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Nissan poised to oust fallen tycoon Ghosn as chairman
TOKYO, Nov 22, 2018 (AFP) – Nissan board members looked set to oust
disgraced tycoon Carlos Ghosn as chairman Thursday, after his spectacular
arrest for financial misconduct sent shockwaves through the car industry and
the business world.
Ghosn stands accused of under-reporting his income by millions of dollars
and a host of other financial irregularities, in a stunning fall from grace
for the once-revered titan of the auto sector.
The 64-year-old Brazil-born tycoon is credited with turning around the
Japanese brand and forged an alliance with Renault and Mitsubishi Motors that
last year sold 10.6 million cars between them — more than any other firm in
the world.
Ghosn’s fate appears all but sealed after his hand-picked replacement as
CEO, Hiroto Saikawa, launched an astonishing broadside at his mentor
following his arrest Monday at a Tokyo airport as he landed in his private
jet.
Saikawa said “too much authority” had been placed in the chairman’s hands
and lamented the “dark side of the Ghosn era”, as he called the board meeting
to fire him.
Seven board members will vote on the motion to dismiss Ghosn, which needs
to be carried by a simple majority. Insiders say Saikawa would likely not
have suggested the ouster if he were not sure of backing from his fellow
board members.
“This would not have been proposed if there had been any doubt and the
results of the investigations have already been presented to the board
members,” a source close to the company told AFP.
Appointing a new chairman will take some time as it has to be approved by
shareholders, but Saikawa is seen as front-runner.
– ‘Spartan conditions’ –
Ghosn is being held in a Tokyo detention centre and has not been seen in
public nor made any comments since his arrest.
He received a visit from Brazilian consul Joao de Mendonca on Thursday who
told AFP that Ghosn “sounded very well, in good health”.
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On Wednesday, local media reported that prosecutors had successfully
applied to extend his custody for an additional 10 days as they step up their
questioning.
Prosecutors believe Ghosn and an American executive Greg Kelly “conspired
to understate Ghosn’s income five times between June 2011 to June 2015”,
reporting a total of five billion yen in income ($44 million) instead of the
actual 10 billion yen.
According to local media, authorities also believe Nissan as a firm has a
case to answer after a months-long investigation prompted by a whistleblower
uncovered years of financial wrongdoing by Ghosn, including the misuse of
company assets.
Public broadcaster NHK said Nissan had paid “huge sums” to provide Ghosn
with luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam “without any
legitimate business reason”.
Ghosn had a reputation as a hard-nosed workaholic with had no qualms about
closing factories and slashing jobs — earning the nickname “Le Cost Killer”
in France, where 47,000 employees work for Renault.
But his exorbitant salary and flashy lifestyle — at odds with Japanese
corporate culture — drew fire and his current accommodation will be a far
cry from his usual expensive surroundings.
“In principle, he will be all alone in a cell,” lawyer Ayano Kanezuka told
AFP.
“There is everything you need, heating, a bed but conditions are spartan,”
said Kanezuka’s colleague Lionel Vincent.
– ‘Couple divorcing’ –
The arrest has sparked questions over whether the alliance of Nissan,
Renault and Mitsubishi Motors can survive without Ghosn, seen as the glue
holding together his fractious creation, which globally employs around
450,000 people.
According to the Financial Times, the fall from grace came as Ghosn was
working on a full-blown merger of Nissan and Renault.
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This was opposed by executives in the Japanese firm that has ended up
being the most profitable player in the partnership and the FT said Ghosn’s
departure could be used as a pretext to rebalance the alliance in Nissan’s
favour.
Renault has held off jettisoning Ghosn, pointedly saying Nissan had failed
to share the evidence it had gathered with its sister company.
French financial daily Les Echos wrote in an editorial Wednesday that
upcoming alliance meetings “are surely going to be explosive”.
“Even if tensions ease, trust between the companies has been at least
partially broken.”
Governments in Paris and Tokyo have been scrambling to contain the fallout
from the arrest, with President Emmanuel Macron saying France would be
“extremely vigilant” about the stability of Renault and the alliance.
Analysts said that despite clear tensions between the two firms
headquartered 10,000 kilometres apart, neither company has the financial
might alone to make the heavy investments in electric vehicles considered to
be the industry’s future.
“It would be like a couple divorcing after 20 years — it would be
complicated, very expensive and not easy to do,” said Gaetan Toulemonde, an
analyst at Deutsche Bank.
“Honestly, I don’t know if it’s even possible.”
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