Tokyo — In a market jolt on 20 November 2018, Nissan Motor Co shares fell after the arrest of chairman Carlos Ghosn, a move that raised immediate questions about the future of the automaker and its wider alliance with Renault and Mitsubishi Motors Corp.
Nissan said on Monday that Ghosn had been arrested over alleged financial misconduct and would be removed from the board later that week. The company’s announcement also put fresh pressure on the governance of the Franco-Japanese partnership, where Ghosn had long been the central figure.
Prosecutors said Ghosn and Representative Director Greg Kelly conspired to understate Ghosn’s compensation for five years beginning in fiscal 2010. They said the reported figure was about half of the actual amount, which they put at 9.998 billion yen, or $88.9 million.
The case also revived scrutiny of how much authority had been concentrated in one executive. Nissan chief executive Hiroto Saikawa said at a late-night news conference on Monday that too much power had been placed in Ghosn’s hands, and that the implications of his leadership of both Renault and Nissan had gone unchallenged since 2005.
Ghosn was not only Nissan’s chairman but also chairman and chief executive of Renault. His removal was expected to force more questions about the alliance he helped shape and had previously said should move toward a deeper tie-up before eventually stepping back from day-to-day operational control.
There was no immediate comment from Ghosn or Kelly on the allegations, and Reuters said it could not reach them for response.
The fallout was quickly reflected in the market. Nissan shares fell as much as 6 percent to 940 yen before trading down 5.5 percent at 950.7 yen. Mitsubishi Motors Corp also slid by about 6 percent after saying on Monday that it would remove Ghosn as chairman. Renault shares lost 8.4 percent on Monday.
The Asahi newspaper, citing unnamed sources, reported that a company employee had provided prosecutors with information about Ghosn in exchange for lighter treatment. The report said it was the second instance of a plea deal in Japan, a system introduced in June.
At the exchange rate cited in the report, $1 was equal to 112.4400 yen.
Reporting was by Chang-Ran Kim, Sam Nussey and William Mallard, with editing by Stephen Coates and Muralikumar Anantharaman.
