Nissan chairman Carlos Ghosn arrested for allegedly violating financial law

Carlos Ghosn

In the five-year period, the prosecutors believe Ghosn actually received a total of almost 10 billion yen in compensation but Nissan's annual securities reports show that his remuneration amounted to about 4.98 billion yen.

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

Spokesmen for Renault and the Renault-Nissan-Mitsubishi Motors alliance did not immediately return calls and messages seeking comment on the arrest reports.

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.

Ghosn's unusually high pay rate had often made him the target of criticism in the Japanese business world, though it had often been excused due to the chairman's role in saving Nissan from bankruptcy after becoming the automaker's president in 2000.

The scandal abruptly threw into question Mr Ghosn's future as leader of the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million cars past year, more than any other manufacturer.

Nissan chairman Carlos Ghosn is being investigated for "significant acts of misconduct", according to a statement by the company. Of French, Brazilian and Lebanese background, he lives in both Japan and France, where he earlier turned Renault around, making it a global player.

In addition, he is chairman and chief executive of the Renault-Nissan-Mitsubishi Motors strategic alliance.

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Saikawa reiterated Nissan's commitment to the venture, while a Renault statement expressed "dedication to the defense of Renault's interest in the alliance". Ghosn voluntarily went with Tokyo prosecutors, the Asahi newspaper reported. Kyodo reports Ghosn's salary was underreported to the tune of $44 million over a five-year period beginning in 2011. Also, the official will be removed from his positions as chairman.

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

Ghosn's removal would deprive the manufacturer of a seasoned leader, and follow a number of surprise shakeups in the sector that have brought new CEOs to Volkswagen AG, VW's Audi brand, Daimler AG and Fiat Chrysler Automobiles.

Nissan said that the misconduct uncovered constituted clear violations of the duty of care as directors, adding that Nissan's Chief Executive Officer Hiroto Saikawa will now propose to the Nissan Board of Directors to promptly remove Ghosn from his positions.

The country owns around 15 percent of Renault, Nissan's partner, and supported Ghosn's renewal at the helm of the French automaker. "But over these 19 years we have been developing many things", Saikawa said.

In recent years, however, there has been discord in the company with regard to Ghosn. Ghosn is also CEO and chairman of Renault, and he is chairman of Mitsubishi. He remained in that post until last year and had received 9.2 million euros ($10.53 million) in pay for the final year as CEO.

He served as Nissan chief executive from 2001 until April 2017, and also was named chief executive of Renault in 2005, leading the two major automakers at once.

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