Nissan Motor Chairman Carlos Ghosn was arrested on Monday for alleged financial misconduct and will be fired from the board this week, Reuters reports, citing the Japanese carmaker.
An internal investigation, triggered by a tip-off from a whistleblower, had revealed that Ghosn engaged in wrongdoing including personal use of company money and under-reporting for years how much he was earning, Nissan was quoted as saying.
CEO Hiroto Saikawa said too much power had been concentrated on Ghosn, who joined Nissan nearly 20 years ago after French automaker Renault bought a controlling stake.
“The problem of governance was significant,” Saikawa said, confirming the arrest of Ghosn in Japan.
“Looking back, after 2005 when he became CEO of both Renault and Nissan, we did not really discuss the implications.”
Saikawa, a long-standing lieutenant to Ghosn, said he could not give specifics on the personal use of company money but that the wrongdoing was serious and had gone on for years.
“To have so greatly violated the trust of many, I feel full of disappointment and regret,” Saikawa told a late night news conference. “It’s not just disappointment, but a stronger feeling of outrage, and for me, despondency.”
Monday’s arrest of Ghosn by Japanese authorities marks a dramatic fall for a leader who had been hailed in the past for rescuing Nissan from close to bankruptcy, Reuters noted.
Ghosn is also chairman and chief executive of Nissan’s French partner Renault and his departure will raise questions about the future of the alliance.
Saikawa took over as Nissan CEO from Ghosn last year.
The CEO said he would propose at a board meeting on Thursday to remove Ghosn and Representative Director Greg Kelly, who was also accused of financial misconduct.
According to Japanese media reports, Ghosn had reported about 10 billion yen (US$88.9 million) of annual compensation as about 5 billion yen for several years.
Renault shares tumbled 11 percent in Paris on Monday following news of Ghosn’s arrest. Nissan’s German-listed securities dropped 10 percent.
French Finance Minister Bruno Le Maire said the government, Renault’s top shareholder, would safeguard the long-term viability of the carmaker.
“The key question for us is to ensure the stability of Renault and of the alliance between Renault and Nissan, so I am working on that with all the parties,” he told reporters in Brussels.
Renault owns 43.4 percent of Nissan, while Nissan owns 15 percent of Renault, with no voting rights in a partnership that began in 1999.
The Asahi newspaper reported on its website that prosecutors had begun searching the offices of Nissan’s headquarters and other locations on Monday evening.
Brazilian-born, of Lebanese descent and a French citizen, Ghosn began his career at Michelin in France, moving on to Renault.
He joined Nissan in 1999 after Renault bought a controlling stake and became its CEO in 2001. Ghosn remained in that post until last year.
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