TOKYO, Japan – Nissan’s board sacked Carlos Ghosn as chairman on Thursday, November 22, a spectacular fall from grace for the once-revered boss whose arrest for financial misconduct has stunned the business world, as France and Japan insisted they want the Nissan-Renault alliance to survive the scandal.
Ghosn, in jail since Monday, November 19, stands accused of underreporting his income by millions of dollars and a host of other financial irregularities after an internal Nissan probe following a whistleblower report.
His ouster is an astonishing turnaround for a titan of the auto sector who revived the Japanese brand and forged an alliance with France’s Renault as well as domestic rival Mitsubishi Motors, which sold a combined 10.6 million cars last year – more than any other firm.
It also throws the future of the alliance into doubt as Ghosn was the architect of the far-flung partnership – which employs 450,000 people globally – and the glue holding it together.
“After reviewing a detailed report of the internal investigation, the board voted unanimously…to discharge Carlos Ghosn as chairman of the board,” Nissan said in a statement after the four-hour meeting, not naming a replacement.
But it reiterated that its “partnership with Renault remains unchanged” and that “the mission is to minimize the potential impact and confusion on the day-to-day cooperation” between the firms.
The French and Japanese finance ministers also reiterated their “strong support” for the alliance at a meeting in Paris on Thursday.
In a joint statement, Bruno Le Maire and Hiroshige Seko said they both wanted “to maintain this winning cooperation.”
Renault’s board has so far stood by Ghosn – naming his deputy Thierry Bollore to handle day-to-day business.
Bollore on Thursday pledged “to stay focused on our mission to preserve the interests of Renault and the sustainability of the alliance.”
“You can count on my full commitment,” he said in a statement on Twitter.
The board of Mitsubishi Motors was reportedly set to meet on Monday to discuss Ghosn’s future.
Prosecutors intercepted the Brazil-born tycoon Monday as he landed in Tokyo on a private jet, accusing him and another executive, Greg Kelly, of understating the chairman’s income by around $44 million between June 2011 and June 2015.
His fate as Nissan chairman appeared sealed just hours later as his handpicked 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.
Even after being jettisoned as chairman, Ghosn remains technically a member of the board as a full shareholders’ meeting is required to remove him.
Nissan said it would study the creation of a “special committee” to take advice from a third party on improving its internal governance and executive pay.
Ghosn is being held custody in a Tokyo detention center and has not been seen in public or made any comments since his arrest.
He received a visit from Brazilian consul Joao de Mendonca on Thursday who told Agence France-Presse that Ghosn “sounded very well, in good health.”
But his conditions are likely to be a far cry from what the millionaire businessman is used to. Inmates at the center 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, November 21, prosecutors successfully applied to extend his custody for an additional 10 days as they stepped up their questioning.
Deputy chief prosecutor Shin Kukimoto said 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 fine of 10 million yen ($89,000) and a 10-year prison sentence.
Under the law, companies themselves can also be held accountable for the falsified documents, Kukimoto said, following reports that prosecutors believe Nissan also has a case to answer.
The Kyodo news agency in Japan also reported Thursday that Nissan had paid $100,000 a year since 2002 to Ghosn’s sister who had no record of doing advisory work for the group.
Public broadcaster NHK has reported that Nissan paid “huge sums” to provide Ghosn with luxury homes in Rio de Janeiro, Beirut, Paris, and Amsterdam “without any legitimate business reason.”
According to the Financial Times, Ghosn’s fall from grace came as he was working on a full-blown merger of Nissan and Renault.
This was opposed by executives in the Japanese firm that has ended up being the most profitable player in the partnership, and the FT said Ghosn’s departure could be used as a pretext to rebalance the alliance in Nissan’s favor.
Analysts said that despite clear tensions between the two firms headquartered 10,000 kilometers 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.” – Rappler.com