Nissan chairman arrested for alleged financial misconduct

Renault-Nissan chief Carlos Ghosn has been arrested by Japanese authorities over alleged spending irregularities, while the Japanese auto giant says it is already moving to terminate his contract.
Mr Carlos Ghosn, seen here giving an interview in September at Nissan's headquarters in Yokohama, is said to have under-reported nearly 10 billion yen (S$122 million) in compensation as around five billion yen. Mr Ghosn is also the chief executive of
Mr Carlos Ghosn, seen here giving an interview in September at Nissan's headquarters in Yokohama, is said to have under-reported nearly 10 billion yen (S$122 million) in compensation as around five billion yen. Mr Ghosn is also the chief executive officer of Renault.PHOTO: BLOOMBERG

Japanese carmaker to oust industry icon for under-reporting his compensation

TOKYO• Nissan Motor chairman Carlos Ghosn has been arrested over suspected financial violations, Japanese media reported yesterday.

The carmaker said it will seek removal of the industry icon as its chairman after an investigation into his alleged misconduct.

Mr Ghosn, among the most prominent auto-industry leaders globally and also the chief executive officer of Renault, was detained over a suspected breach of Japanese financial law, broadcaster NHK said.

Based on a whistle-blower's tip, Nissan has been conducting an internal investigation over the past several months into suspected financial misconduct involving Mr Ghosn and director Greg Kelly, the company said yesterday.

Mr Ghosn is said to have under-reported nearly 10 billion yen (S$122 million) in compensation as about five billion yen, Jiji news agency reported. Kyodo news agency said the under-reporting took place over five years, from 2011.

Nissan is seeking to remove both men.

"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 regard 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. Mr Ghosn voluntarily went with Tokyo prosecutors, Asahi reported.

At a press conference in Tokyo late yesterday, Nissan chief executive Hiroto Saikawa apologised to shareholders, employees and suppliers. He said that the company will make "every effort" to ensure the incident does not affect daily business.

 
 
 
 

A representative for the Tokyo prosecutors and a spokesman for Renault both 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.

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

Said French President Emmanuel Macron yesterday after the Japanese carmaker took steps to oust Mr Ghosn: "It's too early to comment on the reality or materiality of the accusations, about which I have no further information."

Speaking to reporters in Brussels, Mr Macron added: "As a shareholder, however, the French government will remain extremely vigilant regarding the stability of the alliance, the (Renault) group and... its employees, who have the full support of the state."

The French government owns 15 per cent of Renault, which in turn holds a 43.4 per cent stake in Nissan.

Mr Ghosn receives numerous pay cheques in his 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 for 2016 and about US$6.5 million (S$8.9 million) in the most recent fiscal year. He took home about US$8.5 million at Renault and about US$2 million from Mitsubishi in the latest period.

BLOOMBERG, REUTERS

 
A version of this article appeared in the print edition of The Straits Times on November 20, 2018, with the headline 'Nissan chairman arrested for alleged financial misconduct'. Print Edition | Subscribe