Nissan Motor board fires Carlos Ghosn as chairman following arrest

Nissan Motor Co. fired Carlos Ghosn as chairman Thursday, curtailing the powerful executive’s nearly two-decade reign at the Japanese automaker after his arrest for alleged financial improprieties.

In an hours-long meeting, the company’s board of directors voted unanimously to dismiss Ghosn as chairman and as a representative director, Nissan said in a statement. It said its own internal investigation, prompted by a whistle-blower, found serious misconduct including under-reporting of his income and misuse of company assets.

It was a stunning downfall for one of the biggest figures in the auto industry, a man who helped drive turnarounds at both France’s Renault SA and at Nissan and then managed an alliance between them that sold 10.6 million cars last year, besting its rivals.

Nissan said in a statement filed to the Tokyo Stock Exchange that its investigation uncovered misuse of company investment funds and expense money for personal gain.

Earlier this week, Renault voted to keep Ghosn as its chief executive but appointed Thierry Bollore, the chief operating officer, as its interim chief.

Another Nissan executive, Greg Kelly, was arrested in Japan on suspicion of collaborating in the wrongdoing and also will be dismissed as a representative director, Nissan said. Their replacements will be decided later, it said.

Ghosn, 64, is suspected of under-reporting $44.6 million in income from 2011 to 2015, according to Tokyo prosecutors.

Nissan’s board consists of nine members, including Ghosn and Greg Kelly. The seven other board members voted at the meeting, including two members from Nissan and two from Renault.

Ghosn and Kelly will remain on Nissan’s board for now as that decision will be up to shareholders. No date has been set yet for a shareholders meeting.

Ghosn is also chairman at Mitsubishi Motors Corp., a smaller Japanese automaker that’s partnering with the Renault-Nissan alliance and plans to hold a board meeting next week.

Ghosn has been held since his arrest Monday at a Tokyo detention center, under the same Spartan conditions as other detainees, Tokyo deputy prosecutor Shin Kukimoto told reporters Thursday. He gave few details about the case.

Under Japanese law, suspects can be held for 20 days per possible charge without an official indictment. Additional charges can be tagged on, resulting in longer detentions. Neither has been charged so far.

The maximum penalty upon conviction for violating finance and exchange laws is 10 years in prison, an $89,000 fine, or both.

A French citizen born in Brazil, Ghosn became something of a corporate superstar in Japan as he led Nissan’s revival from near bankruptcy after Renault sent him to help in 1999.

Ghosn served as Nissan’s chief executive from 2001 until last year. He became chief executive of Renault in 2005, leading the two automakers simultaneously. In 2016, he also became chairman of Mitsubishi Motors Corp. after Nissan took it into the alliance.

Kelly, 62, joined Nissan, maker of the Leaf electric car and Infiniti luxury models, in the U.S. in 1988. He became a board member in 2012. His background is in human resources and alliance management.

Analysts say the future of Nissan’s alliance with Renault may be at stake, though Nissan’s statement Thursday said the company’s leadership was determined to minimize the impact from Ghosn’s case on the partnership. Renault owns 43% of Nissan, and Nissan owns 15% of Renault.

“The long-standing alliance partnership with Renault remains unchanged,” the Nissan statement in English said, stressing the alliance rather than the misdeeds.

It also said the board will study setting up a third-party committee to beef up governance in management and compensation at Nissan.

CEO Hiroto Saikawa, in a lengthy news conference on Monday, said too much power had been concentrated in Ghosn, with too little credit given to the many others working for the company’s success.

Janet Lewis, managing director and head of industrial research, Asia, at Macquarie Capital Securities in Tokyo, said in an interview that an adjustment was needed to give Nissan more say in the alliance with Renault.

The partnership remains crucial for both companies, she said, since apart from financial ties the companies share technology and parts.

The automakers need to be more like roommates than a married couple, “So they have to find a way to share their house and share all of their expertise because it’s very necessary in terms of new automotive technology, new platform development,” Lewis said.

“They need to figure out how they can continue this and still live happily together in the same house.”