Nissan’s chairman of nearly 20 years has been sacked by board members just days after he was arrested for financial misconduct.
Once-revered boss Carlos Ghosn, 64, seen as the man who saved Nissan, is accused of under-reporting his income by millions of dollars, as well as a host of other financial irregularities.
Prosecutors intercepted the Brazil-born tycoon on Monday as he landed in Tokyo on a private jet, accusing him and executive Greg Kelly of understating the chairman’s income by around $44 million between June 2011 and June 2015.
He is now being held in a Tokyo detention centre in ‘spartan conditions’ and faces up to ten years in prison.
Carlos Ghosn was the chairman of Nissan for almost two decades and was revered in Japan. He has now been removed from his role
His arrest stunned the car industry and the business world and has plunged an alliance between Nissan, Renault and Mitsubishi motors, which he forged, into doubt.
Nissan board members voted unanimously to sack Ghosn as chairman, the Japanese car giant said in a statement on Thursday.
The statement said: ‘After reviewing a detailed report of the internal investigation, the board voted unanimously … to discharge Carlos Ghosn as Chairman of the Board.’
The claims against Ghose come after a month-long internal Nissan probe following a whistleblower report.
Hours after his arrest, his hand-picked successor as CEO, Hiroto Saikawa, launched an impassioned broadside at his former mentor, muttering about a ‘dark side’ to the Ghosn era and urging his sacking.
However, even after being removed as chairman, Ghosn remains a member of the board as a full shareholders’ meeting is required to remove him.
Ghosn is seen as being responsible for the revival of Nissan, as well as the alliance with Renault and Mitsubishi Motors, which sold a combined 10.6 million cars last year – more than any other firm.
The alliance, which employs 450,000 people globally, is now thought to be under threat as Ghosn was believed to be the glue holding it together.
His sacking comes after he was arrested for financial irregularities. Ghosn is being held in spartan conditions at a Tokyo detention centre (pictured)
The disgraced boss is being held in custody in a Tokyo detention centre and has not been seen in public nor made any comments since his arrest.
He received a visit from Brazilian consul Joao de Mendonca on Thursday who told AFP that Ghosn ‘sounded very well, in good health’.
However, his conditions are likely to be a far cry from what the millionaire businessman is used to.
Inmates at the centre are typically allowed 30 minutes exercise per day and only two baths a week.
Ties and strings are removed to prevent suicide attempts and former guards and lawyers said Ghosn was almost certain to be held in a cramped cell on his own.
On Wednesday, prosecutors successfully applied to extend his custody for an additional 10 days as they step up their questioning.
Deputy chief prosecutor Shin Kukimoto said that the type of crime Ghosn is accused of is ‘one of the most serious types of crime’ under Japan’s Financial Instruments Act and Ghosn could face a 10-million-yen fine and/or a 10-year prison sentence.
Under the law, companies themselves can be held accountable for the falsified documents, following reports that prosecutors believe Nissan also has a case to answer.
The crisis appeared to be going from bad to worse for Nissan, as the Asahi Shimbun newspaper reported that prosecutors believe the firm also had a case to answer. Both Nissan and the authorities declined to comment
Public broadcaster NHK said Nissan had paid ‘huge sums’ to provide Ghosn with luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam ‘without any legitimate business reason’.
Ghosn had a reputation as a hard-nosed workaholic with no qualms about closing factories and slashing jobs — earning the nickname ‘Le Cost Killer’ in France, where 47,000 employees work for Renault.
But his exorbitant salary and flashy lifestyle – at odds with Japanese corporate culture – has long been criticised.
According to the Financial Times, Ghosn’s fall from grace came as he was working on a full-blown merger of Nissan and Renault.
Ghosn’s departure could now be used as a pretext to rebalance the alliance in Nissan’s favour, according to reports.
Renault has held off on removing Ghosn, saying that Nissan had failed to share the evidence it had gathered with its sister company.
Governments in Paris and Tokyo have been scrambling to contain the fallout from the arrest, with President Emmanuel Macron saying France would be ‘extremely vigilant’ about the stability of Renault and the alliance.
Analysts said that despite clear tensions between the two firms headquartered 10,000 kilometres apart, neither company has the financial might alone to make the heavy investments in electric vehicles considered to be the industry’s future.
‘It would be like a couple divorcing after 20 years — it would be complicated, very expensive and not easy to do,’ said Gaetan Toulemonde, an analyst at Deutsche Bank.
‘Honestly, I don’t know if it’s even possible.’