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Nissan Chairman was arrested for serious financial abuse

By Simon Denyer YOKOHAMA, Japan – Nissan Motors said Monday that President Carlos Ghosn has been arrested and will be…

By Simon Denyer

YOKOHAMA, Japan – Nissan Motors said Monday that President Carlos Ghosn has been arrested and will be dismissed after the company revealed “significant actions of irregularities” including notifying his own salary and using the company’s assets for his personal benefit.

Ghosn is considered to be one of the automotive industry’s senior executives and is one of Japan’s highest-rated business executives. He is generally credited with saving Nissan from close bankruptcy. He is also President and CEO of France’s Renault and Chairman of Mitsubishi Motors.

Brazilian born, of Lebanese descent and French citizen, he is one of the few foreigners in such a leading position in Japan.

Nissan said it conducted an internal investigation for several months based on a report by a whistleblower regarding misconception of Ghosn and representative director Greg Kelly. It shared its findings with prosecutors for their own parallel investigation.

“I can not talk about the investigation in the investigation itself, but as a result of the survey, we heard that the arrests were made by the two gentlemen, said CEO Hiroto Saikawa to a press conference at the headquarters in Yokohama.

Saikawa would say that he would convene a meeting of the board on Thursday to remove Ghosn and Kelly.

Nissan said the survey showed many “Significant Actions of Irregularities” including reporting Ghost’s compensation to the Tokyo Stock Exchange to more than 40 million dollars over five years

Nissan said Kelly was also deeply involved in mistakes. Saikawa described both men as masterminds of the alleged misconduct.

Renault shares tripped almost 10 percent in Paris, while Nissan’s German listed securities fell by the corresponding amount. [19659003] Ghosn, 64, started his career at Michelin Tire Michelin in France in 1976, before moving on to Renault in 1996. There he helped the technology turn into the carmakern’s wealth that admired him by business, but not by unions or left politicians who raised his high salary while he suffered a major job loss in the wake of the global financial crisis.

He joined Nissan 1999 after Renault bought a controlling shareholder and became his CEO from 2001 to 2017, constructed a similar round there and earned the nickname “Le Cost Cutter”. [19659003] Ghosn went down as Nissan’s president last year but was still chairman of the board.

He became a star in Japan’s business, featured on the newspaper deck dressed in a kimono and also gawning a multitude of comic books on his life, although he also attracted more criticism there for his high salary.

Ghosn was one of the first managers of electric cars and he also developed a number of cheap cars for emergence

In June, Renault’s shareholders approved Ghosn’s $ 8.5 million compensation for 2017. He also received more than 10 million dollar in its last year as Nissan’s Managing Director.

The scandal also raised eyebrows in France, where the French government is a major shareholder in Renault. In connection with assembly disputes, Minister of Finance Bruno Le Maire said on Monday that the government would not comment on the ongoing legal investigation in Japan, but have already made inquiries with Renault about the company’s management structure.

In a late night conference lasted about 90 minutes, Saikawa, Nissan’s CEO, did little to hide his anger at Ghosn to let the company go down.

“The concentration of power in an individual” as well as Ghosn’s “long government” at the automakunglomerate, affected the business and could have been factors for allowing the misconduct to happen, he said.

“People who reported to Ghosn were limited in number,” Saikawa said. As a result, instead of making decisions based on a wealth of information and opinions, Ghosn took decisions due to limited entry in some cases.

Saikawa also spent a lot of time expressing his deep regret of “confusion and anxiety” as the news has caused employees and stakeholders.

“It’s very hard to express this in words,” he said. “In addition to being sad, I feel great disappointment and frustration and despair and anger and anger.”

In its statement, Nissan apologies for giving great concern to shareholders and stakeholders. “We will continue our work to identify our governance and compliance issues, and to take appropriate action,” said the company.

The news is the latest scandal against Sully Nissan’s brand. In July, it acknowledged that it had discovered fake emission data from most factories in Japan, whereas in 2017 it acknowledged that it had allowed unskilled personnel to perform post-production testing at some of its facilities, which forces it to withdraw more than one million vehicles for reinspection.

Although the company denied a direct link between the failure to conduct a proper test and its ongoing efforts to reduce costs, Chef’s competitor Yasuhiro Yamauchi acknowledged at the time that he “needed to reflect on whether there was an environment at Nissan where any customer tolerated if it led to cost savings. “

Tim Hubbard, Assistant Professor at the University of Notre Dame, Mendoza College of Business, said that Ghosn’s arrest complicates a very coherent set of relationships between Nissan, Renault and Mitsubishi Motors – and may affect shareholdings they have in each other.

“This has widespread consequences for a large part of the automotive industry, as these alliances have become more critical in ever-increasing design, manufacturing and support of auto customers worldwide,” he said. “Ghosn’s arrest is another unfortunate example of the dangers of having too much power concentrated on an individual within and across companies.”

One of the puzzles was why Ghosn, with all his wealth, might have wanted to judge his own company if the allegations are true.

“It seems very short-sighted to me, when you have so much money, why would you like the nickel-and-dime company and the shareholders,” says Carl Tobias, a professor at the University of Richmonds law school.

Tobias said that The alleged violations had occurred in the United States, someone like Ghosn, who could afford the best legal adviser, could have reached an agreement with prosecutors to avoid imprisonment by paying a large fine. But he said it was far from clear would be the case in Japan.

Washington Post’s Akiko Kashiwagi in Tokyo and James McAuley in Paris contributed to this report.

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