From Savior to Pariah: Nissan Boots Out Carlos Ghosn for Misconduct
Nissan Chairman and Director Carlos Ghosn, along with another one of the Japanese car brand's directors, Greg Kelly, have reportedly been arrested by prosecutors in Japan following an internal investigation based on a whistleblower report that both individuals "have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount." "These two gentlemen were arrested this evening, that is what I understand," CNN.com quoted Nissan Chief Executive Officer (CEO) Hiroto Saikawa at a press conference in Tokyo yesterday, November 19. Although Nissan doesn't disclose the compensation its directors receive, it reportedly paid Ghosn JPY1.1 billion (around PHP512 million) for the end of the fiscal year of March 2017, Ghosn's last year as the brand's CEO. According to Nissan, it has been conducting an internal investigation on both Ghosn and Kelly for the past several months. Besides misdeclaring his compensation, Ghosn has also been found using company assets for personal use. As a result of Nissan's investigation, Saikawa has proposed to the company's board of directors that both Ghosn and Kelly be removed from their respective positions. Ghosn was instrumental in forming the alliance with the three car brands. After joining Renault as an executive vice president in 1996, he helped establish the alliance with Nissan in 1999 where he became its chief operating officer. When Ghosn implemented his 'Nissan Revival Plan' in 1999, the carmaker had a consolidated net loss of USD6.46 billion (over PHP339 billion) the previous year. By putting in place a series of reforms like cutting its total workforce by 14 percent, closing five plants in Japan, reducing the number of suppliers and shareholdings, and auctioning off assets such as its aerospace unit, Nissan's consolidated net profit after tax grew to USD2.7 billion (nearly PHP142 million) a year later. In 2001, he was promoted as Nissan's CEO and assumed the same role in Renault in 2005, in the process becoming the first person to run two global Fortune 500 companies simultaneously. In 2009, he also became Nissan's chairman of the board, and with Nissan's acquisition of a controlling stake in Mitsubishi in 2016, was named as its chairman of the board as well. Shortly after, he relinquished his post as Nissan's CEO to Saikawa. According to Mitsubishi, the removal of Ghosn from his position as its Chairman of the Board and as one of its Representative Director will be proposed to its Board of Directors and that it will conduct an internal investigation as well to determine if Ghosn also engaged in the same misconduct within the company. Renault, meanwhile, has said that while it waits for "pending provision of precise information" from Ghosn, its 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." Below is Nissan's official statement on the matter:
Regarding serious misconduct by Nissan Chairman and one representative director
"Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company’s Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly.
"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 Carlos Ghosn’s compensation.
"Also, in regards 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 Prosecutors Office and has been fully cooperating with their investigation. We will continue to do so.
"As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan’s Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director. Saikawa will also propose the removal of Greg Kelly from his position as Representative Director.
"Nissan deeply apologizes for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures."