YOKOHAMA, Japan – Nissan Motor Co. is preparing to fire Chairman Carlos Ghosn -- also the head of the globally powerful Renault-Nissan-Mitsubishi Alliance -- for allegedly under-reporting his income and using corporate assets for personal use, the company said Monday.
Nissan CEO Hiroto Saikawa, 65, at a press conference here said the board will meet Thursday to discuss Ghosn's dismissal.
The company also is planning to terminate fellow board member Greg Kelly, 62, who rose through the executive ranks as a director of human resources.
Ghosn, 64, is believed by Nissan to have under-reported his income over multiple years and misused corporate assets. Kelly was “deeply involved” in the scheme, spokesman Nicholas Maxfield said.
Saikawa said Nissan was informed by authorities that Ghosn and Kelly have been arrested. Ghosn voluntarily went with Tokyo prosecutors, the Asahi newspaper reported.
“We have confirmed these two are the masterminds,” Saikawa said of Ghosn and Kelly.
The downfall of Ghosn won’t affect the alliance, he said. “The alliance partnership itself will not be affected by this event.”
Saikawa blamed the alleged abuse on the concentration of too much power in one top executive for so many years.
“This is a negative impact of the long regime of Mr. Ghosn,” Saikawa said. “This is a good opportunity to revise the way we work."
He added: “This is an act that cannot be tolerated."
Saikawa said he would organize a committee led by outside, independent board members to root out the causes of the wrongdoing and prevent recurrences.
They will work with alliance partners Mitsubishi and Renault, when necessary. Saikawa said this discovery adds impetus to the need for reforming the management structure linking Renault, Nissan and Mitsubishi.
In the future, it is important to avoid concentrating too much power in one person, he said. Instead, a sustainable system is needed, he said.
Mitsubishi Motors Corp., in a late statement, said its board would take action following the reports of alleged misconduct.
"It is to be proposed to the Board of Directors to promptly remove Ghosn from his position as MMC’s Chairman of the Board and Representative Director," the statement said. "We will readily conduct an internal investigation on whether Ghosn has been engaged in the misconduct like the above within MMC.
"MMC deeply apologizes for any concern caused by the recent event."
Mitigating the damage
Saikawa said a top goal is to keep the management upheaval from affecting daily operations
During the press conference, Saikawa alleged three wrongdoings by Ghosn. He alleged under-reported his income in official stock market filings. He diverted corporate investment funds for personal use. And he misused company expenses. Saikawa called Ghosn and Kelly the “masterminds” of the scheme.
“We have to make sure we minimize the impact on business partners and employees,” Saikawa said.
While Nissan did not immediately comment on the magnitude of the alleged income under-reporting, the Jiji news agency said Ghosn under-reported nearly 10 billion yen (US$88.7 million) in compensation as nearly 5 billion yen. The Kyodo news agency said it took place over five years, from 2011 to the present.
A representative for the Tokyo prosecutors’ office said it doesn’t comment on individual cases. Under Japanese law, prosecutors need to make official charges before a case can be brought to court. So Ghosn’s arrest doesn’t mean he will be found guilty. It’s unclear where he is now and how long the legal process will take.
Renault, in a statement from its lead independent director and committee chairs, acknowledged Nissan's statement, but didn't announce any immediate action regarding Ghosn.
"Pending provision of precise information from Carlos Ghosn, Chairman and Chief Executive Officer of Renault, the above directors wish to express their dedication to the defense of Renault’s interest in the Alliance," the statement said. "The Board of Directors of Renault will be convened very shortly."
French President Emmanuel Macron, whose country holds 15 per cent of Renault Group shares, said: “The government, as a shareholder, remains extremely vigilant about the stability of the alliance."
Macron and Ghosn have a contentious history; as finance minister under former president Francois Hollande, Macron had criticized the Renault CEO’s salary as excessive and pushed the state to increase its share in the automaker to the 20 per cent level in 2015 from the previous 15 per cent.
A spokesman for France’s finance ministry also declined to comment on the news.
Ghosn has been contemplating his next career step as the companies look to change the pact’s structure, possibly through a merger. Ghosn gave up his role as CEO of Nissan last year and has said that he may step down as CEO of Renault before his four-year term ends in 2022, fueling speculation the alliance could lose its architect and main leader for the past two decades.
The carmakers have given themselves two years to decide on a possible merger between them or find an alternative mechanism to enhance their partnership, Bloomberg News reported in July. Ghosn said in September that the companies will “clarify everything” within the first half of his current term as Renault CEO.
“I am abandoning some jobs to delegate more, the more I consider the organizations are mature and capable to sustain by themselves with the new leadership,” Ghosn said in late September.
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