The arrest of Ghosn in a Nissan financial investigation surprises Japan | Economic news

By MARI YAMAGUCHI, Associated press

TOKYO (AP) – The arrest of Nissan Motor Co.'s chairman, Carlos Ghosn, in the middle of a whistleblower-initiated financial investigation, has brought down the automaker's stock and left many people in Japan and elsewhere stunned by his fall.

Prosecutors said they held Ghosn for his so-called collaboration to falsify title statements and under-report Ghosn's income. A second Nissan executive, Greg Kelly, was also suspected of working with him to under-report some $ 44.6 million in Ghosn revenue from 2011 to 2015.

"It is extremely unfortunate," Cabinet Secretary-General Yoshihide Suga told reporters. "We will follow developments closely."

The scandal sharply questioned Ghosn's future as the leader of the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million cars last year, more than any other automaker.

Ghosn was arrested on Monday and Nissan chief executive Hiroto Saikawa announced that his board of directors would meet on Thursday to approve his dismissal. Prosecutors refused to say where he was detained in Tokyo.

There was no word of Ghosn himself. Investigators reportedly waited for his arrival at Haneda Airport in Tokyo on a private plane from abroad and stopped him after being interrogated.

The Japanese media eagerly detailed the allegations against Ghosn as prosecutors intensified their investigation.

NHK national television said investigators suspected Ghosn, who was responsible for the pay of Nissan's top 13 executives, to have siphoned off some of the pay. According to reports, Mr Ghosn is also suspected of misusing the company's funds for his personal use in Lebanon, Paris, Amsterdam and Rio de Janeiro, where his apartment is located on the rich beach of Copa Cabana.

Ghosn is suspected of not paying all of his rent on housing as Nissan has spent several billion yen (several hundred million dollars) to buy and renovate with the use of Ghosn, NHK said.

The leader of Brazilian origin has become one of the most powerful leaders of the automotive industry by organizing a turnaround at Nissan in two decades.

He has championed the electric and autonomous cars, the resistance of Nissan and Renault, and bet that the repression of emissions would eventually put the gasoline and diesel cars at hand.

Ghosn immediately attracted attention when entering a room and is a dominant figure in France, where Renault is one of the big survivors of the industry. He has met several times with the last four French presidents; no major economic event in France took place without Ghosn.

In Beirut, where Ghosn's Lebanese heritage is a source of pride, Foreign Minister Gibran Bassil issued a statement in which he said he instructed Lebanon's ambassador to Tokyo to follow the case and to ensure that it is treated fairly.

Ghosn represents "a model of Lebanese success abroad and the Lebanese Foreign Ministry will support him in his crisis to ensure that he will get a fair trial," said Bassil.

But in Japan, where the main foreign leaders are rare and where even the biggest bigwigs tend to be low profile, his status was ambivalent.

At a press conference 90 minutes late Monday night, Nissan's Saikawa said the company's feed was too focused on Ghosn and that the company was expecting a change.

On several occasions questioned how the company could have allowed financial misconduct to persist as long, Mr Saikawa said that Nissan's internal systems limited transparency.

The scandal was "a negative result of Mr. Ghosn's long regime," he said.

Ghosn is still officially at the head of the Renault-Nissan-Mitsubishi alliance as CEO and President. But experts have said that it was unlikely that he could stay at Renault or at Renault, where he is still CEO. Renault said its board of directors would soon hold an emergency meeting and only act after hearing Ghosn himself.

The companies of the alliance are parts of them and share among others investments in new technologies. Renault owns 43% of Nissan, which owns 15% of Renault and 34% of Mitsubishi.

According to a press release from prosecutors, Ghosn and Kelly allegedly collaborated to underreport Ghosn's income at 4.99 billion yen ($ 44 million) while it amounted to nearly 10 billion yen (88 millions of dollars), submitting falsified securities declarations to the regional finance office.

Nissan's earnings, generous by Japanese standards, accounted for only part of Ghosn's overall revenues since it was also paid for by alliance partners of the automaker, Renault SA and Mitsubishi Motor Corp.

Nissan shares fell 5% in Tokyo on Tuesday. Renault shares fell 8.4% in Paris on Monday.

Prosecutors were waiting for a next step soon. Police can keep suspects without charge for several days, but prosecutors only have 48 hours to decide whether to lay charges. If they decide that they need more time, they can keep a suspect up to 20 days longer.

The charges seriously undermine a moment when Nissan and its alliance partner Mitsubishi are still recovering from scandals following the modification of the test and fuel consumption test results on vehicles sold in Japan. .

Ghosn signed this year a contract that would last until 2022. Originally French, Brazilian and Lebanese, he lives in Japan and France, where he had previously returned Renault, making him a global player.

Nissan provided only limited details on the case against Ghosn, resulting from a multi-month long investigation by a whistleblower.

Excusing many times, Nissan CEO, Saikawa, promised to improve corporate governance, but provided only limited details on the case, asserting that he had been compelled by the ongoing criminal investigation.

"Beyond being sorry, I feel a great disappointment, frustration, despair, indignation and resentment," Saikawa said.

Associated press editors Yuri Kageyama, Angela Charlton in Paris and Zeina Karam in Beirut contributed to this report.

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