The fall of Carlos Ghosn from the top of the auto industry has continued swiftly after it emerged that Mitsubishi Motors has removed him as chairman this week. This comes after Ghosn was fired by Nissan too. Ghosn is facing charges of alleged impropriety and abuse of power during his time with Nissan. The Mitsubishi Motors board voted on Tuesday to remove Ghosn who until now had been regarded as a legend in the auto industry.
Ghosn was arrested by authorities in Tokyo last week. Nissan said that preliminary investigations showed that Ghosn was involved in financial misconduct although the probe is still ongoing. Ghosn was responsible for building a very strong alliance between Nissan and Mitsubishi Motors as well as the French automaker Renault. He is also credited with turning around Nissan when he came in. The Japanese company was on the brink of bankruptcy at the time.
A statement sent to the Tokyo Stock Exchange by Mitsubishi Motors revealed that the decision to remove Ghosn was unanimous. CEO Osamu Masuko will take over as chairman temporarily. Mitsubishi, however, did say in a press briefing after the vote that the decision to remove Ghosn was “agonizing”. According to the company’s CEO, although the former chairman had really done a lot for the company, it was time for management to do what’s best for the future and for the other employees working at the company.
Ghosn is still under police custody in Tokyo. Prosecutors claim that the Brazilian-born executive has conspired with another senior manager at Nissan to underreport his income by about $44 million over a period of five years. Ghosn is facing up to ten years in prison for these charges and a potential fine of $90,000. His removal from Nissan and Mitsubishi also appears to cast a shadow of doubt on the future of the alliance between Mitsubishi, Nissan, and Renault.
The three companies make one of nine cars sold in the world each year and employ almost half a million people in over 200 countries around the world. There was concern among top executives in the three companies that Ghosn had accumulated a lot of power at the helm of the alliance and this, according to them, had put a big dent on the future prospects of operations among the three automakers.
Executives of the three companies who have been directly involved with the management of the alliance are expected to meet later this week in Amsterdam to discuss way forward. Ghosn hasn’t yet responded to these allegations and hasn’t been seen publicly since he was removed as chairman of Nissan. However, media reports say that the former Renault CEO has denied any wrongdoing. Although he’s no longer chairman at Nissan and Mitsubishi, Ghosn still holds director positions at both companies. Additional shareholder votes will be needed to permanently remove him from both companies and this will likely happen very soon.