Tokyo — On November 20, 2018, Nissan Motor Co said chairman Carlos Ghosn had been arrested in Japan over allegations of financial misconduct that shook one of the country’s best-known carmakers. The company said it would remove him from the chairman role on Thursday.
Ghosn, who also served as chairman and CEO of Renault and chairman of Mitsubishi Motors, was accused by Nissan of using corporate money for personal expenses and failing to report his income properly in filings to the Tokyo Stock Exchange.
Nissan CEO Hiroto Saikawa told reporters that the company’s review found misconduct stretching back years. Prosecutors, who have not commented publicly, were said to be investigating the matter.
According to prosecutors, Ghosn and board member Greg Kelly conspired to understate Ghosn’s compensation over five years beginning in fiscal 2010. The amount cited was about half of the actual 9.998 billion yen, or $88.9 million.
Japanese broadcaster NHK reported that Nissan spent billions of yen buying and renovating homes for Ghosn in Rio, Beirut, Paris and Amsterdam. The report, citing unnamed sources, said the properties had no business purpose and were not disclosed as benefits in TSE filings.
Ghosn, 64, had not been formally charged at the time of the report. The Asahi newspaper said he and Kelly were questioned by prosecutors after arriving at Tokyo’s Haneda Airport on Monday afternoon, and Saikawa later confirmed they had been arrested. Their exact whereabouts were not known, though suspects are typically held at the Tokyo Detention Center linked to the Tokyo District Public Prosecutors Office.
Nissan said the matter came to light after a whistleblower alert triggered an internal investigation and a report to prosecutors. Japanese media said the informant was a member of Nissan’s legal department. The Asahi also reported, without naming sources, that the informant provided information to prosecutors under a plea bargain arrangement.
The scandal raised fresh questions about how much control Ghosn had accumulated inside the alliance. After becoming CEO of struggling Nissan in 2001, he was credited with rescuing the company through aggressive cost-cutting. He later became CEO of Renault in 2005, chairman of Nissan in 2008 and chairman of Renault in 2009, giving him major influence across both companies.
Saikawa said the concentration of power around Ghosn had not been properly examined. “Looking back, after 2005 when he became CEO of both Renault and Nissan, we did not really discuss the implications,” he said.
France’s finance minister Bruno Le Maire said on Tuesday that Ghosn should not remain in charge of Renault after the arrest in Japan.
Under Japanese law, prosecutors can detain a suspect for up to 20 days before charging or releasing them. Former Tokyo District Public Prosecutors Office prosecutor Tsutomu Nakamura said Ghosn could be indicted on Friday, Dec. 7, the final working day before that limit expired.
If bail were granted, Nakamura said it would likely be extremely high, possibly in the hundreds of millions of yen. He added that in major cases, bail is often denied until after the first court appearance.
Ghosn and Kelly were accused of falsifying corporate annual reports, an offence that carries a maximum penalty of 10 years in prison and/or a fine of up to 10 million yen under the Financial Instruments and Exchange Act.
Reporting by Ritsuko Ando, Kiyoshi Takenaka, Elaine Lies; Writing by Malcolm Foster; Editing by Muralikumar Anantharaman.
