Nissan Motors confirmed on Monday that its chairman Carlos Ghosn will be dismissed from the company following his arrest. Nissan said that the company has discovered significant acts of “financial misconduct” perpetrated by Ghosn. Some of these allegations included underreporting his salary and also using the company’s assets for his own personal benefit. Ghosn has been considered by many as one of the most influential executives in the car industry, and he’s also one of the highest-paid CEOs in Japan.
Ghosn is credited with saving the Japanese carmaker from a near bankruptcy a few years ago. He has also served as the chairman of other major car companies such as France’s Renault and Mitsubishi Motors in Japan. Ghosn was one of the few foreigners to hold such a high position in the Japanese car industry. He was actually born in Brazil to parents of Lebanese descent. However, Ghosn later became a French citizen.
According to a report by Nissan, an internal investigation which was conducted for several months revealed that Ghosn was liable of a number of violations. The findings have been shared with prosecutors in Japan so that legal action will be taken against him. A board meeting is also planned for Tuesday this week to remove Ghosn from his position.
This news didn’t go down well in the markets. Nissan stocks that are listed in the German Securities Exchange plunged by nearly 10%. The same was also the case for Renault, the French carmaker where Ghosn also served as a chairman. Ghosn, who is now 64, started his career in the automobile industry in the 1970s, when he started working for French tire maker Michelin. He rose through the ranks in a career that spanned decades. His breakthrough came in 1996 when he joined Renault. There, Ghosn made a name for himself, helping the company navigate through a period of challenges and financial uncertainty until it was able to turn around.
His work with Renault earned Ghosn praise from big players in the car industry. Ghosn was then appointed to take over as the Chairman and CEO of Nissan in 1999. At the time, Renault had bought a controlling stake at the Japanese carmaker. This was also a time when Nissan was going through a financial crisis that threatened to lead the company to bankruptcy. Between 2001 and 2017, Ghosn was able to perform a similar turn around like the one he did with Renault and return the Japanese company back to profitability.
However, Ghosn stepped aside as the CEO of Nissan last year but still retained his title as chairman. During his time at both Renault and Nissan, Ghosn was one of the highest paid CEOs in the car business. In 2017, for instance, the board at Renault approved an $8.4 million annual compensation for him. The scandal in Nissan is likely to raise some eyebrows in France too. The French government is a major shareholder in Renault which holds a controlling stake in Nissan. Whether there will be an investigation in France remains to be seen.