Business / Corporate

Nissan board decides to remove Carlos Ghosn as chairman after arrest

Kyodo, AP

Nissan Motor Co. decided on the removal of Carlos Ghosn as chairman at a board meeting Thursday following his arrest for alleged financial misconduct, marking an abrupt end of nearly two decades of his charismatic leadership.

His close aide Greg Kelly was also dismissed as representative director after the company’s probe uncovered what it describes as his “deep involvement” in the “significant acts of misconduct” by Ghosn, including using company assets for personal gains and understating salaries in securities reports presented to Japan’s regulators.

Both Ghosn, also chairman of the three-way alliance between Nissan, Renault SA and Mitsubishi Motors Corp., and Kelly will stay on as board members at the Japanese automaker, with the firm needing shareholders’ approval to oust them from the board.

Nissan is set to have CEO Hiroto Saikawa double as interim chairman, company sources said Thursday.

Nissan also decided to set up a committee to enhance governance comprised of outside directors in the field.

Ghosn is suspected of having written emails instructing Kelly to falsify financial documents relating to his pay package, sources close to the matter said Thursday.

The prosecutors are believed to have seized the emails as evidence of Ghosn’s wrongdoing, the sources said.

Following the instructions, Kelly is said to have then ordered two of his immediate subordinates — an executive in charge of legal affairs and a senior employee — to manipulate the content of the documents, according to the sources, adding that only close subordinates were involved in concealing the alleged wrongdoing.

Both the executive and the senior employee reached a plea-bargain agreement with the prosecutors and are likely to have given evidence related to the matter, they said. The prosecutors believe the executive was also involved in the purchase, using company money, of overseas residences to be used by Ghosn.

The Brazilian-born tycoon who holds French citizenship faces a charge of violating Japan’s Financial Instruments and Exchange Law by underreporting his remuneration by a total of about ¥5 billion ($44 million) over five years to March 2015, according to sources.

His understated gains likely included the use of residences bought by the company in the Netherlands, Brazil, France and Lebanon without paying rent, according to different sources.

At a news conference following the two arrests on Monday, Nissan CEO Saikawa said Kelly, a former lawyer who has been a Nissan executive since 2008, “has controlled the company with tremendous influence.”

Ghosn, known as a savage cost-cutter, helped save Nissan from near bankruptcy after he was sent to the company by Renault and became chief operating officer in June 1999, three months after the French and Japanese carmakers forged a capital alliance.

He propelled growth under the alliance after becoming president in 2000 and chief executive the following year. He held the CEO post until 2017 while concurrently serving as chairman beginning in 2008.

Kelly, 62, joined Nissan in the U.S. in 1988, and became a board member in 2012. His background over the years has been in human resources and alliance management.

Analysts say the future of Nissan’s alliance with Renault, and other automakers, must be as closely watched as what happens to the executives. Renault owns 43 percent of Nissan, and Nissan owns 15 percent of Renault.