Carlos Ghosn under pressure to quit Renault role from French government
20 November, 2018, 16:59 | Author: Kevin Carter
Nissan announced that an internal investigation of Ghosn and a top deputy, American Representative Director Greg Kelly, uncovered the reported fraud.
The drop in shares was sparked after Japanese newspaper The Asahi reported Mr Ghosn, who is also chairman of Nissan, could face arrest on suspicion of under-reporting his salary.
Carlos Ghosn, who is also chairman of vehicle manufacturer Nissan, is being investigated by Japanese authorities and has been arrested by prosecutors, according to Reuters.
The alliance sold 10.6 million vehicles a year ago, more than one in nine of worldwide auto sales.
"Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company's Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly", Nissan said in a statement.
Carlos Ghosn's arrest in Japan over accusations of under-reporting his compensation and personal use of company assets is a bolt from the blue, threatening to remove the leader of the Renault-Nissan-Mitsubishi Alliance in the midst of unprecedented change sweeping through the industry.
Brazilian-born, of Lebanese descent and a French citizen, he began his career at Michelin in France before moving on to Renault.
"Nissan, Renault and Mitsubishi all see merits of the alliance, which is formed in a quite complicated way with overlaps of various management members", he said.
That, the Nissan CEO said, was "a dark side of the Ghosn era which lasted for a long time". Management, including Saikawa, was strongly alarmed by moves for the two companies to completely integrate their management in keeping with the French government's intentions, and nervously watched every step Ghosn made.
Ghosn allegedly reported only half of the $US88.7 million he earned in a five year period ending in March 2015.
The board of Renault is also due to meet to decide Mr Ghosn's future.
While there could be some scrutiny of the relationships between the companies, they're so intertwined now that cutting them apart would be hard, said Kelley Blue Book analyst Michelle Krebs.
Shares in French automaker Renault (RNSDF), of which Ghosn is CEO, plunged as much as 13% in Paris.
Known as "Le Cost Killer", Ghosn is credited with reviving Nissan and has remained popular despite the massive job cuts that he brought and recent controversy over his lucrative pay package. So with Ghosn out at Nissan and probably Renault as well, the companies are unlikely to get any closer.
Ghosn stepped down as CEO of Nissan in 2017.
Saikawa said he could not provide more details because the investigation was continuing.
"With Carlos Ghosn also Renault CEO, the two groups are reliant on one big hitter to solve their lopsided partnership", wrote Liam Proud, a columnist for Reuters' Breakingviews.
He served as Nissan's chief executive from 2001 until April 2017, becoming chief executive of Renault in 2005, leading the two major automakers simultaneously.
The alliance also says the firms have reduced costs for research and development through unifying related functions, adding that similar logic applies to auto parts procurement and negotiations.
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