Nissan chairman Ghosn arrested

Financial misconduct probe results in two execs being charged.

YOKOHAMA, JAPAN — Nissan Motor chairman Carlos Ghosn has been arrested and will be dismissed for alleged under-reporting of his income and misuse of company funds, the company said Monday.

The Japanese automaker’s CEO, Hiroto Saikawa, confirmed that Ghosn was arrested after being questioned by prosecutors following his arrival in Japan earlier in the day.

It was a stunning development that will pose a daunting test for the Nissan-Renault-Mitsubishi alliance, one of the world’s biggest automakers.

The company said the alleged violations involving millions of dollars by Ghosn, 64, and another executive were discovered during a monthslong investigation that was instigated by a whistleblower.

“Beyond being sorry I feel great disappointment, frustration, despair, indignation and resentment,” Saikawa said, apologizing for a full 7 minutes at the outset of a news conference. “I want to minimize the bewilderment and the impact on the operation and our business partners.”

Nissan said it was providing information to the prosecutors and cooperating with their investigation. The allegations also concern a Nissan representative director, Greg Kelly, who was also arrested.

Saikawa said Nissan’s board will vote Thursday on dismissing both Ghosn and Kelly, who he described as the “mastermind” of the alleged abuses.

“This is an act that cannot be tolerated by the company,” he said. “This is serious misconduct.”

Saikawa said three major types of misconduct were found, including under-reporting income, using investment funds for personal gain and illicit use of company expenses.

Asked why the company had failed to spot the illicit activity for so long, Saikawa said it was because a “system in the company” allowed a lack of transparency that made the wrongdoing possible.

Ghosn is credited with helping engineer a remarkable turnaround at Nissan over the past two decades, resuscitating the Japanese automaker from near bankruptcy after he was sent in by Renault.

For the past two decades, he has maintained an unusually high profile in a nation where foreign chief executives of major Japanese companies are still relatively rare.

He looms similarly large in France, where the business world saw him as a trailblazer from outside the traditional French mold who turned Renault around and made it into a global player, notably in electric vehicles.