Nissan shares slump after Ghosn arrested over alleged financial misconduct

Economy 12:35 20.11.2018

Nissan Motor Co’s shares fell more than 6 percent on Tuesday as Chairman Carlos Ghosn’s arrest a day earlier sent shockwaves through the business world and threw into doubt the future of Japan’s No.2 automaker and its global alliance.

Nissan said on Monday an internal investigation triggered by a tip-off from a whistleblower had revealed that Ghosn engaged in wrongdoing including personal use of company money and under-reporting for years how much he was earning. He was arrested and would be fired from Nissan’s board this week, it said.

Ghosn is also chairman and chief executive of Nissan’s French partner, Renault, and chairman of Japan’s Mitsubishi Motors Corp, the third partner in the alliance.

Ousting Ghosn will pose questions about an alliance that he personally shaped and had pledged to consolidate with a deeper tie-up, before eventually stepping back from its operational leadership.

It also brings into focus the future of Nissan - the biggest partner in the alliance - at a time it is seeing falling profits due to weak U.S. sales and is facing heightened competition from rivals who are investing heavily in new growth areas like internet connected cars and self-driving vehicles.

Ghosn’s alleged improprieties also raise questions over governance at the alliance in which the three partners’ boards are all chaired by a single executive.

Speaking at a late-night news conference on Monday, Nissan CEO Hiroto Saikawa conceded that too much power had been concentrated on Ghosn, and that the implications of his stewardship of both Renault and Nissan had gone unquestioned since 2005.

Prosecutors said in a statement that Ghosn and Representative Director Greg Kelly conspired to understate Ghosn’s compensation over five years starting in fiscal 2010 as being about half of the actual 9.998 billion yen ($88.9 million).

Ghosn joined Nissan in 1999 and became its CEO in 2001. He remained in that post until last year and had received 9.2 million euros ($10.53 million) in pay for the final year as CEO.

“By under-reporting his corporate salary, he basically deprived Nissan’s shareholders of opportunities to judge if the amount of his salary was appropriate,” Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan, said of Nissan’s allegations.

LUXURY LIVING?

Japanese public broadcaster NHK reported Nissan paid billions of yen for the purchase and renovation of homes for Ghosn in Rio de Janeiro, Beirut, Paris and Amsterdam, citing unnamed sources.

The properties had no business purpose and were not listed as benefits in filings to the Tokyo bourse, NHK said. CEO Saikawa declined on Monday to discuss specifics on Ghosn’s personal use of company money.

Nissan spent 2 billion yen on homes for Ghosn in Rio and Beirut via a Dutch subsidiary, with Kelly overseeing the transaction, the Nikkei newspaper reported, citing unnamed sources.

There has been no comment from Ghosn or Kelly on the allegations and Reuters could not contact them for comment.

In a sign of the broader political fallout, Hitoshi Kawaguchi, Nissan senior vice president handling government relations, met with Japan’s top government spokesman on Tuesday, telling media he had requested good relations between Japan and France be maintained.

The Asahi newspaper cited unnamed sources as saying a company employee gave prosecutors information on Ghosn in return for lighter treatment, the second instance of a plea deal in Japan - a system introduced in June.

Nissan shares fell to a two-year low of 940 yen and were later trading down 5 percent at 955 yen.

Shares of Mitsubishi, which also said on Monday it would remove Ghosn as its chairman, slid by about 6 percent. Renault shares lost 8.4 percent on Monday.

Ghosn’s downfall was unlikely to lead to a sharp fall in car sales, capping the downside for Nissan shares, said Fujio Ando, adviser at Chibagin Securities.

“The fact that the case came to light because of a whistleblower is also positive on the whole, in terms of corporate governance. If this had been revealed by outsiders, that would have been a different story,” he said.

