Nissan exec’s arrest could nix Renault merger

Chairman suspected of falsifying income reports

TOKYO — The arrest of Nissan chairman Carlos Ghosn could extinguish any remaining hopes for a merger with key shareholder Renault, which the Japanese company’s CEO has publicly opposed.

Ghosn had this year said he was open to the idea of a merger between Nissan and Renault, where he is chief executive and which he has tied into a cost-saving alliance.

But Nissan CEO Hiroto Saikawa has opposed such a move, which would see a Japanese corporate icon come under foreign control. And with the company’s board gathering today to decide on ousting Ghosn for alleged financial misconduct, it appears the possibility of a merger may be shelved for good.

Renault owns 43 percent of Nissan after it helped save the company two decades ago and turned it around under Ghosn’s leadership. Nissan owns 15 percent of Renault.

Analysts say the companies are likely to continue their alliance. Besides the financial ties through the share ownership, they share technology, like the basic parts on which vehicles are built, as well as parts purchases. “You can’t go back on it that easily,” said Masahiro Akita, auto analyst with Credit Suisse.

Ghosn will be detained for another 10 days as he is questioned over allegedly falsifying income reports by millions of dollars and misusing company assets for personal gain, Kyodo News service reported Wednesday. It cited the Tokyo District Court, which must grant approval for such detentions.

The court and prosecutors declined to comment.

Under Japanese law, suspects can be held for 20 days per possible charge without an official indictment. Neither Ghosn nor Greg Kelly, another senior Nissan executive who was arrested, has been charged so far.

Ghosn is suspected of under-reporting $44.6 million in income from 2011 to 2015, according to prosecutors.

The maximum penalty, upon conviction for violating finance and exchange laws is 10 years in prison, a 10 million yen ($89,000) fine, or both.

Ghosn, 64, is credited with turning around Nissan from near-bankruptcy after he was sent to Nissan by Renault in 1999. He served as Nissan’s chief executive from 2001 until last year. He became chief executive of Renault in 2005, leading the two major automakers simultaneously.

In 2016, he became chairman of Mitsubishi Motors Corp. after Nissan took it into the alliance.