The news that Nissan Motor Co Chairman Carlos Ghosn arrest on alleged financial misconduct is still a shock to Japan.
The Nissan Co Chairman, who was widely esteemed for saving the car maker from near bankruptcy, was arrested on Monday for alleged financial misconduct.
Nissan disclosed that Ghosn, who is also chairman and CEO of Renault and chairman of Mitsubishi Motors, would be fired from his post as Nissan chairman on Thursday.
The CEO of Nissan Hiroto Saikawa told a packed press conference on Monday night that the company found out that Ghosn had been using corporate money for personal purposes and under-reporting his income for years in official company filings to the Tokyo Stock Exchange.
Greg Kelly, who is another board member, was also deeply tangled in the misconduct, Nissan said.
Saikawa said he couldn’t expantiate as the cases are being investigated by prosecutors, who have failed to comment.
Prosecutors said that Ghosn and Kelly combined to play down Ghosn’s payment over five years starting in fiscal 2010 which is about half of the actual 9.998 billion yen ($88.9 million).
Public broadcaster NHK revealed that Nissan paid billions of yen to buy and renovate homes for Ghosn in Rio, Beirut, Paris and Amsterdam, mentioning unnamed sources. NHK said the properties had no business purpose and were not listed as benefits in TSE filings.
According to reports, Ghosn has not been officially charged. The Asahi newspaper reported that he and Kelly had submitted to prosecutors’ questions after getting off a plane on Monday afternoon at Tokyo’s Haneda Airport.
Saikawa confirmed that they had been arrested.
Ghosn and Kelly have not been seen since and their precise locations are not known. Suspects are naturally taken to the Tokyo Detention Center, which is connected to the Tokyo District Public Prosecutors Office.
Nissan’s Saikawa said Ghosn’s alleged immodesties was brought to light through a whistleblower, after which led to an internal investigation in the company and informed prosecutors.
Japanese media reports disclose that the informant is a member of Nissan’s legal department.
The Asahi reported, without quoting sources, that the informant gave the prosecutors information in a plea bargain, implying the person may have provided evidence in exchange for a lighter sentence.
Ghosn, 64, after becoming CEO of a struggling Nissan in 2001, he was hailed as the automaker’s savior by executing an aggressive saving plan. Known for his flair and confidence, Ghosn won respect for his business acumen and for shaking up Nissan’s traditional corporate culture, which may have made it difficult to hold him accountable.
Ghosn became CEO of Nissan partner Renault in 2005, chairman of Nissan of 2008 and chairman of Renault in 2009, giving him considerable sway over both companies.
On Monday, Saikawa recognized that too much power had been concentrated in Ghosn. “Looking back, after 2005 when he became CEO of both Renault and Nissan, we did not really discuss the implications,” he said.
Bruno Le Maire, France finance minister said on Tuesday that Ghosn should not continue to be in charge of Renault after his arrest in Japan.
Nakamura said, if bail is granted, it would be “exorbitant, in hundreds of millions of yen,” or millions of dollars, But in major cases like this, “often no bail is granted until after the arraignment at the first court session”.
The falsifying of corporate annual reports, which Ghosn and Kelly are accused of, comes with a maximum consequence of up to 10 years in prison and/or a fine of up to 10 million yen, under the Financial Instruments and Exchange Act.