Nissan to oust chairman Ghosn over financial misconduct allegations

Nissan to oust chairman Ghosn over financial misconduct allegations

Renault CEO Carlos Ghosn waits for French President Emmanuel Macron for a visit of the Renault factory in Maubeuge, France, November 8, 2018. Etienne Laurent/Pool via REUTERS
TOKYO: Nissan Motor said on Monday (Nov 19) it was ousting Carlos Ghosn from his chairman's post for "significant acts of misconduct" and Japanese media reported he has been arrested, a shocking fate for a leader hailed for rescuing the company from close to bankruptcy.The Japanese automaker said Ghosn's alleged misconduct included personal use of company money and under-reporting how much he had been paid.
Ghosn is also chairman and chief executive of Nissan's French partner Renault and one of the best known figures in the global car industry, and his departure would raise question about the future of the alliance.
Nissan said it launched an months-long investigation after a whistleblower tipped it off to wrongdoing by 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," Nissan said in a statement."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 said it would brief reporters on Monday evening. Spokesmen for Renault and the Renault-Nissan-Mitsubishi Motors alliance did not immediately return calls and messages seeking comment on the arrest reports.
It said CEO Hiroto Saikawa would propose that the Nissan board remove Ghosn and Kelly.SHARES SLIDE
Renault shares tumbled 11 per cent in Paris to be among the worst performing stocks in Europe. Nissan's German-listed securities plunged 10 per cent.
"The initial share price reaction shows how pivotal he is,” Citi analyst Raghav Gupta-Chaudhary said on Monday.The current alliance structure has long undervalued Nissan shares held indirectly by Renault investors, he added. “Ghosn is viewed as critical for value unlock.”
French President Emmanuel Macron said the government, the French carmaker's top shareholder, will be vigilant about Renault and its alliance with Nissan.
CUTTING COSTS
Known as "Le Cost Killer", Ghosn is credited for reviving the Japanese automaker and has remained popular despite the massive job cuts that he brought and recent controversy over his lucrative pay package.Japanese media reported that Ghosn had reported around ¥10 billion worth of compensation as around ¥5 billion.The company said it would brief reporters on Monday night at 10pm Tokyo time (1300 GMT).Ousting Ghosn, 64, is bound to raise questions about the future of the alliance that he personally shaped and had pledged to consolidate with a deeper tie-up, before eventually stepping back from its operational leadership.
"If he is arrested, it's going to rock the Renault-Nissan-Mitsubishi alliance as he is the keystone of the alliance," said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm."He is the man of charisma for the alliance. It is likely to have a negative impact on its brand image," he told AFP.Renault owns 43.4 per cent of Nissan, while Nissan owns 15 per cent of Renault, with no voting rights in a partnership that began in 1999. Since 2016, Nissan has held a 34 per cent controlling stake in its smaller Japanese rival, Mitsubishi.
GOVERNANCE IN QUESTIONAlthough Nissan sad it was fully cooperating with investigators, the news is likely to raise questions about Nissan's accountability at a time when Japan has been pushing companies for better governance.
The Asahi newspaper reported on its website that prosecutors had begun searching the offices of Nissan's headquarters and other locations on Monday evening.Spokesmen for Renault and the Renault-Nissan-Mitsubishi Motors alliance did not immediately return calls and messages seeking comment on the arrest reports.Brazilian-born, of Lebanese descent and a French citizen, he began his career at Michelin in France, moving 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 till last year.In 2016, Ghosn also took charge at troubled Mitsubishi after Nissan threw it a lifeline, buying a one-third stake for about US$2.2 billion as it wrestled with a mileage-cheating scandal that hammered sales.
In June, Renault shareholders approved Ghosn's €7.4 million (US$8.45 million) compensation for 2017. In addition to this, he received €9.2 million in his final year as Nissan chief executive.
Ghosn has a high profile in Japan and is known as a major advocate of the country's auto sector. Neither Ghosn nor Kelly could be reached for comment.
Source: Agencies/ec
 Source : https://www.channelnewsasia.com/news/business/nissan-to-oust-chairman-ghosn-over-financial-misconduct-10946534