Nissan shares plunge as Ghosn faces ouster after arrest

Nissan shares plunge as Ghosn faces ouster after arrest

A man looks at a stock quotation board showing share prices of Nissan Motor Co (top) and Mitsubishi Motors outside a brokerage in Tokyo, Japan November 20, 2018. (REUTERS Photo)

Nissan and Mitsubishi shares plunged Tuesday, as the automakers prepared to oust chairman Carlos Ghosn a day after he was arrested for alleged financial misconduct.

Ghosn's arrest sent shockwaves through the auto industry, where he was a towering figure, as well as Tokyo markets.

And his legacy appeared in danger of total collapse, with his own handpicked successor as Nissan CEO accusing Ghosn of accruing too much power, in what he called the "dark side" of his leadership.

The spectacular fall of the Brazil-born executive also raised questions about the future of the sometimes fractious alliance he led of Nissan, Mitsubishi and Renault.

Nissan and Mitsubishi have said they will propose his removal as chairman, with Renault's board also meeting to discuss his fate.

By the break in Tokyo Nissan was down more than f4% while Mitsubishi was more than 7% lower. Renault lost 8% in Paris.

On Tuesday there were still many unanswered questions about the allegations against a man long credited with an almost magical ability to turn around ailing auto companies.

Nissan CEO Hiroto Saikawa said a months-long investigation prompted by a whistleblower had uncovered years of financial wrongdoing, including under-reporting of Ghosn's salary and misuse of company assets.

Prosecutors said they were holding him as they probed allegations he had under-reported his income by around five billion yen ($44.5 million) over five years.

The shock of his arrest was compounded by the harsh language levelled against him by Saikawa, who in a news conference accused Ghosn of accruing too much power.

"Too much authority was given to one person in terms of governance," he told reporters at Nissan's headquarters in Yokohama on Monday. "I have to say that this is a dark side of the Ghosn era which lasted for a long time."

Saikawa said he was still thinking through whether Ghosn was "a charismatic figure or a tyrant". It was an almost unthinkable turn of events for Ghosn, 64, who had earned a virtually unparalleled reputation, particularly in Japan, for his role in resurrecting Nissan.

Ghosn has dominated the country's corporate landscape and is a well-known figure among the general public, who know him as "Mr Fix It", partly through a popular manga comic of his life story.

But the tables had turned Tuesday, with the Yomiuri Shimbun describing executives at Nissan slamming Ghosn as "greedy".

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"He says the right things, but in the end, it's all about money," the daily quoted employees as saying. It was unclear how long Ghosn could be held, or even when prosecutors would officially announce the charges against him.

Nissan said it had uncovered years of financial misconduct by Ghosn and Representative Director Greg Kelly. Kyodo news agency reported Tuesday one of the allegations against Ghosn involved his use of residences purchased by Nissan in four countries.

It also said prosecutors had negotiated a plea bargain for only the second time since Japanese law changed this year that would allow Nissan officials who are cooperating to receive lesser charges or lighter penalties.

Saikawa said the ongoing investigation limited what details could be shared, and refused to be drawn on whether other people were involved, saying only: "These two gentlemen are the masterminds, that is definite."

He insisted the partnership among Nissan, Renault and Mitsubishi "will not be affected by this event," but had no details on how the other firms would respond, or who might succeed Ghosn.

The news sparked concern in France, where the state owns a 15% stake in Renault. President Emmanuel Macron said Paris would be "extremely vigilant" about the stability of the firm and its three-way tie-up.

And French Finance Minister Bruno Le Maire said the government would "do everything as a shareholder represented on Renault's board to ensure operational continuity and stable governance at Renault".

Despite his international renown and rock-star status, particularly in Japan, where he was a rare foreign-born executive, Ghosn was not without detractors.

He earned admiration but also anger for his ruthless restructuring at firms like Nissan and was nicknamed "Le Cost Cutter" in France.

And his pay packet was regularly the subject of criticism, including at Renault, where it sparked a spat with shareholders.