Nissan’s Carlos Ghosn arrested over allegations of ‘significant’ financial misconduct

Ann Santiago
November 21, 2018

Renault and Nissan chairman Carlos Ghosn, who helped engineer Renault's return to Formula 1 as a full constructor in 2016, has been arrested for alleged violations of Japanese financial laws.

Nissan has said it will dismiss Ghosn after he was arrested for allegedly abusing company funds and misreporting his income. SUBSCRIBE NOW and hit the bell to be the first in the know.

The prosecutors, who reportedly arrested Ghosn after questioning him upon his arrival by private jet at Tokyo's Haneda airport, have 48 hours from the time of Ghosn's arrest Monday to decide whether to press charges.

Another board member, Greg Kelly, was also deeply involved in the misconduct, Nissan said. They can hold a suspect for up to 20 more days per charge if they decide they need more time.

Of French, Brazilian and Lebanese background, Ghosn also is a towering corporate figure in France, where Renault is one of the heavyweight industrial survivors. "Looking back, after 2005 when he became CEO of both Renault and Nissan, we did not really discuss the implications", he said.

A full day that seems not to be almost enough to precisely say what this will mean for Nissan, Renault, Mitsubishi and all the thousands of people working for one of the largest vehicle groups of the planet.

In a sign Nissan may be seeking to loosen its French parent's hold on their alliance, the Japanese company told Renault's board on Monday it also had evidence of potential wrongdoing at Renault-Nissan BV, the Dutch venture overseeing alliance operations under Renault's ultimate control, three people with knowledge of the matter said. He has met repeatedly with the past four French presidents; no major economic event in France was held without Ghosn. He said France's priority was to ensure continuity and stable governance of the French auto giant.

Ghosn's Lebanese heritage is a source of pride in Lebanon, and in Beirut the foreign minister, Gibran Bassil, issued a statement saying the Lebanese ambassador to Tokyo was told to look out for "the model of Lebanese success overseas".

Ghosn's alleged improprieties also raise questions over governance at the alliance, over which he presided relatively unchecked as chairman of all three partners' boards.

He is admired for driving a turnaround at Nissan when it was near bankruptcy and for his foresight in pushing to bring electric and autonomous cars to the masses.

Ghosn, 64, has not been formally charged.

The scandal was a "negative outcome of the long regime of Mr Ghosn", he said.

The Tokyo prosecutors have not disclosed whether Ghosn and Kelly have admitted to their allegations.

Broadcaster NHK reported, citing unnamed sources, that Nissan provided Mr Ghosn with houses in four countries without legitimate business justifications.

In July, prosecutors elected not to indict Mitsubishi Hitachi Power Systems Ltd. after reaching a plea bargaining deal with the company over a case involving the bribery by one of its employees of a Thai public servant in relation to a local power plant project.

The stunning announcement ripped through a powerful global alliance, slamming the stocks of Nissan (NSANY) and Renault (RNSDF), where Ghosn also serves as chairman.

If the misconduct continued for years, as Saikawa said, analysts question how this could have passed undetected for so long, unless internal auditors and senior management turned a blind eye.

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