Published: Tue, November 20, 2018
Money | By Ethel Goodwin

Nissan says CEO Carlos Ghosn lied about salary, misused company money

Nissan says CEO Carlos Ghosn lied about salary, misused company money

Nissan Motor said on Monday its internal investigations showed its chairman Carlos Ghosn had under-reported his income and had committed other misconduct.

According to NHK and the Kyodo News Service, Nissan paid Ghosn almost 10 billion yen ($89 million) over five years through March 2015, including salary and other income, but he reported receiving only about half that amount.

But the group now looks troubled after Japanese police reportedly arrested Ghosn on suspicion he failed to report his full compensation to stock market authorities as chairman of Nissan.

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

"Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company's Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly", Nissan said in a statement. Nissan said in a statement that the directors' behavior constituted "clear violations of the duty of care", and "numerous other significant acts of misconduct" had been uncovered in regards to Ghosn.

The men can be held without charge for 48 hours in Japan but that can be extended by up to 20 more days. The Nissan-Renault-Mitsubishi trilateral partnership was led by Nissan, but the number of executive officers Ghosn invited from outside Japan has increased year after year.

Nissan says Ghosn will be dismissed from the company. Management, including Saikawa, was strongly alarmed by moves for the two companies to completely integrate their management in keeping with the French government's intentions, and nervously watched every step Ghosn made. Kyodo reports Ghosn's salary was underreported to the tune of $44 million over a five-year period beginning in 2011.

Neither Ghosn nor Kelly could be reached for comment. He said in September that he will continue to pare back his roles at the three individual companies, while continuing to head their alliance.

In his 40 years in the auto industry, the praise Carlos Ghosn has won for turning around businesses has regularly been matched by criticism over the amount he has been paid to do it.

As a result, CEO Hiroto Saikawa will propose to Nissan's board of directors to "promptly remove Ghosn from his positions as chairman and representative director", the company said. Renault owns 43% of Nissan, which owns 15% of Renault and 34% of Mitsubishi.

Ghosn helped put Nissan on the right track in the late 1990s after the company neared bankruptcy.

Saikawa said he was still thinking through whether Ghosn was "a charismatic figure or a tyrant".

Renault shares fell as much as 15 per cent in Paris on Monday, the lowest in nearly four years in the wake of the scandal, while Nissan global depository receipts dropped more than 11 per cent. It was also waiting for "precise information from Carlos Ghosn".

In June, Renault shareholders approved Ghosn's 7.4 million euro ($8.5 million) compensation for 2017.

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