Nissan Seeks to Remove Ghosn Due to Financial Misconduct

Nissan stuns the automotive world this morning by announcing it is seeking to remove Chairman Carlos Ghosn.

Ghosn, 64, and a veritable rock star in the auto industry due to his outspokenness and revitalization of the once downtrodden Japanese automaker Nissan, was engaged in financial improprieties, the automaker says of information uncovered during an internal investigation.

“Based on a whistleblower report, Nissan Motor Co. Ltd. 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 says in a statement posted on its media site.

“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,” the automaker adds.

The Japan Times, citing sources, says Ghosn and Kelly together underreported Y5 billion ($44.3 million) from 2011 through 2015.

Besides hiding his full salary, Nissan also says “significant” misconduct by Ghosn was uncovered during the course of its investigation, including his personal use of company assets and Kelly’s “deep involvement.”

Ghosn, also the chairman of France’s Renault and Japan’s Mitsubishi – both alliance partners of Nissan – reportedly was arrested this morning after questioning at the Tokyo District Public Prosecutor’s Office, says The Times. Nissan in its statement says it has and continues to provide information to the Prosecutor’s Office.

Kelly, 62, and a Nissan employee since he joined Nissan North America as an associate legal counsel in 1988, also was arrested, the newspaper’s website reports.

Nissan says CEO Hioto Saikawa is proposing to the company’s board Ghosn’s “prompt” removal from his chairman and representative director roles, as well as Kelly’s removal as representative director.

The worldly Ghosn, of Lebanese descent but raised in France and Brazil, joined Nissan from Renault in 1999. He had turned the French automaker’s finances around and did the same for the Japanese automaker, which had lost money for six of the seven years prior to 1999, when Nissan and Renault formed an alliance and Ghosn joined Nissan as chief operating officer.

His “Le Cost Killer” reputation at Renault continued at Nissan, of which he was named president in 2000 and CEO in 2001. Ghosn cut Nissan manufacturing capacity and closed plants, slashed tens of thousands of jobs and reorganized the company’s purchasing unit.

Speaking at a news conference today in Japan, Saikawa tells the media: “We are deeply sorry and regret the betrayal of trust of various related people, shareholders and suppliers who have supported us for many years because Ghosn was leading Nissan,” he says.

Today’s news comes on top of other recent scandals at Nissan in Japan, including a series of revelations it for years falsified emissions and fuel-economy tests and used unqualified inspectors to do so.