The brand impact — Nissan's Ghosn scandal

The brand impact — Nissan's Ghosn scandal

The French economy minister and Japan's trade minister on Tuesday expressed their support for the Renault-Nissan vehicle alliance, which has been hit by the arrest earlier this week of top executive Carlos Ghosn.

"The partnership among the three entities will not be affected by this event, rather we will closely work together with the alliance partners, contain any possible confusion and minimise any impact on alliance efforts", he said.

Of French, Brazilian and Lebanese background, Ghosn also is a towering corporate figure in France, where Renault is one of the heavyweight industrial survivors.

Ghosn, one of the auto industry's best known leaders, was arrested on Monday after Nissan Motor Co said he had engaged in wrongdoing at the Japanese firm, including personal use of company money and under-reporting his earnings, for years.

"These two gentlemen were arrested this evening, that is what I understand", Nissan CEO Hiroto Saikawa said at a press conference in Tokyo late on Monday.

Carlos Ghosn reported for financial misconduct
Carlos Ghosn reported for financial misconduct

Prosecutors later said in a statement that Mr Ghosn and senior executive Greg Kelly had conspired to understate Mr Ghosn's compensation, starting in 2010. Nissan shared its findings with public prosecutors, including evidence that Ghosn under-reported $40 million in compensation over five years.

CNN wasn't immediately able to reach Ghosn, Kelly or their representatives for comment.

Falsifying corporate annual reports, which Ghosn and Kelly are accused of, carries a maximum penalty of up to 10 years in prison and/or a fine of up to ¥10 million, under the Financial Instruments and Exchange Act.

Nissan's Saikawa said Ghosn's alleged improprieties came to light through a whistleblower, after which the company began an internal investigation and informed prosecutors.

Nissan's board is to meet Thursday to consider Ghosn's fate.

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Renault shares closed 1.2 percent lower before the meeting, extending Monday's decline of more than 8 percent.

Kelly, who is one of Nissan's three representative board members, had reportedly ordered them to hide portions of Ghosn's remunerations.

"It's extremely regrettable", Mr Suga said of the arrest.

Apologising repeatedly, he vowed to improve the company's governance. That opens up a leadership void at the entire alliance, for which Ghosn officially still serves as CEO and chairman. The Japanese company said it was proposing that its board "promptly" remove Ghosn from that position. Nissan stock fell another 5.5 per cent, while Mitsubishi Motors, the third member of the alliance, ended down almost 7 per cent.

Born in Brazil, Ghosn started his career at French tire maker Michelin in 1978, working his way up to running the company's North American operations.

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Carlos Ghosn joined Renault in 1996.

Known as an aggressive cost-cutter, he was appointed chief operating officer of Nissan in 1999 and became president the following year.

The announcement sent shockwaves through the automotive industry where Mr Ghosn, 64, is seen as a titan, responsible for a dramatic turnaround at Nissan in the early 2000s. That made him the first executive to run two Fortune Global 500 companies at the same time. Since 2016, Nissan has held a 34 percent controlling stake in Mitsubishi Motor Corp.

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