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Leader of Japanese-French Car Alliance Arrested

2018-11-19

Japan’s Nissan Motor Company says its chairman, Carlos Ghosn, has been arrested and will be dismissed from his position.

He is accused of under-reporting his earnings and misusing company money.

Nissan’s chief executive officer, Hiroto Saikawa, confirmed that Ghosn was arrested on Monday. He announced that Ghosn was detained after being questioned by Japanese government lawyers after he arrived in Japan.

The development surprised many people and raised questions about the partnership of Nissan, Renault and Mitsubishi Motors. Together, the three companies make up one of the world’s biggest car manufacturing groups.

Nissan said that Ghosn and another company official, Greg Kelly, are accused of misusing millions of dollars. It said an investigation was launched after someone inside the company told officials about suspected wrongdoing.

Kelly also was arrested.

Saikawa apologized at a press conference, saying he felt great disappointment. He told reporters that the investigation had identified “serious misconduct.” He added that he wanted to reduce “the impact on the operation and our business partners.”

Nissan Motors, which is based in Yokohama, said it is providing information to the Japanese government and is cooperating with the investigation.

Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance, speaks during a news conference, Yokohama, Japan, May 12, 2016.
Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance, speaks during a news conference, Yokohama, Japan, May 12, 2016.

Saikawa said that a “system in the company” had permitted the activity to remain hidden. He said three kinds of wrongdoing were identified: under-reporting of earnings, using investment money for personal gain and illegal use of company money.

He added that Nissan’s board of directors will vote Thursday on whether to dismiss both Ghosn and Kelly.

Unusual for a Japanese company head

Saikawa said he could not provide more details because the investigation was continuing. But he promised Nissan’s leadership would get more involved in supervising top company officials.

Ghosn has been at Nissan for 19 years. The Reuters news agency reports that he had signed a contract earlier this year that would have kept him employed until 2022. His pay is unusually high for leaders of Japanese businesses.

Japan’s NHK and Kyodo News Service reported that Nissan paid Ghosn about $89 million over the five years ending in 2015. However, they added that he reported only half that: about $44 million.

Company documents show that Ghosn received $8.9 million in yearly pay until 2016, when shareholders voted against his pay deal. In 2017, he received a 30 percent cut in pay.

Ghosn is credited with helping Nissan improve the profitability of its business operations. Before he joined the company almost 20 years ago, it was close to financial collapse.

A French citizen, Ghosn also was credited with helping French carmaker Renault become profitable through cost-cutting measures and new products like electric cars.

However, he made enemies of French labor unions and some politicians.

Ghosn was an unusual business leader because he served as chief executive of Nissan and also of Renault starting in 2005. In 2016, he also became chairman of Mitsubishi Motors, another one of Japan’s large carmakers.

The partnership between Nissan and Renault started in 1999. Ghosn was born in Brazil 64 years ago. He holds both Brazilian and French citizenship. He came to Nissan from Renault, France’s largest carmaker.

Nissan’s Saikawa was asked if Ghosn was a good or bad leader.

“He achieved much that many others could not do in reforms, especially in the beginning,” he said.

I’m Mario Ritter.

Mario Ritter Jr. adapted this AP story for VOA Learning English. George Grow was the editor.

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Words in This Story

impact – n. a powerful or major influence or effect

misconduct – n. wrong behavior that is illegal or morally wrong

achieve – v. to become successful; to reach a goal

contract – n. a business agreement between two more or more people

boardn. a group of people with supervisory or advisory powers

disappointmentn. dissatisfaction

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