Carlos Ghosn re- arrested
Carlos Ghosn, former Nissan chief has been rearrested by special investigation squad of Tokyo District Public Prosecutors Office for alleged aggravated breach of trust under the Companies Law. He faces up to 10 years in prison, a fine of 10m yen, or both if he is found guilty.
Carlos Ghosn is a Lebanese–Brazilian–French businessman, has served as the chairman and CEO of Renault, Nissan, and of Mitsubishi Motors. He was also the chairman and CEO of the Renault–Nissan–Mitsubishi Alliance, the strategic partnership overseeing Nissan, Mitsubishi and Renault through a unique cross-shareholding agreement. Besides, from June 2013 to June 2016, Ghosn was also the chairman of Russia-based automobile manufacturer AvtoVAZ.
After his radical restructuring of Renault that returned the company to profitability in the late 1990s, Ghosn became known as "Le Cost Killer". He has also earned the nickname "Mr Fix It" for spearheading the turnaround of Nissan’s bankruptcy in 1999 and also for orchestrating one of the auto industry's most aggressive downsizing campaigns in the early 2000s.
Following the Nissan financial turnaround, in 2002 Fortune awarded him Asia Businessman of the Year. In 2003 Fortune identified him as one of the ten most influential people in business outside the U.S., and its Asian edition voted him Man of the Year.
Ghosn stepped down as CEO of Nissan on April 1, 2017, while remaining chairman of the company. He was arrested at Haneda Airport on 19 November 2018, for under-reporting his earnings and misuse of company assets. On November 22, 2018, the company's board made a unanimous decision to dismiss Ghosn as Nissan's chairman followed by Mitsubishi Motors' board on November 26, 2018
Former Nissan chairman Carlos Ghosn has been re-arrested on fresh charges reducing chances of being released from jail before Christmas. Mr Ghosn has spent the last month in prison, accused of misusing funds and hiding $80m (£63m) of income. A court rejected a request by the prosecution to extend his detention.
The arrest is on a new charge of aggravated breach of trust. The prosecutors now accuse Mr Ghosn of shifting a private investment loss of over $16.6m of losses from his private investments to Nissan in the wake of the 2008 financial crisis. “The accused was responsible for managing Nissan’s overall operations and for dutifully fulfilling his role as CEO not to cause damage to Nissan and its subsidiaries… but he took action that betrayed his role and caused financial damage to Nissan,” prosecutors alleged.
Ghosn was first arrested on 19 November for allegedly underreporting his pay by about 5bn yen (£35m) between 2011 and 2015. He and former Nissan executive Greg Kelly, who is also being detained, are also alleged to have continued to underreport Ghosn’s income through to March this year, increasing the overall amount by four billion yen. Ghosn's arrest has shaken the international auto industry and strained the alliance he built between Nissan (NSANY), Renault (RNSDF) and Mitsubishi Motors (MMTOF). Both Nissan and Mitsubishi Motors promptly sacked Ghosn as chairman following his arrest, on the basis of a months-long internal Nissan investigation.
Nissan said after his arrest that it unearthed multiple instances of possible wrongdoing in an internal investigation triggered by a whistleblower. The internal probe is ongoing and has included allegations of diverting company funds to pay for personal expenses. Investigators have been looking into the use of an internal “CEO Reserve” fund and the role of overseas subsidiaries in alleged financial misconduct.
The Ghosn case has put Japan’s criminal justice system under international scrutiny and sparked criticism for some of its practices, including keeping suspects in detention for long periods and prohibiting defence lawyers from being present during interrogations
Christopher Richter, deputy head of Japan research at CLSA, an investment and brokerage group also added to the difference in payment method. He said: “There was always a disconnect between Western management salaries and Japanese management salaries.”
We feel that Ghosn was pushing for a merger of Renault Nissan and Mitsubishi Motors that would install Renault in permanent command which was not favourable to the Japanese executives. This may have prompted tighter scrutiny by the Japanese.
Our assessment is that this is an instance of greed and oversight resulting in the indictment of the CEO of yet another large business enterprise.