Nissan board members appeared poised to oust disgraced tycoon Carlos Ghosn as chairman Thursday, after his spectacular arrest for financial misconduct stunned the car industry and the business world. Ghosn stands accused of under-reporting his income by millions of dollars and a host of other financial irregularities, in a stunning fall from grace for the once-revered titan of the auto sector. The 64-year-old Brazil-born tycoon is credited with turning around the Japanese brand and forged an alliance with Renault and Mitsubishi Motors that last year sold 10.6 million cars between them more than any other firm in the world.
Ghosn's fate appears all but sealed after his hand-picked replacement as CEO, Hiroto Saikawa, launched an astonishing broadside at his mentor following his arrest Monday at a Tokyo airport as he landed in his private jet. Saikawa said "too much authority" had been placed in the chairman's hands and lamented the "dark side of the Ghosn era", as he called the board meeting to fire him. Seven board members will vote on the motion to dismiss Ghosn, which needs a simple majority to pass. Insiders say Saikawa would likely not have suggested the ouster unless he were sure of support from his fellow board members.
"This would not have been proposed if there had been any doubt and the results of the investigations have already been presented to the board members," a source close to the company told AFP. Appointing a new chairman will take some time as it has to be approved by shareholders, but Saikawa is seen as front-runner. Even if removed as chairman, Ghosn will technically remain on the board as a shareholders' meeting is required to oust him.
Ghosn is being held in a Tokyo detention centre and has not been seen in public nor made any comments since his arrest. He received a visit from Brazilian consul Joao de Mendonca on Thursday who told AFP that Ghosn "sounded very well, in good health". On Wednesday, prosecutors successfully applied to extend his custody for an additional 10 days as they step up their questioning.
Authorities believe Ghosn and an American executive Greg Kelly "conspired to understate Ghosn's income five times between June 2011 to June 2015", reporting a total of five billion yen in income ($44 million) instead of the actual 10 billion yen. Deputy chief prosecutor Shin Kukimoto said that the type of crime Ghosn is accused of is "one of the most serious types of crime" under Japan's Financial Instruments Act.
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. Public broadcaster NHK said Nissan had paid "huge sums" to provide Ghosn with luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam "without any legitimate business reason". Ghosn had a reputation as a hard-nosed workaholic with had no qualms about closing factories and slashing jobs earning the nickname "Le Cost Killer" in France, where 47,000 employees work for Renault.
But his exorbitant salary and flashy lifestyle at odds with Japanese corporate culture drew fire and his current accommodation will be a far cry from his usual expensive surroundings. He is thought to be alone in his detention cell in northern Tokyo, with 30 minutes of daily exercise and two baths a week. The arrest has sparked questions over whether the alliance of Nissan, Renault and Mitsubishi Motors can survive without Ghosn, seen as the glue holding together his fractious creation, which globally employs around 450,000 people.
According to the Financial Times, the fall from grace came as Ghosn 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 favour. Renault has held off jettisoning Ghosn, pointedly saying Nissan had failed to share the evidence it had gathered with its sister company.
Governments in Paris and Tokyo have been scrambling to contain the fallout from the arrest, with President Emmanuel Macron saying France would be "extremely vigilant" about the stability of Renault and the alliance.
Analysts said that despite clear tensions between the two firms headquartered 10,000 kilometres 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."
Comments
0 comment