Update II: As was widely expected, Nissan's board will take steps to oust Ghosn at a meeting on Thursday, according to CEO Hiroto Saikawa, who is speaking at a late night press conference being carried live on Japanese TV.

*NISSAN CONFIRMS GHOSN ARRESTED; BOARD TO DISMISS HIM THURSDAY

*NISSAN: 3RD PARTY INVESTIGATION TO BE LED BY EXTERNAL DIRECTORS

*NISSAN: WILL CONSULT WITH ALLIANCE PARTNERS ON ANY CHANGES

*SAIKAWA: GHOSN MIS-USED BOTH INVESTMENT FUNDS AND EXPENSES

*SAIKAWA: GHOSN, KELLY WERE THE MASTERMINDS OF THE MISCONDUCT

As investors speculate about what Ghosn's ouster will mean for the future of the Nissan-Renault relationship, Bloomberg highlighted signs of fracture that will likely be exacerbated by the scandal.

Regardless of the rights and wrongs of this case, it's hard to escape the sense that we're seeing some of the tensions within the Renault-Nissan alliance coming to the surface here. From Nissan's union in 2015 objecting to the French state's power-grab to unnamed executives this year being quoted in the Nikkei Asian Review saying there's no way a merger with Renault could be accepted, there's been a testier tone emerging from Japan for a while. We'll have to see the charge sheet, but Nissan is moving with remarkable alacrity to distance itself from Ghosn and Kelly given the nature of the acts they've been accused of in its press release.

According to Reuters, Nissan said that it had been investigating possible improper practices involving Ghosn and Representative Director Greg Kelly, who has also been wrapped up in the scandal, for several months. Saikawa promised that, in an effort to improve oversight, the company would establish a third board committee led by independent directors to oversee the company's operations. The company will also look to build a more sustainable structure that doesn't rely so heavily on one person, adding that the concentrated power in the hands of Ghosn is what led to the misconduct, per Bloomberg.

In what investors will undoubtedly herald as welcome information, Saikawa said that the Nissan-Renault-Mitsubishi alliance wouldn't be affected by Ghosn's arrest, adding that the three companies should work together to improve accountability. In terms of the length of the fraud, Saikawa refused to provide dates, saying only that the behavior had been ongoing "for a long time."

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Update: As Nissan prepares to hold a press conference where it is expected to reveal more details about Ghosn's alleged financial misdeeds, a 2016 story in Town and Country magazine is making the rounds on twitter. While many avid readers of the business press might not remember, back in the fall o 2016, Carlos and his wife Carole Ghosn rented out Versailles (yes, that Versailles) for a party to celebrate their civil wedding, which had taken place earlier that year.

The party featured colorful sweets meant to evoke former French princess Marie Antoinette's "Let them eat cake."

"When you invite people to a party, they say maybe. When you invite them to Versailles, they will come," Ghosn said.

* * *

As anxious global markets enter what's expected to be a period of holiday-dampened liquidity (in the US, at least), reports that Japanese authorities have arrested (soon-to-be former) Nissan-Renault Chairman Carlos Ghosn on charges that he used company assets for personal purposes, underreported his compensation and is suspected of "numerous acts of misconduct". The report sent shares of Nissan and French carmaker Renault tumbling more than 12%, dragging down the broader European market. Ghosn is expected to be fired by Nissan over the allegations.

Ghosn has been credited as the architect of the Nissan-Renault-Mitsubishi alliance and is widely seen as the "essential man" at both Nissan and Renault.

Details are still murky, but Bloomberg (via Kyodo) is reporting that Ghosn is suspected of understating income by 5 billion yen ($44 million) over 5 years. While Ghosn was one of the best-paid executives in Japan, compared with auto executives in Europe and the US, he was dramatically underpaid, according to Bloomberg.

In his final years as Nissan's president in 2015 and 2016, Ghosn earned over 1 billion yen a year, which was about $9.6 million at the time. In Japan, that made him one of the country's best-paid executives. However, compared with global auto executives, his pay was about half of the average.

Nissan is preparing to hold a press conference to release more details at 7 am ET. Right now, it's unclear what led investigators in Tokyo to look into Ghosn. Indeed, much remains unknown.

In a statement released by Nissan, the company said it had been conducting an internal investigation into Ghosn and his fellow director Greg Kelly:

Based on a whistleblower report, Nissan Motor Co., Ltd. (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company’s Representative Director and Chairman Carlos Ghosn and Representative Director Greg Kelly. 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. 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. Nissan has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with their investigation. We will continue to do so. As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan’s Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director. Saikawa will also propose the removal of Greg Kelly from his position as Representative Director. Nissan deeply apologizes for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures.''

According to Bloomberg, Citigroup analysts said that the reaction in Renault shares has been so strong because Ghosn is seen as "pivotal" for any potential streamlining of the Renault-Nissan structure.

The pressures on European automakers on Monday are adding to what has already been a tough year (European auto stocks had already fallen 22% YTD through Friday).

Nissan is expected to release more details at a 7 am ET press conference.