Carlos Ghosn Allegedly Arrested For Under-Reporting Income

Virginia Carson
November 20, 2018

A press release by the prosecutor's office in Tokyo said Mr Ghosn and Mr Kelly collaborated to under-report Mr Ghosn's income as 4.99 billion yen even though it actually was nearly 10 billion yen, submitting falsified securities statements to the regional finance bureau.

FBN's Susan Li on reports Nissan Motor Chairman Carlos Ghosn was arrested for allegedly under-reporting his salary.

Ghosn voluntarily went with Tokyo prosecutors, who are set to arrest him after questioning, the newspaper said.

As head of the Renault-Nissan-Mitsubishi alliance, Ghosn has created an industrial behemoth, its combined 470,000 employees selling 10.6 million vehicles past year from 122 factories around the globe.

Nissan's board has said it will seek his removal after a months-long inquiry prompted by a whistle-blower uncovered "significant acts of misconduct".

Brazilian-born, of Lebanese descent and a French citizen, Mr Ghosn began his career at Michelin in France, moving on to Renault.

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It's a shock announcement for what had been seen as one of the key architects of Nissan's turnaround and the ongoing success of the Renault-Nissan-Mitsubishi Alliance.

Saikawa reiterated Nissan's commitment to the venture, while a Renault statement expressed "dedication to the defense of Renault's interest in the alliance".

Public broadcaster NHK reported board members received less compensation than financial statements showed, with Ghosn pocketing the difference.

Ghosn's arrest will undoubtedly shake up the auto industry, in which he has been a key vocal player for 40 years.

Ghosn was one of the first executives to champion electric cars, and he also developed a range of low-priced cars for emerging markets.

Company officials have said the firms have been increasingly enjoying the benefits of the partnership, with the cost-saving synergy logging a record €5.7 billion (about ¥730 billion) in fiscal 2017.

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Ghosn is one of the highest-paid executives, if not the highest-paid, in Japan, but is believed to have under-reported his incomes over the last couple of years by millions of dollars and used corporate assets for personal use.

Known as "Le Cost Killer", Ghosn is credited with reviving Nissan and has remained popular despite the massive job cuts that he brought and recent controversy over his lucrative pay package.

The scandal caused shares in Nissan and Mitsubishi to plunge over five per cent in Tokyo trade, a day after Renault shares dipped more than 12 per cent in Paris.

It said CEO Hiroto Saikawa would propose that the Nissan board remove Ghosn and Kelly.

The situation also illustrates the key person risk that investors face when they buy shares of a company - a topic Barron's explored earlier this year in a Streetwise column ("CEO's Sudden Exit Can Hurt...or Help a Stock", June 16).

Shares in Nissan were down about 4% by midday, Mitsubishi was also down more than 7%. He joined Nissan in 1999 after the 1996 acquisition of major stake by Renault.

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He served as Nissan's chief executive from 2001 until April 2017, becoming chief executive of Renault in 2005, leading the two major automakers simultaneously.

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