Alliance company shares fall, but succession plan already in place.
Carlos Ghosn, the storied chairman of Nissan that saved the company from the brink and the founder of the Renault-Nissan-Mitsubishi Alliance, has been arrested by Japanese authorities on Monday night over suspected financial violations. Japan’s NHK national public broadcaster reported that Ghosn, with the help of Nissan director Greg Kelly, under-reported nearly US$88.70-million (or about $122-million) in compensation by about half. This has evidently been going on since 2011.
A whistleblower tip from within Nissan had prompted an internal investigation over several months into the claim that Ghosn & Kelly had conspired to under-declare the former’s annual compensation. As a result, Nissan will move to have both Ghosn & Kelly removed at the soonest possible opportunity. Ghosn willingly went with Tokyo prosecutors who met him as he disembarked a business jet at Haneda Airport at 4.30pm local time. The prosecutors quickly began searching the offices in Nissan’s headquarters as well as several other locations, shortly after Ghosn’s detention.
“The investigation showed that over many years, both Ghosn & 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 go Carlos Ghosn’s compensation. 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.” — Statement, Nissan Motor Corporation
Ghosn is credited for the turnaround of Nissan in 1999, when he merged the failing Japanese marque with Renault. At the time of purchase, just 3 of the 46 vehicles that Nissan sold in Japan was profitable, and a ‘revival plan’ for the brand was tabled in October that year. By the year 2000 the automaker reported a consolidated net profit of US$2.7-billion, and Ghosn had managed to return Nissan to profitability within 12-months, and within 3-years had turned it into one of the industry’s most profitable automakers.
He was one of the first foreigners to helm a large Japanese company, and while he was seen as an outsider initially, his turnaround of Nissan endeared him greatly to the Japanese people. Since 2001 his life story has been turned into a superhero-style comic book, and has had things like bento-boxes named after him. He’s also referred to as ‘Seven-Eleven’ within the Alliance, and has been repeatedly dubbed ‘the hardest-working man in the competitive automotive industry.’
Be sure to stay tuned to CarShowroom as this story develops.