Car crash for Nissan as chairman Carlos Ghosn fired for pay ‘misconduct’

Ghosn was made chief executive of Nissan in 2001 and stepped down last year, retaining the chairman’s role
Ghosn was made chief executive of Nissan in 2001 and stepped down last year, retaining the chairman’s role

One of the car industry’s most feted executives — Nissan chairman Carlos Ghosn — was stunningly fired on Monday for “serious misconduct” including under-reporting his salary and misuse of company funds.

The 64-year old — the first foreigner to lead a Japanese company — is chairman of Nissan, Renault and Mitsubishi after building a strategic alliance of the three car-making giants nearly 20 years ago. Combined sales by the trio reached 10.6 million cars last year, or one-in-nine passenger cars sold worldwide.

Shares in Renault, where Ghosn is also chief executive, plunged 13% and Nissan’s Europe-traded stocks slumped 12% amid reports of Ghosn’s arrest in Tokyo after a probe by Japanese prosecutors.

Nissan said it had been conducting an investigation into Ghosn and fellow director Greg Kelly “over the past several months” following a whistleblower’s report. It claimed that “over many years” the pair had worked together to under-report Ghosn’s pay to the Tokyo Stock Exchange, adding: “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.” Reports from the Kyodo news agency suggested Ghosn had under-reported his salary by 5 billion yen (£34 million) since 2011, breaching Japan’s Financial Instruments and Exchange Act.

Nissan said the “clear violations” had impelled Nissan’s chief executive Hiroto Saikawa to call on the board to “promptly remove” Ghosn and Kelly from their positions. It added: “We will continue our work to identify our governance and compliance issues.”

Ghosn, Brazilian-born, of Lebanese descent and a French citizen, began his career at Michelin before moving onto Renault.

He joined Nissan in 1999 after Renault bought a controlling stake and is widely credited with saving it from bankruptcy. In June, Renault shareholders approved Ghosn’s €7.4 million (£6.6 billion) package for 2017, and he also received €9.2 million in his final year as Nissan chief executive.

The French government, which holds 15% of Renault, helped to approve Ghosn’s pay deal but the company has had an uneasy recent relationship with the Elysée Palace. In 2015, as finance minister, Emmanuel Macron briefly increased France’s stake in Renault to 20%, giving it the ability to thwart Ghosn’s plan to give Nissan a bigger say in the alliance. Speculation also mounted in March that Nissan would buy most of the French government’s stake.

Analysts said the ousting of Ghosn would prompt questions about the future of the alliance he shaped and dent the speculation over a full-blown merger. “The initial share price reaction shows how pivotal he is,” Citi analyst Raghav Gupta-Chaudhary said.

Reports suggest that chief operating officer Thierry Bolloré would be a likely successor at Renault after being promoted by Ghosn earlier this year.

Nissan and Renault have a combined 280,000 staff worldwide, and the alliance sells cars in nearly 200 countries under 10 brands including Dacia, Lada and Datsun.

Kerpow! Cartoon hero 'Le cost-cutter’ is axed

It is hard to overstate the huge impact Carlos Ghosn has had on the car industry since getting his first big job running the Michelin tyre company in his native Brazil, writes Jim Armitage.

After turning that business around, he was snapped up by Renault, where he earned the nickname “Le Cost-Cutter” and returned it to profitability. In 1999, he was hired by Nissan to repeat the trick. At the time, Nissan had $20 billion debt and was losing $6 billion a year.

Ghosn cut 21,000 jobs and brought in French and American managers to work with Japanese incumbents, making English the global company language. He massively overdelivered on targets, returning Nissan to profit in the first year and there are now more staff than when he started. So celebrated was he that a manga comic was even made of his life story.

Ghosn was made chief executive of Nissan in 2001 and stepped down last year, retaining the chairman’s role, as well as chairing alliance partners Renault and Mitsubishi. As with the best manga plotlines, his story is coming to a bloody end.