France to follow Nissan in ousting Renault CEO Ghosn after arrest in Japan over financial misconduct

Renault CEO Carlos Ghosn ETIENNE LAURENT/AFP/Getty Images

  • Nissan and Mitsubishi shares tumbled in Tokyo after Renault CEO Carlos Ghosn was arrested in Tokyo, where prosecutors said he reported only half of his $US89 million in earnings.
  • French President Emmanuel Macron said France would be “vigilant” in encouraging stability at Renault, while French ministers said they would push for interim governance. Nissan announced plans to oust him as its chairman on Monday.
  • Ghosn could face up to 10 years in prison in Japan and a fine of up to 10 million yen.
  • Follow the share prices of Renault, Nissan and Mitsubishi Motors at Markets Insider.

It’s all getting worse for Carlos Ghosn.

Prosecutors in Japan allege that the Renault-Nissan-Mitsubishi Alliance chairman and CEO earned a salary of about 10 billion yen, or $US88.7 million, from 2011 to 2015 but reported only half of that. He was arrested Monday and could face up to 10 years in prison and a fine of up to 10 million yen.

Now, the highest members of the French government (France owns a whopping 15% stake in Renault) have piled on.

“The state as a shareholder will be extremely vigilant to the stability of the alliance and the group,” French President Emmanuel Macron said on Monday. France’s finance minister, Bruno Le Maire, told France Info that he would push for interim governance at the carmaker. Renault said executives would meet imminently to discuss the incident. Nissan on Monday announced plans to oust him as its chairman.

The debacle has called into question the future of the world’s biggest car alliance without the veteran executive at the helm. Investors have showed concern: After Renault shares reached a four-year low on Monday, Nissan and Mitsubishi Motors followed suit, tumbling in Tokyo trading. Renault fell for a second day, and it was down 3.1% in Paris trading on Tuesday.

Renault and Nissan have had a strategic partnership since 1999 that later included Mitsubishi, with Ghosn acting as chairman of all three companies while also serving as CEO at Renault. It is a carmaking powerhouse: The alliance sold more than 10.6 million cars in 2017, which would be the most of any single automaker in the world.

The Brazil-born Ghosn, 64, was arrested in Tokyo following allegations of misconduct with claims that he underreported his salary with the help of a fellow board director, Greg Kelly. The Japanese broadcaster NHK also said Nissan paid tens of millions of dollars toward his residences in various global cities while paying hundreds of thousands toward his family vacations.

Ghosn stepped down as CEO of Nissan in 2017. Renault’s shares, already battered by the US-China trade war, are down about 30% this year.

“Nissan deeply apologizes for causing great concern to our shareholders and stakeholders,” the company said Monday.

Renault declined to comment to Business Insider on Tuesday.

See Mitsubishi’s intraday performance in the chart below:

Mitsubishi stock price
Mitsubishi’s shares fell after Ghosn’s arrest. Markets Insider