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Let’s discuss the arrest of Carlos Ghosn

This week’s featured article

KAZUAKI NAGATA, THE JAPAN TIMES

Carlos Ghosn, chairman of the alliance between Nissan Motor Co., Renault SA and Mitsubishi Motors Corp., was arrested Monday over the alleged underreporting of his income and misuse of company funds, in an unprecedented scandal that sent shock waves through one of the world’s top automaker groups.

Ghosn, 64, is expected to be relieved of his post Thursday at a meeting of the company’s board of directors, Nissan CEO Hiroto Saikawa told a news conference later in the evening, adding that Ghosn’s long reign had negatively impacted the firm’s governance.

The carmaker said it had initiated an internal investigation after a report by a whistleblower revealed misconduct by Ghosn and Nissan Representative Director Greg Kelly, alleging that the two executives had conspired to underreport Ghosn’s salary for a number of years.

The Tokyo District Public Prosecutor’s Office had questioned Ghosn earlier in the day and arrested him and Kelly. Together, the amount of their underreporting amounted to some ¥5 billion over five years between 2011 and 2015, sources said.

At the hastily organized news conference, which ran late into the evening, Saikawa apologized for the trouble he said had been caused by Ghosn, who has long been seen as the public face of the automaker.

“We cannot go into details today, but we have confirmed that this matter is totally unacceptable as a company. Experts have also said this misconduct is grave enough to relieve (Ghosn and Kelly) from their posts,” Saikawa said.

He said he will propose to Nissan’s board of directors that Ghosn be removed from his positions as chairman and representative director as well as Kelly from his position as representative director on Thursday.

Ghosn is one of the best-paid executives among Japanese companies, a fact that has often been a target of criticism. His reported salary last year fell by some 33 percent from 2016, to ¥730 million — the first time in four years that his pay had not hit at least ¥1 billion. In 2016, his salary was ¥1.09 billion and in 2015 he received ¥1.07 billion.

Ghosn, a rare foreign top executive in Japan, is well-regarded for turning Nissan around from near bankruptcy.

His management style stood out as he set numerical “commitment” targets and carried out aggressive reforms.

First published in The Japan Times on Nov. 21.

Warm up

One-minute chat about “scandal.”

Game

Collect words related to finance, e.g., company, business, money.

New words

1) alleged: suspected, e.g., “She is alleged to have been the last one to see him alive.”

2) unprecedented: never done or known before, e.g., “The amount of people in need of food support is unprecedented.”

3) reign: governance or rule, e.g., “Prince Charles’ reign begins when his mother dies.”

Guess the headline

Nissan C_ _ _ _ _ _ _ Carlos Ghosn a_ _ _ _ _ _ _ over allegations of financial misconduct

Questions

1) Why was Carlos Ghosn arrested?

2) Who else was arrested?

3) How much did Ghosn receive as his salary last year?

Let’s discuss the article

1) What do you think about this scandal?

2) What do you think will happen to the company and the industry as a result?

Reference

長きにわたり会社の顔として活動をし、その知名度をもって会社や商品のPRにも貢献したといえるであろう人物に大きなスキャンダルが浮上しました。

経営者自身が人気ものになれば企業としても大きなブランディングになる一方、ネガティブなニュースが出たときの企業ブランドへの打撃も大きそうです。

世の中の経営者には何が求められていくのか、朝の会に参加し皆さんで話し合ってみましょう。

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