A car industry chief was arrested yesterday amid claims he raided company funds and concealed bonuses to dodge tax.
In an extraordinary fall from grace, Carlos Ghosn, who is chairman and chief executive of Renault-Nissan, was detained by prosecutors in Tokyo.
Greg Kelly, who is the firm’s senior executive in the US, was also taken into custody. Nissan accuses the pair of masterminding financial crimes stretching back to 2011.
They include under-reporting their pay to the Tokyo stock exchange by £34million over five years, in a suspected ploy to slash their tax bill.
Carlos Ghosn (pictured right with British Prime Minister David Cameron in 2011), the chairman of Nissan and Renault, has been arrested for alleged misconduct and using company money at the Japanese carmaker for personal use
In a statement issued by Nissan yesterday numerous other ‘significant acts of misconduct’ were uncovered during an internal investigation
Nissan chief executive Hiroto Saikawa said the company plans to dismiss the two men at a board meeting this week.
Numerous other ‘significant acts of misconduct’ were uncovered during an internal investigation, according to a statement issued by Nissan yesterday.
These include ‘misrepresenting’ the purpose of company investments and personal use of company assets.
The scandal comes just months after Mr Ghosn’s £6.7million pay package from Renault for last year was narrowly approved by shareholders.
A French citizen born in Brazil and of Lebanese descent, he has been one of the car industry’s most powerful figures for almost 20 years, heading a firm that builds around one in nine vehicles sold around the world.
Nissan said it had been probing possible improper practices of the 64-year-old and Representative Director Greg Kelly for several months based on a whistleblower report
Its site in Sunderland is the UK’s biggest car plant, employing around 7,000 workers.
He met David Cameron in Downing Street and two years ago Theresa May rolled out the red carpet to Mr Ghosn, inviting him to London to reassure him about Brexit.
Career of ‘Le Cost Killer’
Carlos Ghosn is known in the industry as ‘Le Cost Killer’.
His relentless drive saw him rise to become chairman and chief executive of Renault, chairman and former chief executive of Nissan, and chairman of Mitsubishi.
A twice-married father of five, he was born in Brazil but returned with his mother to their ancestral home of Lebanon as a child.
He studied French and built a career with Michelin before switching to Renault in 1996.
The multilingual Ghosn, 64, restructured the firm to such an extent that he became ‘Le Cost Killer’.
When Renault linked up with Nissan he cut even more jobs – 21,000 – and shut five plants.
He once reportedly turned down running for president of Lebanon because he had ‘too many jobs’.
As well as being courted by politicians, he has become a hero in Japan for rescuing Nissan and he is even celebrated in manga comics.
But yesterday he was arrested shortly after his plane landed at Tokyo’s Haneda airport.
Prosecutors also raided Nissan’s offices. Mr Saikawa said he expected employees, dealerships and customers to feel anxious and bewildered, adding: ‘Beyond being sorry I feel disappointment and frustration.
‘I feel despair and indignation and resentment.’
He said Mr Ghosn was given too much power in 2005 when he became chief executive of both Renault and Nissan – making him hard for board members to control.
Mr Saikawa said he would now focus on stabilising the company.
The revelations spooked investors, fuelling fears that the Renault Nissan pact could fall apart.
As shares in Renault slumped more than 8 per cent, President Emmanuel Macron said the French government, which is a major shareholder, ‘will be extremely vigilant about the stability of the alliance’.
Mr Macron and Mr Ghosn visited a Renault plant together this month in northern France.
The alleged wrongdoing emerges as the car industry struggles to rebuild its reputation after the VW ‘Dieselgate’ emissions scandal.
Carlos Ghosn: The cost cutter with a big price tag
In his 40 years in the auto industry, the praise Carlos Ghosn has won for turning around businesses has regularly been matched by criticism over the amount he has been paid to do it.
In the latest furore over his finances, Japan’s Nissan Motor Co Ltd said on Monday it planned to oust Ghosn as chairman after alleging he had made personal use of company assets, among other acts of suspected misconduct.
The scandal comes just five months after the 64-year-old head of the Renault-Nissan alliance narrowly won a shareholder vote at Renault over his 7.4 million euro ($8.5 million) pay package for 2017, after losing a 2016 vote.
In his 40 years in the auto industry, the praise Carlos Ghosn (pictured) has won for turning around businesses has regularly been matched by criticism over the amount he has been paid to do it
Brazilian-born, of Lebanese descent and a French citizen, Ghosn began his career in 1978 at tyremaker Michelin, before moving to Renault in 1996, where he oversaw a turnaround at the French automaker that won him the nickname ‘Le Cost Killer.’
After Renault sealed an alliance with Nissan in 1999, Ghosn used similar methods to revive the ailing Japanese brand, leading to ‘business superstar’ status in Japan, blanket media coverage and even a manga comic book on his life.
As auto markets in western Europe and Japan struggled, Ghosn championed a cheap car for the masses in emerging markets and embraced the electric vehicle before many others.
He also never made it a secret that he believed there were too many carmakers in the world and consolidation would continue – in 2016 he added Japan’s Mitsubishi Motors Corp to the alliance.
But in recent months, attention has increasingly turned to how the complex web of cross-shareholdings between the alliance partners might be simplified to ensure it can thrive following the eventual departure of its main architect.
In March, sources close to the matter told Reuters the alliance partners were discussing plans for a closer tie-up in which Nissan would acquire the bulk of the French state’s 15 percent stake in Renault.
With Japan’s Yomiuri newspaper reporting on Monday that Ghosn had been arrested by Tokyo prosecutors on suspicion of under-reporting his salary, the alliance’s plans for the future just got more pressing.