Tokyo: The arrest of Nissan Motor’s Chairman Carlos Ghosn has thrown the auto industry’s largest global alliance into turmoil, with the Japanese carmaker saying it will seek to remove him. Ghosn, a towering figure in the industry who saved Nissan from collapse and brought it together with Renault and Mitsubishi Motors, was detained on Monday in Tokyo over a suspected breach of Japanese financial laws, according to NHK. He and Director Greg Kelly have been under investigation at Nissan for several months, and the company is seeking to oust them both, it said.
The automaker’s board will meet on Thursday to fire Ghosn, the company’s chief executive officer Hiroto Saikawa said. “I will call a board meeting to make a proposal to remove him from the position of chairmanship and approve it,” he told a news conference on Monday. Both Ghosn and Kelly were reporting compensation to securities regulators in Tokyo that was less than the actual amount, Nissan said, adding that they did this to reduce Ghosn’s disclosed compensation. Regarding 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,” according to the carmaker.
The bombshell allegations threaten to bring down one of the auto industry’s most powerful executives, who turned Nissan and Renault into a global challenger to giants Volkswagen and Toyota Motor Corp. They also cast doubt over the future of the alliance, a three-way pact that has sought to go deeper under the steady hand of Ghosn, 64. While no longer Nissan’s chief executive officer, he’s been laying the groundwork as chairman to make the alliance permanent after his departure — including the possibility of a merger.
A spokesman for France’s finance ministry declined to comment on the news. The country owns about 15 per cent of Renault and supported Ghosn’s renewal at the helm of the French automaker. Ghosn has been contemplating his next career step as the companies look to change the pact’s structure, possibly through a merger. A Brazilian-born French national, Ghosn revived Renault as executive vice president from 1996 to 1999.
He then was assigned to turn around Nissan, where he reduced the Tokyo-based company’s purchasing costs, shut five factories, eliminated 21,000 jobs and invested the savings back into 22 car and truck models in three years. The latest developments add to a string of crises in the Japanese auto industry, from scandals involving product quality to falsification of records. Nissan found itself in the midst of a controversy last year, when Japan’s regulators discovered uncertified inspectors were approving vehicles, leading to a recall of more than 1.2 million cars.