Nissan’s American-traded shares tumbled Monday after the Japanese automaker said it would oust Chairman Carlos Ghosn following his arrest in Tokyo on charges of under-reporting his compensation.
Ghosn, 64, was detained after being questioned by prosecutors following his arrival in Japan earlier in the day, said Chief Executive Officer Hiroto Saikawa, who plans to ask the board to remove the chairman at a meeting later this week. Violations involving millions of dollars by Ghosn and another executive were discovered during a monthslong investigation prompted by a whistleblower, the Yokohama-based automaker said in a statement.
The developments create further challenges for Nissan, whose U.S. operations have been under stress since President Trump proposed setting 25 percent tariffs on shipments of cars and car parts to the U.S. That would pinch profits for foreign companies like Nissan, whose U.S. plants that rely on sprawling global supply chains.
Nissan fell 5.7 percent to $16.89 in New York trading on Monday, widening its decline so far this year to 15 percent. The company’s investigation indicated that both Ghosn and Greg Kelly, a representative director, understated their earnings in reports filed with the Tokyo Stock Exchange, Nissan said.
The automaker also disclosed “numerous other significant acts of misconduct,” including personal use of investment funds for personal gain and expense improprieties.
“This is an act that cannot be tolerated by the company,” Saikawa said at a news conference. “This is serious misconduct.”
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.
Throughout the conference, Saikawa repeatedly said he was constrained by the ongoing investigation from disclosing many of the details of the case. But he promised to beef up corporate governance, adding that the problems may have happened because too much power was concentrated in one person.
“Nissan deeply apologizes for causing great concern to our shareholders and stakeholders,” the company said in its statement. “We will continue our work to identify our governance and compliance issues, and to take appropriate measures.
– With assistance from the Associated Press.
