Arrest of Nissan’s Ghosn in financial probe stuns Japan

FILE – In this Feb. 12, 2016, file photo, Chairman and CEO of Renault-Nissan Carlos Ghosn addresses reporters during a press conference in Boulogne Billancourt, outside Paris. The arrest of Nissan Motor Co.’s chairman Ghosn on charges he underreported his income and misused company funds caused the company’s shares to tumble and shocked many in Japan who view him as something of a hero. (AP Photo/Christophe Ena, File)

TOKYO  — Japanese prosecutors were considering Tuesday whether to file formal charges against Nissan Motor Co.’s chairman Carlos Ghosn amid a probe into allegations he misused company assets and under-reported millions of dollars of income.

The arrest of Ghosn after a whistleblower disclosed the alleged misconduct left many in Japan stunned by the downfall of a relentless cost-cutter who appears to have spent lavishly on himself.

“Actually, we also have a Nissan car. So I do feel a little betrayed because he essentially was being dishonest,” Noriko Handa, a housewife in her 50s, said as she walked near downtown Tokyo’s Shimbashi train station.

Prosecutors said they were holding Ghosn, 64, for allegedly collaborating to falsify securities statements and underreport $44.6 million of his income from 2011-2015. A second Nissan executive, Greg Kelly, was also suspected of collaborating with him.

“It’s extremely regrettable,” Chief Cabinet Secretary Yoshihide Suga told reporters. “We will watch developments closely.”

There was no word from Ghosn himself. Prosecutors have refused to say where he was being held.

The prosecutors, who reportedly arrested Ghosn after questioning him upon his arrival by private jet at Tokyo’s Haneda airport, have 48 hours from the time of Ghosn’s arrest Monday to decide whether to press charges. They can hold a suspect for up to 20 more days per charge if they decide they need more time.

The scandal has thrown into question Ghosn’s future as leader of the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million cars last year, more than any other manufacturer.

Nissan’s board was due to meet Thursday to consider dismissing Ghosn and Kelly. Earlier this year, Ghosn signed a contract that would have run through 2022.

Ghosn officially still leads the Renault-Nissan-Mitsubishi alliance as CEO and chairman. Renault said its board will hold an emergency meeting Tuesday in response to his arrest.

Of French, Brazilian and Lebanese background, Ghosn also is a towering corporate figure in France, where Renault is one of the heavyweight industrial survivors. He has met repeatedly with the past four French presidents; no major economic event in France was held without Ghosn.

But French Finance Minister Bruno Le Maire told broadcaster Franc-Info on Tuesday that Renault should name temporary leadership as Ghosn is not in a position to lead the group. Le Maire said French authorities have found no wrongdoing in Ghosn’s tax situation in France.

Ghosn’s Lebanese heritage is a source of pride in Lebanon, and in Beirut the foreign minister, Gibran Bassil, issued a statement saying the Lebanese ambassador to Tokyo was told to look out for “the model of Lebanese success abroad.”

He said the Lebanese foreign ministry would stand by Ghosn to ensure he gets a fair trial.

In Japan, where foreign executives are scarce and even the biggest corporate bigwigs tend to keep a low profile, Ghosn’s status is more ambiguous.

He is admired for driving a turnaround at Nissan when it was near bankruptcy and for his foresight in pushing to bring electric and autonomous cars to the masses.

But in a 90-minute news conference late Monday night, Nissan’s CEO Hiroto Saikawa said Ghosn had too much power and the company was overdue for some change.

The scandal was a “negative outcome of the long regime of Mr. Ghosn,” he said.

With few new developments, Japanese media were avidly detailing allegations against Ghosn.

The national broadcaster NHK said Ghosn was in charge of allocating pay among Nissan’s top executives and is suspected of siphoning off some of that remuneration.

He also is suspected of underpaying his share of the rent and misusing company funds on his company-issued housing in Lebanon, Paris, Amsterdam and Rio de Janeiro, where his apartment is on the wealthy Copa Cabana beach strip.

Ghosn’s compensation from Nissan, generous by Japanese standards, was only a part of his overall income since he also was paid salaries by the automaker’s alliance partners Renault SA and Mitsubishi Motor Corp.

Repeatedly questioned over how the company could have let financial misconduct persist for so long, Saikawa said systems inside Nissan limited transparency.

The allegations are a serious blow at a time when Nissan and its alliance partner Mitsubishi are still recovering from scandals over altered results for emissions and fuel economy tests on vehicles sold in Japan.