Nissan board meets to end Ghosn’s two-decade reign

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TOKYO (Reuters) – Nissan Motor Co (7201.T) is holding a board meeting to oust Chairman Carlos Ghosn after the shock arrest of its once-revered leader, ushering in a period of uncertainty for its 19-year alliance with Renault (RENA.PA).

The Franco-Japanese alliance, enlarged in 2016 to include Japan’s Mitsubishi Motors (7211.T), has been rattled to its core by Ghosn’s arrest in Japan on Monday, with the 64-year-old group chairman and industry star accused of financial misconduct.

Ghosn had shaped the alliance and was pushing for a deeper tie-up including potentially a full Renault-Nissan merger at the French government’s urging, despite strong reservations at the Japanese firm.

Japanese prosecutors said Ghosn and Representative Director Greg Kelly, who has also been arrested, conspired to understate Ghosn’s compensation at Nissan over five years from 2010, saying it was about half the actual 10 billion yen ($88.47 million).

Shin Kukimoto, deputy public prosecutor at the Tokyo District Public Prosecutors Office, said on Thursday that court approval was received a day earlier to detain Ghosn for 10 days but he could not comment on whether he had admitted to the allegations.

Nissan’s board meeting will be held sometime after 4:00 p.m. (0700 GMT) on Thursday at its headquarters in Yokohama and the company is likely to issue a statement afterwards, one senior Nissan official told reporters on Wednesday, requesting anonymity as the details were confidential.

Renault executives are expected to join by video conference.

Japanese media said the meeting had started. It said that given Nissan’s board composition Ghosn’s removal from the post is expected to be approved.

Nissan executives have five seats on the nine-member board, Renault loyalists have two seats and the remaining two are held by unaffiliated outside directors, a former bureaucrat and a race driver.

With Ghosn and Kelly still in detention, neither of the men will be able to vote or defend themselves at the meeting. A majority vote by the remaining seven members of board will be sufficient to strip them of their positions.

People walk near a Nissan signage at Nissan Motor Co.’s global headquarters in Yokohama, Japan November 22, 2018. REUTERS/Toru Hanai

Renault has refrained from firing Ghosn as chairman and CEO, although he remains in detention along with Kelly, whom Nissan also accuses of financial misconduct.

But Mitsubishi Motors plans to remove Ghosn from his post of chairman at a board meeting next week.

Amid growing uncertainty over the future of the alliance, Japan’s industry minister and France’s finance minister are due to meet in Paris on Thursday to seek ways to stabilize it.

“For me, the future of the alliance is the bigger deal,” said the Nissan official, when asked about Ghosn’s arrest. “It’s obvious that in this age, we need to do things together. To part would be impossible.”

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Nissan said on Monday an internal investigation triggered by a tip-off from an informant had revealed that Ghosn engaged in wrongdoing including personal use of company money and under-reporting of his earnings for years.

Slideshow (14 Images)

Ghosn and Kelly have not commented on the accusations and Reuters has not been able to reach them.

Prosecutors said Ghosn is being held at the Tokyo detention center, which is known for an austere regime, a far cry from his usual luxury lifestyle, including restrictions on sleeping during the day and a requirement to wear a mask when meeting with visitors to prevent the spread of disease.

The detention house “is pretty cold at this of time year,” internet entrepreneur and convicted fraudster Takufumi Horie told his followers on Twitter.

The Asahi Shimbun said on Thursday, quoting unnamed sources, that Ghosn had given Kelly orders by email to make false statements on his remuneration. Tokyo prosecutors likely seized the related emails and may use them as evidence, the report said.

The Yomiuri, Japan’s biggest-circulation daily, cited unnamed sources as saying that Nissan’s internal investigation found that Ghosn had since 2002 instructed that about $100,000 a year be paid to his elder sister as remuneration for a non-existent advisory role.

The paper said Nissan had found through the investigation that Ghosn’s sister had in fact been living in and managing a luxury apartment in Rio de Janeiro that the company had bought through an overseas subsidiary, but had done no advisory work for the car maker. Nissan has shared the information with prosecutors, Yomiuri said.

Shares in Nissan closed up 0.8 percent, in line with a broader market .N225, ahead of the board meeting.

($1 = 113.0300 yen)

Reporting by Maki Shiraki, Sam Nussey, Chang Ran Kim and Kiyoshi Takenaka; Writing by Ritsuko Ando; Editing by Muralikumar Anantharaman

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