Auto titan Carlos Ghosn is facing the scandal of his life as Nissan said it will oust him for “significant acts of misconduct” related to his salary and use of company funds. He was arrested on Monday in Tokyo, according to a Nissan (7201.T) spokesperson.
The Japanese automaker said it would remove Ghosn from his position as chairman, after uncovering that the former CEO had purposely under-reported his compensation to the Tokyo Stock Exchange and made personal use of company assets.
Nissan’s CEO Hiroto Saikawa said at a press conference that too much power had been concentrated in Ghosn’s hands.
“Looking back, the concentration of power was something we need to deeply reflect on,” he said.
Director Greg Kelly was also found to have under-reported his compensation and had “deep involvement” in Ghosn’s schemes, according to the company.
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 comes as a shock in Japan where Ghosn, a rare foreign top executive, had been well-regarded for turning Nissan around from near-bankruptcy. He is also chairman and chief executive of France’s Renault (RNO.PA).
Renault said in a statement on Monday that it had seen the Nissan announcement and would hold a meeting of its board of directors shortly. It was also waiting for “precise information from Carlos Ghosn.”
Renault shares tumbled about 10% in afternoon trading in Paris.
Ousting the 64-year-old executive from Nissan is bound to raise questions about the future of a three-way auto alliance between Nissan, Renault and Mitsubishi, which Ghosn had personally shaped and pledged to consolidate with a deeper tie-up.
Renault said its directors “wish to express their dedication to the defence of Renault’s interest in the [auto] alliance.”
Nissan’s CEO also stood by the three-way partnership.
“While I think [this news] will have an impact, especially on Renault, this is just essentially about correcting a serious misconduct, and is not a matter that should hurt our partnership with Renault, Nissan, and Mitsubishi,” he said.
Ghosn, a Brazilian-born French citizen of Lebanese descent, began his career at Michelin in France, then moved 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.
In June, Renault shareholders approved Ghosn’s €7.4m ($8.5m) compensation for 2017. In addition to this, he received €9.2m in his final year as Nissan chief executive.
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.
With files from Reuters