Car giant to sack chairman facing accusations of under-reporting his income and misuse of company funds; shares plunge.

Carlos Ghosn, the chairman of Nissan and one of the world’s most powerful motor industry bosses, has been arrested in Japan over allegations of financial misconduct.

Tokyo prosectutors confirmed on Tuesday that Ghosn was under arrest, after reporting income of 4.9 billion yen ($51.5 million) over five years when his actual income for that period had been nearly 10 billion yen. Japanese media first reported that the Brazilian-born executive had been held on Monday.

A towering figure in the car industry, Ghosn is credited with turning around several major manufacturers, and currently leads an alliance of Nissan, Renault and Mitsubishi.

Nissan’s shares plunged 6 percent in early trade in Tokyo, as investors responded to Ghosn’s arrest.

Nissan, Renault boards to meet

Nissan’s board is set to meet on Thursday, when it is expected to agree to sack Ghosn and Representative Director Greg Kelly, who is also reportedly under arrest, the company’s CEO Hiroto Saikawa said at a press conference on Monday.

In an earlier statement, Nissan said it had been investigating Ghosn and Kelly for months, after receiving a report from a whistleblower. The Japanese car giant has since uncovered misconduct going back several years, the statement said.

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“The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation,” it said.

“Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.”

The company said it had provided information to Japanese prosecutors and would recommend that the board of directors “promptly remove Ghosn from his positions”.

Later on Monday, Renault said its board would be meeting “shortly” to discuss the situation surrounding Ghosn, who serves as the company’s chief executive.

Mitsubishi also released a statement on Monday, saying the company would propose removing Ghosn as chairman.

Renault is one of France’s most iconic companies and a large employer [File: Philippe Wojazer/Reuters]

France ‘extremely vigilant’ on Renault stability

News of Ghosn’s reported arrest broke on Monday evening when Asahi Shimbun newspaper said he was being questioned by prosecutors and was likely to face arrest.

Japanese media later said Nissan’s headquarters in the city of Yokohama were being raided by Tokyo prosecutors.

Al Jazeera’s Natacha Butler, reporting from Paris, said the news has already affected the markets.

“There’s no doubt that shockwaves are reverberating around the global motor industry. In fact, here in Paris we saw shares in Renault plunge more than 12 percent to opening trade on Monday,” she said.

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On Monday, French President Emmanuel Macron said that Paris would remain extremely vigilant about the fate of Renault and its alliance with Nissan after Ghosn’s reported arrest.

Speaking at a news conference in Brussels, at the start of a two-day state visit to Belgium, Macron said: “It is too early to comment on the facts.”

But he went on to add that the French state, as a Renault shareholder, “will be extremely vigilant to the stability of the alliance and the group.”

Macron said his government would give “all its support” to employees of Renault, one of France’s major companies.

Finance Minister Bruno Le Maire said France remained strongly committed to promoting the Nissan-Renault alliance and would respect presumption of innocence in Ghosn’s case.

“The key question for us is to ensure the stability of Renault and of the alliance between Renault and Nissan and so I am working on that with all the parties,” he told reporters in Belgium, adding that the French government would meet representatives from Nissan in the coming days.

“There is no concern over the stability or the future of Renault,” Le Maire said.

Major figure

One of the mostly highly-paid corporate bosses in Japan, Ghosn began his career at French tyre manufacturer Michelin in 1976, before moving on to Renault in 1996 where his cost-slashing measures earned him the nickname “Le Cost Killer”.

He was parachuted into Nissan and began a huge corporate overhaul when Renault acquired the then-ailing Japanese manufacturer in 1990.

Credited with saving Nissan from bankruptcy through a series of hardnosed measures, including closing plants and restructuring, Ghosn is a household name in Japan, where he is one of few high-profile foreign executives.

In 2016, he also took charge at Mitsubishi after Nissan threw the car manufacturer a lifeline following a mileage-cheating scandalthat hammered sales.

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“He really shook those companies up. He slashed jobs to maintain profit, so he’s really seen as something of an icon in the motoring industry,” said Al Jazeera’s Butler.

“If he is asked to stand down as chairman of Nissan, it will be a huge blow to him and his reputation.”

Ghosn is regarded as the glue which holds the alliance of Nissan, Renault and Mitsubishi together and questions have been raised in the past about how his eventual departure might affect the group.

However, he has also faced opposition, including over his pay. Bloomberg reported Ghosn took home some $6.5m from Nissan in the most recent fiscal year, in addition to $8.5m from Renault and about $2m from Mitsubishi.

His compensation package from Renault prompted a spat with shareholders and criticism from Macron, when he served as France’s economy minister.