Nissan CEO Ghosn Arrested For Alleged Misconduct

In a surprising and remarkable tumble from grace over the weekend, Nissan CEO Carlos Ghosn (along with a second executive) was arrested by Japanese authorities for his role in alleged misconduct with Nissan preparing to fire Ghosn later this week.

Ghosn is accused of several acts of financial misconduct which include underreporting his salary to Japanese authorities for “multiple years,” as well as using company assests for personal use. The investigation into Ghosn and Greg Kelly (a director on Nissan’s board) began after an annonymus whistleblower reported the allegations to Japanese authorities.


The downfall of Ghosn and his regime is even more surprising considering that he was once revered as an agent of change in Japan, and was credited with not only  saving Nissan from utter collapse in the 1990s and early 2000s, but for also breathing newfound vigor into Renault and a weakened Mitsubishi when it too was added to the fold in late 2016.

Ghosn also proved to be a master at promoting synergy and cooperation within the alliance, which helped Nissan-Renault avoid the calamities that doomed other joint ventures such as the infamous and ultimately doomed Daimler-Chrysler merger.

Prior to his arrest, Ghosn was a key figure in Nissan’s payroll, with the Japanese auto giant revealing in a securities report that he was paid 735 million Yen (about $6.5 million) in cash for 2017. This was lower than the 1.1 billion Yen that he was paid in 2016.


With the arrests of Ghosn and Kelly, the future of the Renault-Nissan-Mitsubishi alliance itself has been pushed into the spotlight. While Mr. Ghosn did relinquish his control of Nissan last year, he still remained in the top post for Renault and Mitsubishi, with Ghosn being paid 227 million Yen in cash and stock options by Mitsubishi last year.

Ghosn was also embroiled in a long battle with Renault’s board of directors and the French government (a major stake holder) over his salary. Ghosn had pressed for a pay package of 7.4 million euros ($8.5 million) for 2017, with the request generating considerable uproar from Renault shareholders.

The French government for its part had encouraged Ghosn’s pay to be more limited, amid its broader effort at addressing the percieved divide between wealthy executives and working class employees especially those in the manufacturing sector. Ultimately, Ghosn’s request was approved, but he was forced to reluctantly cut his salary by 30 percent in 2018 to secure backing from the French government for another four year term.

Look for more information to emerge in the next few days, but all three companies have already been dinged in the stock market in the wake of today’s news.