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Carlos Ghosn guilty of 'serious misconduct', Nissan says

20 November, 2018, 17:00 | Author: Kristi Dunn
  • Renault shares PLUNGE as chief Carlos Ghosn 'faces arrest in Japan'

He is accused of under-reporting his earnings and misusing company money.

Shares of Japan's second-largest vehicle manufacturer as well as France's Renault plunged following a report that Carlos Ghosn, Nissan chairman and chief executive of the Renault-Nissan-Mitsubishi alliance, was arrested on allegations of financial trading misconduct.

It is not the first time Ghosn has gotten into hot water over pay, in particular a combined salary that makes him one of the highest-paid CEOs in France and one of the best-paid foreign executives in Japan.

Together, Renault, Nissan and Mitsubishi employ more than 470,000 people in almost 200 countries, according to the alliance's website.

Under Ghosn, the three auto companies together formed an alliance that rivals Volkswagen (VKLAF) and Toyota (TM) in terms of vehicle sales.

He said the company had uncovered years of financial misconduct including under-reporting of income and inappropriate personal use of company assets.

Another important lesson from Monday's news, Brenner says, is that "every company should have a succession plan, including an emergency succession plan".

"I feel despair, indignation and resentment." said Nissan chief executive Hiroto Saikawa at a news conference. The automaker also reports that it has been cooperating fully with Japanese investigators throughout the investigation. "I want to minimize the bewilderment and the impact on the operation and our business partners".

"The Tokyo District Public Prosecutor's Office arrested Nissan chairman Ghosn on suspicion of violation of the Financial Instruments and Exchange Act", Japan's public broadcaster NHK said.

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Mr Ghosn heads up the Japanese-French alliance Renault-Nissan-Mitsubishi.

Saikawa said that a "system in the company" had permitted the activity to remain hidden. The allegations also concern a Nissan representative director, Greg Kelly, who was also arrested. The alleged misconduct was "totally unacceptable", Saikawa said. But he promised Nissan's leadership would get more involved in supervising top company officials.

Ghosn was at Nissan for 19 years and signed a contract this year that would have run through 2022.

Tokyo prosecutors have chose to arrest Nissan Motor Chairman Carlos Ghosn over alleged breaches of financial trading law, Japanese media have reported. However, they added that he reported only half that: about $44 million.

Renault shareholders in 2016 voted against Ghosn's pay package as too generous, but the board ignored the move. He is credited with rescuing Nissan from the brink of bankruptcy. Before he joined the company nearly 20 years ago, it was close to financial collapse.

And in February the French state, which owns a 15 percent stake in Renault, forced Ghosn to accept a 30 percent pay cut from the 7.25 million euros ($8.3 million) he took home as Renault CEO past year, calling the amount "excessive".

With Ghosn's future as the Alliance's leader in question, the conglomerate's future also looks to be less clear than before right as the envisioned synergies of the venture begin to bear fruit.

However, he made enemies of French labor unions and some politicians.

Nissan said on Monday it would fire Ghosn this week, while the Mitsubishi board will meet next week. Since 2016, Nissan has held a 34 per cent controlling stake in its smaller Japanese rival, Mitsubishi. Over the ensuing three decades, he earned nicknames for cutting costs at Nissan and its subsidiaries and served as a visionary for the Renault-Nissan-Mitsubishi Alliance. Ghosn was born in Brazil 64 years ago.

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