Nissan chairman arrested on suspicion of 'financial misconduct'

Nissan chairman arrested on suspicion of 'financial misconduct'

Nissan Motor Company said on Monday it was moving to fire Carlos Ghosn from his post as chairman after Japanese media reported he was arrested for using company money for personal use and engaging in other serious acts of misconduct.

Mr Ghosn under-reported his income by as much as $44 million (Dh161m) over the course of five years, according to Kyodo news agency.

Nissan said CEO Hiroto Saikawa would propose to the board to remove Ghosn and Kelly. The investigation, prompted by a whistleblower report, had shown that "over many years" both Ghosn and Kelly had been under-reporting compensation to reduce the chairman's disclosed pay.

Nissan chairman Carlos Ghosn is being investigated for "significant acts of misconduct", according to a statement by the company. The allegations also concern another Nissan executive, its representative director Greg Kelly.

Greg Kelly, a Nissan representative director, is also accused of under-reporting his income and was "deeply involved" in the misconduct.

The arrest and firing of Ghosn affects the automotive industry on a global scale as his position is rather complicated.

In 2003 he was named by Fortune one of the 10 most powerful people in business outside the US and was considered one of the most respected business leaders in the world.

Another important lesson from Monday's news, Brenner says, is that "every company should have a succession plan, including an emergency succession plan". He is also chairman and chief executive of France's Renault (RNO.PA).

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Ghosn was appointed CEO of Nissan in 2001 following his successful efforts to restructure the French auto giant Renault, and transitioned a year ago into a role as board chairman.

"The initial share price reaction shows how pivotal he is", Citi analyst Raghav Gupta-Chaudhary said on Monday.

It said an investigation found that Ghosn and another board member had been under-reporting Ghosn's compensation.

Nissan forecast a flat year in 2018 for the Middle East auto market, as still-slow economic growth and the introduction of Value-Added Tax has taken a toll on consumption, the company's regional director said in June.

Mr Ghosn joined Nissan in 1999 after Renault bought a controlling stake and became its CEO in 2001, remaining in that post until past year.

The scandal-rocked Japanese automaker has thereafter made a decision to fire its Chairman Carlos Ghosn on allegations of serious misconduct.

Ghosn then became chairman of the board of that automaker as well, and vowed to revive it by integrating Mitsubishi Motors into the Renault-Nissan manufacturing alliance. Ghosn remained in that post till previous year.

He is credited with saving Nissan from bankruptcy through a series of hardnosed measures including closing plants and restructuring, and he has instant name recognition in Japan, where he is a rare, high profile foreign executive. But he was expected to remain chief executive of Renault and to continue in overall charge of the Alliance for the next few years. For 2017, for instance, Ghosn demanded a 7.4m euro ($8.5m) package for his role, but the French government pushed back.