20 November 2018
Nissan chairman Carlos Ghosn (picture) was arrested on suspicion of under-reporting $44.6 million in pay, the Tokyo District Public Prosecutor’s Office said Monday.
Greg Kelly, a representative director at Nissan, was also arrested on suspicion of conspiracy with Ghosn.
Ghosn, 64, became the chief operating officer of Nissan when Renault and Nissan formed a strategic alliance. Nissan CEO Hirota Saikawa criticized the concentration of too much power by a single individual and offered an apology. Saikawa succeeded Ghosn.
For many years both Ghosn and Kelly have been reporting far less compensation amounts than the actual amounts in the Tokyo Stock Exchange securities report.
Nissan began investigating months ago, acting on a tip from a whistle-blower. Nissan fired Ghosn after he was arrested.
Born in Brazil of Lebanese parents, Ghosn began his career working for Michelin tire company. He was recruited by Renault in 1996 and tasked with pulling the French automaker out of its financial slide. He brought Renault back to health in barely a year. In 1999 Renault took a 36.8 percent stake in Nissan. The investment proved valuable. Nissan quickly went into the black and halved its debt within three years. It provided a lifeline for Renault when it ran into financial problems a few years later.
Ghosn was soon elevated to CEO at Nissan and soon after at Renault. He also served as chief executive with the Renault-Nissan Alliance which coordinated operations between the two automakers. The two automakers continued to function as independent companies.
Ghosn was a great deal maker. He formed a partnership of the Renault-Nissan alliance with Germany’s Daimler AG. Although there was no cross holding the partnership profited both parties by sharing of engines and vehicle platforms and the construction of an assembly plant in Mexico shared by Daimler’s Mercedes brand and Nissan’s Infiniti.
Two years ago, Ghosn initiated Nissan’s purchase of a controlling stake in Mitsubishi Motors, a small Japanese automaker that was about to go bankrupt after a fuel-economy ratings scandal.
Ghosn last year stepped down from his post as CEO of Nissan, to focus on a turnaround at Mitsubishi as its new chief executive. He remained as chairman of Nissan.
The Renault-Nissan-Mitsubishi Alliance benefitted all three parties. The three companies now produce and sell 10.2 million light vehicles, employing 470,000 workers in 122 factories around the world. Renault-Nissan rivals Toyota Motor and Volkswagen in size.
Japanese public broadcaster NHK reported Nissan paid billions of yen for the purchase and renovation of homes for Ghosn in Rio de Janeiro, Beirut, Paris and Amsterdam, citing unnamed sources.
In France, where the state owns a 15 per cent stake in Renault, President Emmanuel Macron said Paris would be “extremely vigilant” about the stability of the firm and its three-way tie-up. NBC News reported.
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.