Carlos Ghosn arrested; Nissan likely to sack him

Renault CEO Carlos Ghosn waits for French President Emmanuel Macron for a visit of the Renault factory in Maubeuge

Chairman Carlos Ghosn was arrested on November 19 by Tokyo prosecutors on suspicion of under-reporting his income in violation of the Financial Instruments and Exchange Act, according to people close to the investigation.

The Japanese automaker said it would remove Ghosn from his position as chairman, after uncovering that the former CEO had purposely under-reported his compensation to the Tokyo Stock Exchange and made personal use of company assets.

Representative director Greg Kelly has also been subject to the investigation.

In 2003 he was named by Fortune one of the 10 most powerful people in business outside the USA and was considered one of the most respected business leaders in the world.

French President Emmanuel Macron said the country would work to preserve the stability of Renault and its alliance with Nissan. Then in the early 2000s, he earned the nickname of "Mr. Fix It" after he brought back Nissan from the brink of bankruptcy by orchestrating one of the most aggressive downsizing campaigns.

Saikawa said the company can't disclose further details of the suspected wrongdoing.

Nissan said it had been investigating its chairman for months and would now move to fire him.

Ousting the 64-year-old executive from Nissan is bound to raise questions about the future of a three-way auto alliance between Nissan, Renault and Mitsubishi, which Ghosn had personally shaped and pledged to consolidate with a deeper tie-up.

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After the news broke, Renault shares took a nosedive on the European market, briefly dipping more than 10 percent compared with Friday's closing. The company has also been cooperating with an investigation by the Japanese Public Prosecutors Office. It was expected that he will retire as chairman of the French-Japanese alliance in the next couple of years, but not before finalizing the process of restructuring the company.

"These two gentlemen were arrested this evening, that is what I understand", Nissan CEO Hiroto Saikawa said at a press conference in Tokyo late on Monday.

Together, Renault, Nissan and Mitsubishi employ more than 470,000 people in almost 200 countries, according to the alliance's website.

"Nissan deeply apologises for causing great concern to our shareholders and stakeholders". Spokesmen for Renault and the Renault-Nissan-Mitsubishi alliance did not immediately return calls and messages seeking comment.

For the past two decades, he has maintained an unusually high profile in a nation where foreign chief executives of major Japanese companies are still relatively rare.

Following that report, Nissan global depository receipts fell more than 11 per cent in Japan, while shares in Renault have dropped by more than five per cent, reaching their lowest level in almost four years.

Total auto sales across the Middle East dropped 9 per cent year-on-year in 2017, and by 11 per cent in the GCC, according to Nissan's financial report for the first half of 2018. At Renault, his package for 2017 was narrowly passed by Renault shareholders, but only after he agreed a 20% reduction. He also serves as chairman and CEO of Renault, as well as chair of Nissan of Mitsubishi, through a unique corporate alliance between the three automakers.

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