Nissan’s Carlos Ghosn fired: 450,000 employees at risk
It looks like it’s over for Nissan CEO and Chairman Carlos Ghosn – former CEO and Chairman now, actually.
News just broke that the seemingly corrupt businessman has been officially sacked from his position by Nissan, following his arrest earlier this week after an internal investigation suspected him of embezzlement.
Mixing business and pleasure
Ghosn’s charges involve under-reporting his salary and using company assets for personal use, which could mean up to 10 years in prison, or a fine of about $89,000 (10 million yen), or both.
According to the NHK, Japan’s national public broadcasting organization, citing unnamed sources, Nissan spent millions of dollars on luxury homes in four countries without legitimate business justifications.
Millions of dollars had been spent to purchase and renovate the homes in Brazil, Lebanon, France and the Netherlands, the Japanese organization said.
Partner in crime also in custody
The Brazilian-French businessman was not the only Nissan executive put in police custody. Longtime colleague and co-conspirator Representative Board Director Greg Kelly was also arrested.
Nissan’s board decided to strip responsibilities from Kelly as well, the company said in a statement. The two men remain directors since a shareholder vote is required to remove them from the board entirely. The Financial Times explains.
According to the BBC, Nissan’s board issued a statement which said the decision to dismiss the two men was unanimous. The board’s mission was “to minimize the potential impact and confusion on the day-to-day cooperation among the Alliance partners”, it added.
The internal investigation was revealed by Nissan to have been ongoing for several months, prompted by a whistleblower.
This corruption has been deep-seated, however. Prosecutors have said the two men conspired to understate Ghosn’s compensation starting in 2010, the BBC reported.
2 arrested, but 450,000 losers
While Ghosn and Kelly were arrested, they aren’t the only losers here. Nissan, Mitsubishi and Renault are all in partnership together, with about 450,000 employees between them. Ghosn had served as the chairman and CEO of Renault, chairman and CEO of Nissan, and chairman of Mitsubishi Motors. Now, the three companies are suffering the after effects.
According to Japanese news agency Kyodo, Nissan’s chief executive Hiroto Saikawa will take over as interim chairman. He promised earlier this week that Nissan would try to “stabilize the situation, and normalize day-to-day operations” for staff and business partners.
Mitsubishi Motors plans to quickly cut Carlos Ghosn out of the post, the Business Review reported. A meeting of the Board of Directors will take place next Monday, a spokesman said.
Renault, on the other hand, has chosen its COO Thierry Bollore to act as deputy CEO as the Ghosn investigation continues.
U.S. traded shares of Renault dropped by about 11% one day after news of Ghosn’s arrest in Tokyo broke on Monday, while Nissan’s shares in the U.S. fell by about 6% after the same period of time.
Ghosn led Nissan for nearly two decades and transformed it into one of the world’s largest automotive groups through an alliance with France’s Renault, the Financial Times notes.
Mitsubishi Motors has already realized the gravity of the situation. Its chief executive Osamu Masuko said the alliance would be difficult to manage without Ghosn. How the companies progress from here is anyone’s guess, as this controversy could seriously shake up the partnered firms involved.