Nissan and Mitsubishi shares plunged Tuesday, as the automakers prepared to oust chairman Carlos Ghosn a day after he was arrested for alleged financial misconduct. Details began to emerge about the allegations against Ghosn, whose arrest sent shockwaves through the auto industry, including claims that "huge sums" were spent on homes for him in four countries.
His legacy appeared in danger of total collapse, with his own handpicked successor as Nissan CEO accusing Ghosn of accruing too much power, in what he called the "dark side" of his leadership.
The spectacular fall of the Brazil-born executive, which Japan's top government spokesman called "truly regrettable," also raised questions about the future of the sometimes fractious alliance he led of Nissan, Mitsubishi and Renault.
Nissan and Mitsubishi have said they will propose his removal as chairman, with Renault's board also meeting to discuss his fate. The automakers and Japanese government officials said they would work to protect the alliance.
"Keeping a stable relationship (among the three companies) is important," industry minister Hiroshige Seko told reporters.
On Tuesday there were still many unanswered questions about the allegations against a man long credited with an almost magical ability to turn around ailing auto companies. Nissan CEO Hiroto Saikawa said a months-long investigation prompted by a whistleblower had uncovered years of financial wrongdoing, including under-reporting of Ghosn's salary and misuse of company assets.
Prosecutors said they were holding him as they probed allegations he had under-reported his income by around five billion yen (USD 44.5 million) over five years.
Public broadcaster NHK reported Nissan has provided Ghosn with houses in four countries "without any legitimate business reason," and that Nissan paid "huge sums" for the homes in Rio de Janeiro, Beirut, Paris and Amsterdam.
It also reported that some compensation due to other executives ended up going to Ghosn, without specifying how the process had worked. At the close of Tokyo trade, Nissan was down 5.45 per cent while Mitsubishi had fallen 6.84 per cent. The shock of Ghosn's arrest was compounded by the harsh language levelled against him by Saikawa, who in a news conference accused the titan of accruing too much power.
"Too much authority was given to one person in terms of governance," he told reporters at Nissan's headquarters in Yokohama on Monday. "I have to say that this is a dark side of the Ghosn era which lasted for a long time." It was an almost unthinkable turn of events for Ghosn, 64, who had earned a virtually unparallelled reputation, particularly in Japan, for his role in resurrecting Nissan.
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