan's financial laws raises the question: Can the Renault-Nissan-Mitsubishi alliance survive without him?

"Nissan's chief executive officer Hiroto Saikawa will propose to the board of directors to promptly remove Ghosn from his positions as chairman and representative director". Japanese media say Ghosn, Nissan Motor Co. chairman, is being questioned by Tokyo prosecutors on suspicion he falsified his financial reports.

"Numerous other significant acts of misconduct have been uncovered, such as personal use of company assets", Nissan (NSANY) added.

Shares in Nissan plunged in Tokyo on Tuesday, ending down nearly 5.5% and pulling the Nikkei index down to a three-week low.

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.

Renault could find other industrial partners, he said, or the importance of Ghosn may be overrated.

"Nissan deeply apologizes for causing great concern to our shareholders and stakeholders", the company's statement said.

Mr Ghosn has appeared on magazine covers dressed in a kimono, vowing to renew the Nissan brand.

Renault's stock was down more than 10% on Monday; Mitsubishi's fell by almost 3%, according to FactSet.

Ghosn helped put Nissan on the right track in the late 1990s after the company neared bankruptcy. Ghosn remained in that post till a year ago.

"With Carlos Ghosn also Renault CEO, the two groups are reliant on one big hitter to solve their lopsided partnership", wrote Liam Proud, a columnist for Reuters' Breakingviews.

He said Ghosn's arrest shows power was too concentrated in one person and that Nissan plans to reduce its reliance on a single leading executive. He became a star in the business world in Japan, even spawning a manga comic book on his life, although he also attracted criticism for his high salary. "We will continue our work to identify our governance and compliance issues, and to take appropriate measures".

A statement by Philippe Lagayette, lead independent director of Renault, along with Renault Board Committee Chairs Marie-Annick Darmaillac and Patrick Thomas, said the three "wish to express their dedication to the defense of Renault's interest in the Alliance". In addition to this, he received €9.2 million in his final year as Nissan chief executive.

That involvement has presented headaches for Ghosn and Nissan before, particularly when it comes to the chairman's compensation.

Ghosn's arrest will undoubtedly shake up the auto industry, in which he has been a key vocal player for 40 years.

Other reports by iNewsToday