Following allegations of some serious offences and misconduct which had violated Japanese financial trading law, Japanese car maker Nissan is set to ouster its Chairman Carlos Ghosn from his position as the chairman of the company after being recommended by the CEO of the company Hiroto Saikawa.
Ghosn was arrested by Tokyo prosecutors on Monday after he had voluntarily gone to them for investigations as stated by local media reports in Japan. His departure from the current position in Nissan would have an impact in the auto industry because he also has to conduct the role of the CEO of Renault and he was instrumental in forging the alliance between the three global car makers – Renault, Nissan and Mitsubishi.
According to the allegations for which Ghosn was arrested, he, along with his Nissan colleague, Representative Director Greg Kelly, had produced documents with false numbers with the Tokyo Stock Exchange securities report. The documents were allegedly designed such that they resulted in under-reporting of the amount of compensation package for Ghosn “over many years”. It has also been alleged that the top executive had financed his personal expenses with company money.
According to an official statement issued by Nissan on the issue, it said that the directors’ behavior constituted “clear violations of the duty of care,” and “numerous other significant acts of misconduct” had been found out with respect to Ghosn.
The issue first came to light with the top management at Nissan following revelations by a whistle blower who provided detailed reports about how Ghosn and Kelly had been conducting the improper and illegal practices. This started off an internal investigation that went on for a number of months with the company. The matter was also being investigated by the Japanese Public Prosecutors Office and Nissan had cooperated in that investigation too.
Ghosn’s ouster at Nissan comes as larger shifts are happening at the Renault-Nissan-Mitsubishi alliance. The companies have reportedly considered changing the structure of their partnership, possibly through a merger. Ghosn’s slow retreat from his roles at each company—including stepping down as Nissan’s CEO last year and suggesting he may step down from his post as CEO of Renault before the scheduled end of his term in 2022—have sparked rumours that he wasn’t on board with plans for further integration and might be thinking of leaving the alliance anyway.
Under the best of circumstances, the exit of Ghosh – who has been running the company since 1999 and who had been instrumental in forging the very unlikely alliance between the three car makers, would have had a destabilising impact. But now there is a real threat to the business because of his departure considering the current conditions of the company as revealed on Monday.
There were no immediate comments available from Renault about the possible ouster of Ghosn.
There was a drop of as much as 13 per cent in the stock price of both Nissan and its partner Renault following revelation of the news of Ghosn’s ouster.
(Adapted from Fortune.com)