Nissan chairman Ghosn arrested for ‘significant misconduct’

Nissan chairman Ghosn arrested for ‘significant misconduct’

In a statement today, Nissan revealed that it has been working with the Japanese Public Prosecutors Office on an investigation into both Ghosn and Representative Director Greg Kelly.

The Japanese auto manufacturing giant said it had been conducting an internal investigation for several months which showed Ghosn had been under-reporting his pay package and identified "Numerous other significant acts of misconduct" including "personal use of company assets".

Ghosn, who is also chairman of Renault SA and Mitsubishi Motors Corp., was arrested Monday on suspicion of violating Japan's Financial Instruments and Exchange Act by understating his pay package by a total of about 5 billion yen ($44 million) over five years from 2011.

Nissan said it uncovered the "numerous" acts of misconduct based on a whistleblower report and had been conducting an internal investigation for months.

The news of Ghosn's downfall emerged unexpectedly on Monday evening, with local media first reporting he was being questioned by prosecutors and that Nissan's headquarters was being raided.

The alliance sold 10.6 million vehicles previous year, more than one in nine of worldwide auto sales. The company said its internal investigation also found Ghosn had used company assets for personal purposes.

Brazilian-born, of Lebanese descent and a French citizen, he is one of the few foreigners in such a senior position in Japan.

"Nissan, Renault and Mitsubishi all see merits of the alliance, which is formed in a quite complicated way with overlaps of various management members", he said.

As the probe is ongoing, Nissan said it can not provide further details of the alleged offenses.

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Carlos Ghosn is no longer fit to lead Renault following his arrest in Japan, said French Finance Minister Bruno Le Maire on Tuesday (Nov 20).

Ghosn's alleged improprieties also raise questions over governance at the alliance in which the three partners' boards are all chaired by a single executive. It said an investigation was launched after someone inside the company told officials about suspected wrongdoing.

Ghosn implemented tough cuts including closing Nissan plants and slashing 14-percent of the workforce.

In his 40 years in the auto industry, the praise Ghosn has won for turning around businesses has regularly been matched by criticism over the amount he has been paid to do it.

Mr Ghosn signed a contract this year that would have run through 2022.

Then came Carlos Ghosn, a Renault executive who helped to orchestrate an unprecedented transcontinental alliance, combining parts of both companies to share engineering and technology costs.

Renault's shares, listed in Paris, plummeted after Nissan confirmed reports of its chairman's alleged misconduct. While he remains chairman and CEO of Renault, Nissan confirmed Monday that its board will convene on Thursday to dismiss him. Renault owns 43 percent of Nissan, which owns 15 percent of Renault and 34 percent of Mitsubishi.

The French government objected to his multi-million pay packet, and Saikawa said too much authority had become vested in the chairman. He joined Nissan in 1999 after Renault bought a controlling stake and became its chief executive in 2001.

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