Nissan's long-time chairman is arrested in Japan over claims he under-reported his salary
James Attwood, digital editor
19 November 2018

Carlos Ghosn is set to be removed from his role as Nissan chairman and representative director after an internal investigation found that he has under-reported his salary to Japanese authorities. The firm said it has also uncovered evidence of other "significant acts of misconduct" by Ghosn.

Nissan said the misconduct, which involved both Ghosn and fellow representative director Greg Kelly, came to light following a whistleblower report, prompting an internal investigation that has been ongoing for several months. In Japanese business, the representative director role is the most senior executive managing role, reporting directly into the board of directors.

Opinion: taking stock of Nissan's claims about Ghosn - and their impact

According to Japanese news agency Kyodo, Ghosn is believed to have understated his income by 5 billion yen over five years, a total of around £34 million.

In a press conference, Nissan CEO Hiroto Saikawa confirmed that both Ghosn and Kelly has been arrested by authorities. He said that it was his priority to minimise the impact on Nissan and its employees, and that the board would also look at ways of preventing such issues occuring in the future.

During the conference, Sakawa  said he was unable to give full details of the acts of misconduct, but said: "It’s very difficult to express it in words. Beyond being sorry, I feel big disappointment and frustration and despair. I feel despair, indignation and resentment. As the details are disclosed, I believe people will feel the same way that I feel today."

Saikawa said the board would meet on Thursday to remove both men from their roles and discuss future plans. He said that 'independent directors' would join the Nissan board going forward, and a committee led by independent directors would be established to look at how to prevent such issues in the future.

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As well as his role with Nissan, Ghosn is the chairman of the Renault-Nissan-Mitsubishi Alliance, which encompasses ten brands and is one of the world's three largest car groups.

Saikawa said that the Alliance would not be affected by the move – despite the fact Ghosn currently remains chairman and CEO of Renault. "The partnership among the three entities will not be affected by this event," said Saikawa. "We will work closely with Alliance partners to minimise the impact on Alliance efforts."

Nissan: invesigation sparked by whistleblower report

In a statement confirming the news, Nissan said: “The investigation showed that over many years, both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount in order to reduce the disclosed amount of Ghosn’s compensation.

“Also, in regard to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.

“Nissan has been providing information to the Japanese public prosecutor's office and has been fully cooperating with their investigation. We will continue to do so.”

Nissan said that, because the misconduct “constitutes clear violations of the duty of care as directors”, CEO Hiroto Saikawa will propose that the company’s board of directors promptly remove both Ghosn and Kelly from their roles with the company.

Ghosn's Nissan tenure

Ghosn joined Renault in 1996 and was named COO of Nissan in 1999, when the French firm bought a major stake in its Japanese rival. He was named Nissan’s chairman in 2000 and CEO the following year, although he stood down from the latter role last year. During his press conference, Saikawa suggested that, in his personal opinion, the "dark side" of Ghosn's long run in the chairman role may have been a "negative aspect".

Saikawa also suggested that the concentration of power within the Alliance to Ghosn would not be repeated, saying: "In the future we will make sure we don’t rely on a specific individual, but rely on a more sustainable structure, so we need to talk to the partners and this is an opportunity to revise the way we work."

Kelly joined Nissan in 1988, working in its North American division, and has largely worked as a director and vice president in human resources since then. He has been a representative director since June 2012.

Renault's response to allegations

Since 2005, Ghosn has also served as CEO and chairman of Renault, and he had been set to continue in that role until 2022. In addition, he has been chairman of Mitsubishi since 2016, when Nissan acquired a stake in its compatriot firm

Shortly after Saikawa's press conference on Monday evening in Japan (lunchtime in Europe), Renault said its board of directors would meet to discuss the claims shortly.

The statement read: "Philippe Lagayette, as lead independent director of Renault, in liaison with Board Committee Chairs Marie-Annick Darmaillac and Patrick Thomas, have acknowledged the contents of Nissan’s press release of today.

"Pending provision of precise information from Carlos Ghosn, Chairman and Chief Executive Officer of Renault, the above directors wish to express their dedication to the defense of Renault’s interest in the Alliance. The Board of Directors of Renault will be convened very shortly."

Mitsubishi proposes Ghosn removal

Mitsubishi Motors, which is part-owned by Nissan, has issued a statement that, "since the alleged misconduct is related to a corporate governance and compliance issue", it will propose Ghosn is removed as chairman of the company and representative director by its board of directors.

The statement added: "We will readily conduct an internal investigation on whether Ghosn has been engaged in the misconduct like the above within MMC."

Nissan and Renault share price falls

The news that the Tokyo District public prosecutor's office was set to arrest Ghosn first came from Japanese newspaper The Asahi Shimbun.

Following that report, Nissan's global depository receipts fell more than 11% in Japan before trading closed, while shares in Renault have so far dropped by more than 8%.

