Nissan's Ghosn is gone

Tuesday November 20, 2018
Nissan's Ghosn is gone
The arrest of Nissan Motor's charismatic Chairman Carlos Ghosn's is sending shockwaves around the business world.

Ghosn was arrested on November 19th on suspicion of underreporting his income by 5 billion yen, or about 44 million dollars. Another Nissan executive, Greg Kelly, was also arrested.

Tokyo prosecutors say Ghosn underreported his salary. They say the chairman reported earning 40 million dollars over a 5-year period. But they suspect he actually earned double that amount.

NHK has learned Ghosn may have also misused company funds. Sources say Nissan Motor provided its leader with houses in 4 countries without any legitimate business reason. They say the houses are located in Rio de Janeiro, Paris, Amsterdam and Beirut.

Prosecutors raided Nissan offices on the day of his arrest.

Whistle-blower

Ghosn is head of the automotive groups of Nissan, Renault and Mitsubishi. His arrest will likely cause the industry to reconsider the approach of concentrating power in the hands of just one executive.

Nissan President and CEO Hiroto Saikawa held a late-night news conference after Ghosn's arrest.

Saikawa revealed the allegations came to light following an internal probe sparked by a whistle-blower. He says the company is looking at 3 major acts of alleged misconduct:

"One is under-reporting his pay on asset securities reports. The second is spending the company's investment capital for personal purposes and disguising those purposes. The third is personal use of company expenses."

Saikawa said the board of directors will be convened on November 22nd to officially dismiss Ghosn and Kelly.

Nissan President and CEO Hiroto Saikawa said he has decided to dismiss Chairman and Representative Director Carlos Ghosn.

How much was Ghosn's salary?

Ghosn's annual earnings are featured in Nissan's annual securities report. It says in 2014, Ghosn was paid about 9.1 million dollars; in 2015, 9.5 million dollars; and in 2016, a record of 9.7 million dollars, in current terms.
But last year, his income dipped by about 33 percent to 6.5 million dollars.

Ghosn also received 1.9 million dollars, in current terms, from Mitsubishi Motors as official remuneration in fiscal 2017. Renault also paid him separately.

Ghosn explained his salary to stakeholders in June 2017: "Executive remuneration is decided after analyzing achievement, contribution to the firm and salaries at other global companies of the same scale as Nissan.

"About half of our group's executives and senior officials are foreign nationals. We must secure good human resources the world over in order to maintain competitiveness."

Mitsubishi appalled

Ghosn also serves as Mitsubishi Motors' chair.

Mitsubishi Motors Chief executive Osamu Masuko said he will propose that the board of directors immediately dismiss Ghosn from his post.

The automaker says it will conduct an internal investigation to find out whether the same kind of misconduct has happened at Mitsubishi.

Mitsubishi was taken under the Nissan umbrella in 2016 after a fuel mileage manipulation scandal.

Renault stunned

French automaker Renault issued a statement saying it acknowledges the content of Nissan's announcement.
It said it will strive to protect the interests of Renault until it is briefed directly by Ghosn himself.

French President Emmanuel Macron touched on the case: "It is too early to speak about the reality of facts on which I do not have full details. But the nation, as a shareholder, will be extremely vigilant about the stability of the Renault-Nissan alliance and the group."

In both Paris and New York, Nissan's shares tumbled by 8% from Friday's close at one point on Monday.

Carlos Ghosn profile

Carlos Ghosn joined the management of Nissan Motor as chief operating officer in 1999, when the company forged an alliance with Renault. He became Nissan's president in 2000.
He led the firm's turnaround from near-bankruptcy to profitability by aggressively cutting costs and was appointed President and CEO of Renault in 2005.

He has been overseeing Nissan, French automaker Renault and Mitsubishi Motors.

The group is the world's second-largest automaker. Nissan and its group companies sold over 10 million vehicles in 2017, knocking Toyota into third place.

Tomoko Kamata
NHK World
Correspondent

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