Sunday 16 December
Nov 20, 2018 @ 11:21

Nissan boss Ghosn scandal: what we know

 

By Agence France-Presse

One of the world’s most influential executives is under arrest in a shocking turn of events that raises questions about the future of his sprawling Franco-Japanese auto group.

Carlos Ghosn, the all-powerful boss of the Renault-Nissan-Mitsubishi alliance, was detained by police in Tokyo and faces dismissal over allegations of financial malpractice.

Here is what we know so far about the scandal, some history about the carmaking alliance, and what might happen next:

– Shock arrest
Confirmation of Ghosn’s arrest in Japan came after local media first reported he was being questioned by prosecutors and that Nissan’s headquarters were being raided.

Nissan said it had been investigating Ghosn and Representative Director Greg Kelly for months, after a report from a whistleblower.

CEO Hiroto Saikawa said the company had uncovered years of financial misconduct including underreporting of income and inappropriate personal use of company assets.

Nissan has now scheduled a board meeting for Thursday, when Ghosn is likely to be fired as its chairman.

Mitsubishi Motors, another part of the automaking alliance, also looks set to dismiss Ghosn as chairman.

– Fallout in France
While the news sent shockwaves through Japan, it has particular resonance in France given Ghosn is CEO as well as chairman of Renault, one of the European country’s industrial champions.

The French state holds a 15-percent stake in Renault, which said its board would meet “shortly” over the affair.

President Emmanuel Macron warned his government would be “extremely vigilant” about the stability of Renault and the three-firm alliance.

The revelations came after the Tokyo stock market had already closed. But in Paris, Renault’s share price plunged more than 12 percent at one point Monday before closing down 8.43 percent at 59.06 euros.

French labour unions are expressing concern.

– Who is ‘Le Cost Killer’?
Ghosn, 64, was born in Brazil of Lebanese descent, and educated at elite colleges in France, where he started in industry at tyremaker Michelin.

He made his name as a turnaround specialist before he was parachuted into Nissan from Renault in 1999, swinging the axe on costs to bring the troubled Japanese firm rapidly back to profit.

A globetrotting polyglot who shook up corporate culture in France and Japan, Ghosn could seemingly do no wrong until disquiet began to mount in recent years over his high renumeration.

The French government objected to his multi-million pay packet, and Saikawa said too much authority had become vested in the chairman.

That, the Nissan CEO said, was “a dark side of the Ghosn era which lasted for a long time”.

– What is the alliance?
Renault took control of the struggling Nissan in 1999 and brought in Ghosn to oversee an overhaul.

Mitsubishi joined the partnership in 2016 and under Ghosn’s leadership, the alliance has become an industrial titan with 470,000 employees selling 10.6 million light vehicles last year from 122 factories around the world.

The three companies remain independent entities but hold stakes in each other — with Renault the dominant equity partner — and share common platforms to build vehicles.

Ghosn was the incarnation of the vast alliance and will be a tough act to follow, according to Flavien Neuvy, director of l’Observatoire Cetelem, a French automotive consultancy.

“He always knew how to maintain the subtle equilibrium between the French and Japanese sides. He is very much the alliance, and the succession will truly be very complicated,” he said.

– What will it do now?
With all three companies planning crisis board meetings and doing their best to distance themselves from their charismatic leader, Ghosn seems guaranteed to be shown the door.

He also faces a nervous wait to see what prosecutors in Japan decide as the investigation plays out.

Ghosn was the architect of a plan to cement the industrial alliance through still-closer partnership by 2022, the scheduled end of his current term as the overall boss.

He also led an effort by Renault and Nissan to carve out an edge in the fast-growing markets for electric vehicles and urban car-sharing.

Now, there is doubt over who can drive the alliance to its next destination.

The French government, unhappy about Ghosn’s leadership in the pay spat, had already insisted he install a number two at Renault in the form of chief operating officer Thierry Bollore.

The French executive is another Michelin veteran and also has extensive experience of working in Asia.

But Nissan will have its own say on who might lead the alliance overall.

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