Azerbaijan Defense Minister informs NATO chief on situation in Azerbaijan-Armenia conditional border -VIDEO

News line

Moldova’s Foreign Ministry to expel Russian Embassy employee
Moldova’s Foreign Ministry to expel Russian Embassy employee
13:30 19.03.2024
Azerbaijan weather forecast for March 20
13:13 19.03.2024
Israel, Hamas ready to compromise at Doha talks
13:05 19.03.2024
More than dozen workers trapped in one of Russia's largest gold mines
More than dozen workers trapped in one of Russia's largest gold mines
12:49 19.03.2024
Armenia may face a war if refuses to discuss border issues - Pashinyan
12:22 19.03.2024
North Korea holds firing drill using super-large multiple rocket launchers
North Korea holds firing drill using super-large multiple rocket launchers
11:55 19.03.2024
Fenerbahçe to discuss withdrawing from 'Super Lig'
11:32 19.03.2024
Azerbaijani police found numerous weapons and ammunition in Khankandi
11:08 19.03.2024
US Maritime Administration issues new advisory amid rising maritime threats in Middle East
10:55 19.03.2024
EU looks forward to cooperation with Azerbaijan for successful COP29
10:38 19.03.2024
EU to impose tariffs on Russian grain
10:11 19.03.2024
Embassy of Azerbaijan in France appeals to Azerbaijanis
10:00 19.03.2024
Azerbaijani oil price exceeds $88
Azerbaijani oil price exceeds $88
09:48 19.03.2024
Mehriban Aliyeva makes post on Last Tuesday before Novruz Holiday
09:35 19.03.2024
Pashinyan: Delimitation process between Armenia and Azerbaijan entered practical stage
09:00 19.03.2024
Pakistan restricts foreign travels of ministers, government officials
Pakistan restricts foreign travels of ministers, government officials
20:39 18.03.2024
EU to boost military support fund for Ukraine by EUR 5 bln — Hungarian foreign minister
20:00 18.03.2024
Industrial zones to be created in Azerbaijan’s Zangilan, Jabrayil, and Gubadli
19:16 18.03.2024
Reuters: Only an oil slump can stop Russia
19:00 18.03.2024
Top Hamas operative killed in hospital raid, IDF says
Top Hamas operative killed in hospital raid, IDF says
18:33 18.03.2024
President Ilham Aliyev congratulates people of Azerbaijan on occasion of Novruz holiday - UPDATED
18:00 18.03.2024
Jens Stoltenberg: We fully support Georgia's sovereignty and territorial integrity
Jens Stoltenberg: We fully support Georgia's sovereignty and territorial integrity
17:47 18.03.2024
2 dead, 6 injured in Türkiye factory explosion
2 dead, 6 injured in Türkiye factory explosion
17:28 18.03.2024
Armenia’s anti-Russian policy reaches new level
17:11 18.03.2024
"The Middle Corridor plays a key role for Green Energy" - Expert Ali Pasha
16:45 18.03.2024
Central square of Khankandi named “Victory Square”
16:22 18.03.2024
President: We demonstrated tremendous heroism during the II Karabakh War and the anti-terror operation
16:16 18.03.2024
Nobel Peace Prize Laureate Muhammad Yunus visited IEPF - PHOTOS - VIDEO
16:00 18.03.2024
Historic opportunity emerged to advance the Azerbaijani-Armenian peace agenda - FM Bayramov
15:21 18.03.2024
Bayramov and Stoltenberg discuss normalization process between Azerbaijan and Armenia
15:03 18.03.2024
Azerbaijan Defense Minister informs NATO chief on situation in Azerbaijan-Armenia conditional border -VIDEO
14:58 18.03.2024
Stoltenberg's visit to the Caucasus: "NATO is in panic" - OPİNİON
14:29 18.03.2024
Hikmat Hajiyev holds discussions for upcoming COP29 with Chinese Vice FM
Hikmat Hajiyev holds discussions for upcoming COP29 with Chinese Vice FM
14:00 18.03.2024
Stoltenberg concludes his official visit to Azerbaijan
13:42 18.03.2024
Geomagnetic storm expected on March 20
13:33 18.03.2024
Mbappe celebrates his 250th goal in PSG
Mbappe celebrates his 250th goal in PSG
13:19 18.03.2024
President Ilham Aliyev makes a phone call to Vladimir Putin
13:00 18.03.2024
President Ilham Aliyev lit Novruz bonfire in Khankandi and congratulated Azerbaijani people
12:34 18.03.2024
Foreign students attacked in India over Ramadan prayers
12:30 18.03.2024
Spring comes to Northern Hemisphere
Spring comes to Northern Hemisphere
12:17 18.03.2024
Hamısı