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Nissan crisis deepens as ‘charges loom’ over Ghosn case

The crisis at Nissan deepened Wednesday as it emerged the Japanese car giant could itself face charges over the alleged financial misconduct that led to the stunning arrest of its chairman Carlos Ghosn.

Monday’s arrest of the millionaire auto tycoon, who is credited with turning around the Nissan-Renault-Mitsubishi Motors alliance, sent shockwaves through the global car sector and corporate Japan.

The Asahi Shimbun daily said Wednesday that Tokyo prosecutors believe Nissan also has a case to answer in the under-reporting of Ghosn’s package by about ¥5-billion ($44.5-million) over four years. Both Nissan and authorities declined to comment on the report.

Nissan’s board will decide on Thursday whether to remove the 64-year-old tycoon as chairman, a staggering reversal of fortune for the Brazil-born businessman credited with creating the three-way alliance which together sells more cars worldwide than any other automaker.

Ghosn’s fate appears all but sealed after his hand-picked replacement as CEO, Hiroto Saikawa, launched an astonishing broadside at his mentor, saying “too much authority” had been placed in his hands and lamenting the “dark side of the Ghosn era.”

He pointedly refused to offer the deep “apology bow” that usually accompanies corporate scandals in Japan and played down the role Ghosn had personally played in reviving the firm’s fortunes.

However, in France, Renault said it was sticking with the fallen manager as chief executive although it named chief operating officer Thierry Bollore as deputy CEO, handing him the “same powers” as the “temporarily incapacitated” Ghosn.

After an emergency board meeting, Renault urged its sister company Nissan to share “evidence seemingly gathered” against Ghosn from a months-long internal investigation, saying it was unable to comment on the charges without this information.

Paris and Tokyo have been scrambling to contain the fall-out from the arrest, with the finance ministers of both countries declaring strong support for “one of the greatest symbols of Franco-Japanese industrial cooperation.”

The scandal — the latest in a string to affect Japan Inc. — wiped millions off the stock value of all three companies but Nissan bounced back marginally in opening Tokyo trade, climbing more than half a percentage point in a falling market.

– ‘Flamboyant glory-hogging ways’ –

Ghosn was once the darling of corporate and even popular Japan — even having a manga comic inspired by him — and has been the glue holding the auto tie-up together since 1999.

“Ghosn is likely the most successful foreign chairman in Japan,” said Kosuke Sato, a senior economist at the Japan Research Institute.

“What he did was unprecedented in Japanese corporate history.”

He had a reputation as a workaholic and won the nickname “Le Cost Cutter” in France for his slash-and-burn approach to corporate restructuring.

Under his stewardship, Nissan and Renault became deeply entwined.

Renault owns 43 percent of Nissan while in turn the Japanese firm has a 15-percent stake in Renault.

Nissan has become the alliance’s key player however, posting sales of ¥12-trillion ($106-billion) last year compared with Renault’s €59-billion ($67-billion).

According to the Financial Times, Ghosn was working on a merger of the two carmakers that Nissan opposed because it feared the Japanese company could be relegated to a secondary role.

Jeff Kingston, director of Asian Studies at Temple University Japan, told AFP that Ghosn was “a victim of his own hubris and success.”

“He trampled on Japanese cultural norms with his flamboyant glory-hogging ways, and his massive compensation incited jealousies and invited retaliation,” he told AFP.

– ‘Greedy’ –

Local media reported that Nissan’s representative director Greg Kelly, who was arrested along with Ghosn, ordered other executives to “hide salaries.”

Some compensation due to other executives reportedly ended up going to Ghosn, although it is not clear how the scheme worked.

Public broadcaster NHK reported that Nissan had paid “huge sums” to provide Ghosn with luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam “without any legitimate business reason.”

Even when his reputation was sky-high, he attracted criticism for a flashy lifestyle at odds with traditional Japanese corporate culture and his salary — an estimated €13-million in total last year.

Media reports also spoke of a lavish Marie Antoinette-themed party in 2016 for Ghosn’s second wedding, at the grandiose palace of Versailles.

The Yomiuri Shimbun on Tuesday quoted Nissan executives slamming Ghosn as “greedy”.

“He says the right things, but in the end it’s all about money,” the daily quoted an unnamed senior employee as saying.

His arrest has also raised alarms among Renault’s French workers about what lies ahead.

“What worries us is the alliance with Nissan,” said Ghislaine, a production line worker at the Flins plant outside Paris — where Nissan’s popular Micra hatchback accounts for half its output.

“I hope our future isn’t at risk.”

© Agence France-Presse

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Richard Carter
Richard Carter
News editor for @afp in Japan. Former Europe/Africa desk chief. Ex Berlin, Brussels, Paris.
Joseph Schmid
Joseph Schmid
France correspondent for @AFP

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