Japanese automaker Nissan Motor Co.'s influential chairman Carlos Ghosn was fired and arrested Monday after an internal probe found he underreported his salary and for other financial violations, including the personal use of company assets, the firm and Japanese state media said.
Nissan said in a statement that Ghosn would be dismissed after an internal probe based on a whistleblower report found he falsified reports "over many years."
Japan's state broadcaster NHK said Ghosn was later arrested Monday on suspicion of financial misconduct. The news was announced after Japan’s financial markets closed, meaning Nissan's Japan-listed stock price was not immediately affected.
However, shares in French carmaker Renault, Nissan's longtime partner, fell 14 percent in European trading, to 55.61 euros – the largest drop in over three years.
Brazilian-born Ghosn, 64, is a huge figure in the global auto industry. He was an early advocate for electric cars, autonomous and driverless vehicles, and for integrating communication capabilities with smartphone technology for the "connected car."
Ghosn helped turn around Renault and Nissan and pushed them into electric cars. Ghosn is chairman and CEO of the Renault-Nissan-Mitsubishi alliance and CEO of Renault.
Over a decade ago, Ghosn was a central figure in a proposed three-way alliance between General Motors, Renault and Nissan. The failed globe-spanning partnership would have created the world's largest carmaker, currently Germany's Volkswagen.
Renault was not available for comment on the allegations.
Another senior Nissan executive, American Greg Kelly, was also dismissed. Neither Ghosn nor Kelly could be reached directly for comment.
"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," Nissan said in its statement. "Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly's deep involvement has also been confirmed."
The fall for Ghosn, whose charisma, globe-trotting persona and industry gravitas once inspired a Japanese manga comic book about him, left the auto industry gasping.
"Ghosn is a giant in the industry," said Michelle Krebs, an analyst at Cox Automotive’s Autotrader. "He’s a giant on the global business stage."
Although investors were concerned Ghosn’s dismissal could mean Nissan faces financial problems, Sanford Bernstein auto analyst Max Warburton said it’s more likely the accusations pertain to Ghosn’s personal conduct.
As a leader of three companies at once, Ghosn successfully pressed the global alliance of Nissan, Renault and Mitsubishi to challenge Volkswagen Group and Toyota Motor for the title as the world’s largest automaker. He promoted collaboration among the alliance partners to save on vehicle costs.
In doing so, he entertained the prospect of an outright merger at one point, but political realities made it infeasible, he eventually concluded. Among them: The French government owns a large stake in Renault and is unlikely to cede control to the shareholders of more-profitable Nissan.
Now, with Ghosn "defenestrated," the alliance’s future is suddenly in jeopardy, Warburton wrote in an investor note Monday.
"It is hard not to conclude that there may be a gulf opening up between Renault and Nissan. Perhaps the Alliance will be fine without Ghosn – his importance may be overstated. Or perhaps it will come apart at the seams."
One of Ghosn’s signature moves was his aggressive pursuit of sales volume, sometimes at the expense of profitability and quality. He wanted to make Nissan one of the largest automakers in the U.S., but his successor as CEO of the Japanese automaker, the recently installed Hiroto Saikawa, publicly questioned the brand’s strategy of heavily discounting vehicles for Americans.
Still, few questioned Ghosn’s industry leadership, especially when he cast a vision to make Nissan the world’s leader in electric vehicles, starting with the battery-powered Nissan Leaf.
Which is why it was such a shock when Nissan lost the electric-car crown to Silicon Valley’s Tesla and to General Motors.
"He had this vision for being extremely aggressive in electric vehicles,” Krebs said, of Cox Automotive’s Autotrader. "It just has not taken hold."
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