Board Meets, and Ghosn's (Almost) Gone From Nissan
As expected, Nissan chairman Carlos Ghosn ended the week with fewer titles than when he started. The automaker’s board of directors voted to remove the executive, instrumental in creating the Renault-Nissan-Mitsubishi Alliance powerhouse, on Thursday, just three days after his arrest on suspicion of under-reported income and misuse of company assets.
The move came as Renault, which hasn’t made decision on whether to remove Ghosn as CEO, found itself at loggerheads with its alliance partner. The French automaker urged caution in the matter, perhaps fearing that Ghosn was the glue holding everything together.
In a statement, Nissan outlined the steps taken in the wake of the whistleblower-prompted investigation and subsequent board meeting:
At the beginning of the session, the board acknowledged the significance of the matter and confirmed that the long-standing Alliance partnership with Renault remains unchanged and that the mission is to minimize the potential impact and confusion on the day-to-day cooperation among the Alliance partners. After reviewing a detailed report of the internal investigation, the board voted unanimously:
1. To discharge Carlos Ghosn as Chairman of the Board
2. To discharge Carlos Ghosn as Representative Director
3. To discharge Greg Kelly as Representative Director
4. To study the creation of a special committee to appropriately take advice from an independent third party regarding the governance management system and better governance of director compensation. Further to the mandate, the three independent directors – Masakazu Toyoda, Keiko Ihara and Jean-Baptiste Duzan – will lead this matter.
5. To approve establishment of an advisory committee chaired by Masakazu Toyoda and including Keiko Ihara and Jean-Baptiste Duzan. The committee will propose nominations from the board of directors for the position of Chairman of the Board.
Thus far, Nissan has not named a replacement. As Ghosn cools his heels in a sparse Tokyo jail cell, Japanese prosecutors claim the high-flying exec under-reported his income to the tune of $44 million between 2010 and 2014, though no charges have yet been laid. Earlier this week, prosecutors said it could be 10 days or more before formal charges are drawn up.
When they are laid, however, the charges will not be light, nor will the penalties be meager.
As reported by Automotive News Europe, Deputy Chief Prosecutor Shinji Akimoto of the Tokyo district public prosecutors’ office said Thursday that the crimes Ghosn is alleged to have committed are extremely serious, and that the arrest was not the result of what some observers have characterized as a “coup.”
“Falsifying the financial statement is categorically one of the most serious crimes in the Financial Instruments and Exchange Act,” Akimoto said. “When a crime is suspected and there is evidence, we will carefully judge if it warrants an indictment. We won’t do that, with an agenda in mind.”
The report also sheds light on a degree of dissent among the alliance’s ranks. Two Renault board members reportedly urged Nissan to hold off on dropping Ghosn until after the completion of the internal probe and a trial. The former chairman won’t be officially stripped of his position until shareholders vote on it, and that meeting’s not expected until June of 2019. Renault holds a 43.3 percent stake in Nissan.
Evidence laid out at the board meeting reportedly calmed the French contingent, with an official at French President Emmanuel Macron’s office telling Reuters, “The accusations are extreme, certainly, but they are also precise. We know there’s a flourishing conspiracy theory about all this, but that’s really not our thinking.”
France holds a 15 percent stake in Renault.
According to Japanese broadcaster NHK, Ghosn received nearly $900,000 in unreported funds from a Netherlands-based Nissan subsidiary, and used another subsidiary (though possibly the same one) to purchase glitzy homes scattered around the world. It’s also alleged that Ghosn used company funds to pay for lavish family vacations, and that Ghosn’s sister collected $100,000 a year from Nissan for an advisory position that “did nothing for the company,” according to Japan’s Asahi newspaper.
Ghosn has reportedly lawyered up, hiring what may be the best defense attorney in Japan.
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I bet that earned you some street cred at the NCO! No Ghosn fan here either, but if he's lawyering up, I bet this gets worked out on the sidelines. Ghosn engineered the corporate move from LA to TN, they are around the corner, I remember the housing market blew up with the announcement. If you're a real estate agent, just drag some future LA expatriates through a few McMansions in TN and watch how quickly they jump. And I forgot to mention the smell of a pig pen is something you never forget either, shout-out to my Uncle Curtis.
What I don't get is why the Japanese would pursue this so openly thereby causing so much damage to the stock. $44M is small potatoes.