Carlos Ghosn arrested in Japan for tax fraud (update)
Carlos Ghosn (64), president and CEO of Renault, and president of the Renault-Nissan-Mitsubishi alliance, has been accused of tax fraud by Japanese justice and after being questioned, has been arrested, according to Japanese media. After the news broke, Renault shares plunged by 13% immediately on the stock market, recovering to -8,43% later on the day.
The news was confirmed on Monday midday by Nissan, saying Ghosn had declared for years less income to the Japanese tax service than he actually received. In total he would have underestimated his salary in Japan by 5 billion yen (39 million euro). The latter showed up in an internal investigation after a whistle-blower had belled the cat.
Nissan also said its own Representative Director, Grey Kelly, an American, was under investigation too for possible improper practices. Kelly was also arrested on suspicion of financial misconduct, Japanese press agency, Kyodo, reported later.
‘Numerous other embezzlements’
According to Nissan, “Ghosn is also guilty of numerous other embezzlements, like using company goods for his own private use”. The Japanese car maker will ask the board on Thursday to put Ghosn aside as soon as possible, but Nissan CEO, Hiroto Saikawa, said this wouldn’t affect the Alliance as such. Saikawa felt “strong resentment and disappointment” over Ghosn, he declared at a press conference.
Ten years imprisonment
For the Japanese prosecutor, Ghosn is suspected of violating the Financial Instruments and Exchange Act, a crime that could be punished with up to 10 years in prison and/or a fine of up to 10 billion yen (77 million euro).
Carlos Ghosn arrived in Tokyo in 1999 to reform Nissan that was just united with Renault. Two years later he was nominated CEO. He managed to turn the company that was in deep turmoil into a profitable group with a turnover of more than 100 billion euro. Since 2005 he also became CEO of Renault and President since 2009.
Hidden bonus system
In 2017 Ghosn left the Nissan CEO’s chair at his ‘dauphin’, Hiroto Saikawa, while remaining as president of the Alliance to concentrate on Renault and Mitsubishi, that joined the Alliance in 2016.
To get an idea of what Ghosn earned in this period: for his role as CEO at Nissan he was payed almost 1,1 billion yen (8,8 million euro) for the period between April 2016 and March 2017 and got an additional 7 million euro per year from Renault.
In June 2017, the Reuters news agency unveiled that the Alliance was thinking about a hidden bonus system for its directors through a society installed in the Netherlands, something Ghosn denied.
Payment lowered by 30%
In Februari 2018, Ghosn accepted that his payment was lowered by 30%, a demand by the French government, which is a major (15%) shareholder of Renault, in exchange to back him up for another four-year mandate at the head of the group.
French president, Emmanuel Macron, said it was too early to say something about the significance of the affair, as he had no further information yet, but he warned the French state as a shareholder would be “extremely vigilant as to the stability of the Alliance and the Renault group”.
In the first six months of 2018, the Alliance with Renault, Nissan, and Mitsubishi became the world’s largest car seller with 5,4 million cars, outselling the Volkswagen Group’s 5,2 million.