Fudging salary costs dear; Carlos Ghosn arrested and to be ousted from Nissan

Last Updated: Mon, Nov 19, 2018 21:35 hrs
FILE PHOTO: Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, smiles before an interview during the 87th International Motor Show at Palexpo in Geneva

Brazil born French business-magnate of Lebanese origin, Carlos Ghosn is usually referred as a Titan, Czar, or a Mogul. On Monday, however, his name unceremoniously cropped on a list of criminals.

According to reports from Japan, Ghosn had been alleged as under-reporting salary to exchange houses and filing agencies. Executives from Nissan, a Japanese auto-major that Ghosn was associated with, were quoted as saying that they uncovered "significant acts of financial misconduct". In a statement by Nissan, the company's Chief Executive Hiroto Saikawa said, Ghosn and Greg Kelly, a representative director may have done this to reduce their disclosed compensation.

Kyodo News reported Saikawa as saying that there were three large instances of misconduct by Ghosn. Saikawa also added that Ghosn and Kelly had been arrested.

A statement from Nissan alleged that the duo had resorted to "personal use of company assets".

Prosecutors from Tokyo arrested Ghosn on Monday and public broadcaster NHK confirmed reported prosecutors alleging that Ghosn deflated his income by about 5 billion yen or approximately $44 million.

Although Saikawa did not offer a customary bow as mark of sorrow during a media briefing, he expressed his feelings in words. "I feel strong anger and disappointment," he was quoted as saying by Bloomberg while at a news conference at Nissan headquarters in Yokohama, Japan.

Nissan is likely to seek the removal of both Ghosn as well as Kelly from the board. Reports concur that their removal was a mere formality.

Meanwhile attorneys and legal experts believe that prosecutors may have to show additional details of Ghosn's crime. Reports are yet to reveal where Ghosn has been lodged. Prosecutors are also investigating details such as the role of others besides the two. Reports say that there was a possibility of a corporate coup being played to oust Ghosn from his job.

Ghosn enjoyed a demi-god status at Renault, Nissan, Mitsubishi and the global automotive industry. The 64 year old Ghosn had been credited for rescuing Japanese automaker Nissan from near-bankruptcy in 1999. Back then, Renault overtook the charges of saving Nissan and let it's Man-Friday (Ghosn) free. A large overhaul ensued and Nissan was brought back from the dead and into a list of innovative automakers.

The operation in 1999 earned Ghosn the sobriquet Le Cost Killer, a nickname for leaving at least one in seven jobless. Le Cost Killer unleashed a similar reign at Mitsubishi, another Japanese automaker that reported sickness in 2016. But this time, instead of Renault it was Nissan that threw a lifeboat. Nissan purchased a third of Mitsubishi for about $2.2 billion.

Carlos Ghosn and Nissan are currently the top trending topics on Twitter. Anand Mahindra, the Chief at Indian automaker Mahindra and Mahindra also took to twitter to express his thoughts.

The unceremonious arrest has thrown a spotlight on the alliance between Nissan, Mitsubishi and Renault. The arrest has also lead to questions being posed to the French President Emmanuel Macron. The French government owns a 15% share in Renault.

Macron had been quoted in an Agence France-Presse story as saying that France would be extremely vigilant about the fate of Ghosn. "The state, as a shareholder (of Renault), will be extremely vigilant to the stability of the alliance and the group," he said.

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