Read more

Opinion: taking stock of Nissan's claims about Ghosn - and their impact

February 2018: Carlos Ghosn set to remain as Renault boss until 2022

September 2017: Renault-Nissan-Mitsubishi Alliance to invest £8.9bn in electric and autonomous cars

November 2013: Renault-Nissan Alliance and Mitsubishi Motors join forces

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Comments
21

19 November 2018

Official line is a big wig gets instant dismal for filling in his tax returns wrong in a foreign country.  Far more interested in what hasn't been reported than this official line.

Always hated seeing people with fantastic jobs and salaries cheating the man in the street.

19 November 2018
xxxx wrote:

Official line is a big wig gets instant dismal for filling in his tax returns wrong in a foreign country.  Far more interested in what hasn't been reported than this official line.

Always hated seeing people with fantastic jobs and salaries cheating the man in the street.

Government is not "the man in the street". Not anymore.

19 November 2018
NoPasaran wrote:

xxxx wrote:

Official line is a big wig gets instant dismal for filling in his tax returns wrong in a foreign country.  Far more interested in what hasn't been reported than this official line.

Always hated seeing people with fantastic jobs and salaries cheating the man in the street.

Government is not "the man in the street". Not anymore.

Tax receipts get spent on the 'man in the street'. Cheat on taxes and you Cheat the people. 

19 November 2018

Absolutely right, and often forgotten or ignored by the able bodied but workshy, whose life on benefits is paid for, not by the government printing money, but out of the taxes collected from working people.  Meanwhile, those who genuinely need to be supported by the state through disability or poor health go wanting.

19 November 2018
Daniel Joseph wrote:

Absolutely right, and often forgotten or ignored by the able bodied but workshy, whose life on benefits is paid for, not by the government printing money, but out of the taxes collected from working people.  Meanwhile, those who genuinely need to be supported by the state through disability or poor health go wanting.

Benefit cheating is pretty rare, despite what the right wing press say.

19 November 2018

Wow, someone's really enjoying his right-wing Kool Aid. Benefit fraud accounts for a TINY percentage of the government's overall spend on social security, while tax fraud by the wealthy, whether via 'legal' tax avoidance, or outright tax evasion (such as underreporting one's income) costs the UK an estimated £34bn a year. 

19 November 2018

Legal tax avoidance is just that, legal.  Anyone in the UK who has an ISA is legally avoiding tax.  If the government doesn't like people avoiding or deferring tax, they are free to change the rules as they see fit.  Tax evasion is fraud and should be prosecuted to the full extent of the law.

I feel exactly the same about anyone who doesn't pay their fair share, be they multimillionaires or benefit cheats.  The point I was making was that the government has no money of its own, only what it collects in taxes or borrows.  So, those who defraud the system aren't defrauding the government,  they are defrauding all of us.  That viewpoint hardly warrants your right-wing jibe.

19 November 2018
xxxx wrote:

NoPasaran wrote:

xxxx wrote:

Official line is a big wig gets instant dismal for filling in his tax returns wrong in a foreign country.  Far more interested in what hasn't been reported than this official line.

Always hated seeing people with fantastic jobs and salaries cheating the man in the street.

Government is not "the man in the street". Not anymore.

Tax receipts get spent on the 'man in the street'. Cheat on taxes and you Cheat the people. 

You are very idealistic. Like a little kid who believes in Santa and tooth fairy. All these guys, even billionaires like Warren, pay very little tax (even though warren likes to wax lyrical about how rich should pay more). Government will gut you like a pinata if it needs to, it does already , you get much less than what you really give away to the "government". Direct and indirect taxes, all kind of fees, all kind of regulations that you don't even notice. Carlito will be fine and will end up making millions somewhere else, you go try to steal a loaf of bread and see what happens to you. 

20 November 2018
NoPasaran wrote:

xxxx wrote:

NoPasaran wrote:

xxxx wrote:

Official line is a big wig gets instant dismal for filling in his tax returns wrong in a foreign country.  Far more interested in what hasn't been reported than this official line.

Always hated seeing people with fantastic jobs and salaries cheating the man in the street.

Government is not "the man in the street". Not anymore.

Tax receipts get spent on the 'man in the street'. Cheat on taxes and you Cheat the people. 

You are very idealistic. Like a little kid who believes in Santa and tooth fairy. All these guys, even billionaires like Warren, pay very little tax (even though warren likes to wax lyrical about how rich should pay more). Government will gut you like a pinata if it needs to, it does already , you get much less than what you really give away to the "government". Direct and indirect taxes, all kind of fees, all kind of regulations that you don't even notice. Carlito will be fine and will end up making millions somewhere else, you go try to steal a loaf of bread and see what happens to you. 

 

Wow, you're so worldy!  Teach us more, Mr Economics!!!

19 November 2018

James, 100 Yen is equal to 69p.

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