Nissan removes Ghosn as chairman after arrest

Nissan Motor Co. ousted Carlos Ghosn as chairman at an emergency board meeting Thursday following his arrest for alleged financial misconduct, bringing down the curtain on his nearly two decades of charismatic leadership at one of the world’s largest automaker groups that may change its future course.

Ghosn’s close aide Greg Kelly was dismissed as representative director. Nissan said in a statement it found that Ghosn and Kelly had «masterminded» understating the amount of the then chairman’s remuneration in securities reports presented to Japanese regulators and his use of company assets for personal gain.

A Nissan source said the board will decide who will assume the post of chairman at a meeting in December. The automaker said an advisory committee will be set up to propose nominations from the current board members.

Nissan also said it will consider creating a special committee that will take advice from an independent third party on how best to improve governance of its management and compensation system of board members.

The 64-year-old Ghosn was arrested by Tokyo prosecutors on Monday for allegedly violating Japan’s Financial Instruments and Exchange Act by underreporting his remuneration by a total of about 5 billion yen ($ 44 million) over five years to March 2015. Kelly, 62, was arrested on suspicion of conspiring with Ghosn.

The dramatic fall from grace of Ghosn came after a months-long internal investigation of Nissan triggered by a whistleblower report.

The removal of Ghosn, one of Japan’s highest paid executives, in a unanimous vote, may accelerate a review of the three-way alliance between Nissan, Renault SA and Mitsubishi Motors Corp., one of the world’s largest automotive groups that he led as its architect, some analysts said.

Nissan’s board consists of nine members, including Ghosn and Kelly who are in detention and could not vote at the meeting.

The advisory committee will be chaired by three external directors — Masakazu Toyoda, a former senior official at the industry ministry, and racing driver Keiko Ihara, who both joined the board in June, and Jean-Baptiste Duzan, a former Renault senior vice president who came to Nissan as a director in 2009.

«The biggest focus now is whether there will be a change in the alliance’s power balance,» said Kentaro Harada, a senior credit analyst at SMBC Nikko Securities Inc.

«The possibility that the relationship in the alliance will weaken cannot be denied,» Harada said, while adding he believes it is unlikely that the partnership will collapse as the Franco-Japanese group benefits from the current framework.

Ghosn was the crucial linchpin of the complex tripartite partnership, which apparently favors Renault even as Nissan contributes to about 50 percent of the French automaker’s net income in recent years.

In the alliance, Renault owns a 43.4 percent stake in Nissan, which holds a 15 percent stake in its French peer but with no voting rights and 34 percent in Mitsubishi Motors.

Ghosn for now remains as both chairman and chief executive of Renault, of which the French government has a stake at 15 percent.

Under Ghosn, the alliance has promoted sharing procurement and technology and other steps to save costs. The group was the world’s largest automaker in terms of sales units in the first half of 2018, outselling Volkswagen AG.

But there have been growing tensions between Nissan and Renault recently. Ghosn proposed to the board in September to review Nissan’s capital structure with Renault, according to company sources.

A number of Nissan executives have been opposed to a full merger with Renault.

Among the nine-member board, four directors had close ties with Ghosn — Kelly, Duzan, former Renault Senior Vice President Bernard Rey and Toshiyuki Shiga, who was Nissan’s chief operating officer until 2013.

There was a chance that Ghosn’s possible proposal of a merger with Renault could win the majority of votes on the board.

Nissan, however, said in the statement the board confirmed that the long-standing alliance with Renault «remains unchanged.»

Nissan CEO Hiroto Saikawa has blamed excessive authority concentrated on Ghosn and the lack of transparency as reasons it could not be aware of his wrongdoing that was carried out «for a long time.»

Ghosn — who became Nissan president in 2000 and served as chief executive officer from 2001 to 2017 — and Kelly will both stay on as board members of the Japanese automaker. Nissan needs to gain shareholders’ approval to oust the two from the board.

Ghosn, known as a savage cost-cutter, won his credit for saving Nissan from near bankruptcy after he was sent to the company by Renault and became chief operating officer in June 1999, three months after both sides forged a capital alliance.

Mitsubishi Motors is also set to dismiss Ghosn as chairman at its board meeting on Monday.

Renault, meanwhile, named its Chief Operating Officer Thierry Bollore as acting CEO without ousting Ghosn at its board meeting Tuesday.

All — Kyodo News+

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