Auto titan Ghosn arrested over major financial misconduct

Nissan chairman Carlos Ghosn, one of the world’s best-known businessmen, was reportedly under arrest in Japan yesterday in a shocking fall from grace linked to allegations of financial misconduct. Japanese media said Ghosn had been arrested after being questioned by Japanese prosecutors for various improprieties including underreporting his income. Nissan said it had been investigating its chairman for months and would now move to fire him.

The news sent shockwaves through the auto industry, where Ghosn is a towering figure who is credited with turning around several major manufacturers and leads an alliance of Nissan, Renault and Mitsubishi. French President Emmanuel Macron said Paris would be “extremely vigilant” about Renault’s stability after Ghosn’s arrest. In a statement, Nissan said it had begun investigating Ghosn and its Representative Director Greg Kelly after receiving a whistleblower report and had uncovered misconduct going back several years. The Tokyo prosecutor’s office had no comment on the reports about Ghosn.

Mitsubishi and Renault also declined comment. “The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation,” Nissan said. “Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.”

The company said it had provided information to Japanese prosecutors and would recommend that the board of directors “promptly remove Ghosn from his positions” along with Kelly. The astonishing news first emerged Monday evening, when the Asahi Shimbun newspaper reported Ghosn was being questioned by prosecutors and was likely to face arrest. Japanese media later said Tokyo prosecutors were raiding Nissan’s headquarters in the city of Yokohama.

The Kyodo news agency said Ghosn was suspected of understating his income by 5 billion yen, or around $44 million, over five years from 2011. It also reported that Kelly had been arrested. Renault shares plunged more than 12 per cent in late morning trading in Paris on the news, which emerged after the end of the Tokyo session.