As anxious global markets enter what’s expected to be a period of holiday-dampened liquidity (in the US, at least), reports that Japanese authorities have arrested (soon-to-be former) Nissan-Renault Chairman Carlos Ghosn on charges that he used company assets for personal purposes, underreported his compensation and is suspected of “numerous acts of misconduct”. The report sent shares of Nissan and French carmaker Renault tumbling more than 12%, dragging down the broader European market.
Ghosn has been credited as the architect of the Nissan-Renault-Mitsubishi alliance and is widely seen as the “essential man” at both Nissan and Renault.
Details are still murky, but it’s unclear whether Ghosn’s alleged improprieties stemmed from income tax violations or blatant theft from the company. Nissan is preparing to hold a press conference to release more details at 7 am ET. Right now, it’s unclear what led investigators in Tokyo to look into Ghosn. Indeed, much remains unknown.
In a statement released by Nissan, the company said it had been conducting an internal investigation into Ghosn and his fellow director Greg Kelly:
Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company’s Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly.
The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation.
Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.
Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation. We will continue to do so.
As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan’s Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director. Saikawa will also propose the removal of Greg Kelly from his position as Representative Director.
Nissan deeply apologizes for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures.”
According to Bloomberg, Citigroup analysts say in a note that the Renault stock price reaction is so strong because Ghosn is seen as “pivotal” for any potential collapse of the Renault-Nissan structure. Also says that Renault has the “best set-up” in the face of significant industry change.
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