Nissan board votes to oust Ghosn as chairman

Ghosn's era is over.

TOKYO -- Nissan Motor Co.'s board voted Thursday to remove Carlos Ghosn as chairman and representative director, coming another step closer to ejecting the storied auto executive from the Japanese carmaker he once rescued from near bankruptcy.

Led by CEO Hiroto Saikawa, the board also decided to strip representative director status from Greg Kelly, the American director accused of being a co-conspirator in Ghosn’s alleged misdeeds.

The decision is effective immediately.

Both men are expected to keep their seats as regular directors, at least for now. That is because the company’s shareholders are the final arbiters on whether Ghosn and Kelly lose that status.

In a statement released after the resolution, Nissan said the board acted in response an internal investigation that uncovered financial misconduct by Ghosn and collusion by Kelly.

"The company will further investigate this matter and consider measures to enhance the company's governance," Nissan said in the filing to the Tokyo Stock Exchange.

Nissan accuses Ghosn of under-reporting his income over multiple years, abusing company expenses and misusing corporate investment funds. Japanese media say prosecutors suspect Ghosn hid 5 billion yen ($44 million) of income from 2010 to 2014. The income he disclosed to authorities was less than half his actual haul, the reports say.

"It's a coup," said Tatsuo Yoshida, an analyst at Sawakami Asset Management, who used to work at Nissan. "Ghosn's era is over."

The removal of Ghosn clouds the direction of the Renault-Nissan alliance, which he had personally shaped and pledged to consolidate with a deeper tie-up despite reservations at Nissan. Ghosn is also Renault's chairman and chief executive.

Renault's board had urged Nissan's board to delay removing Ghosn from his position as chairman, sources familiar with the matter told Reuters.

Even as Nissan's board was meeting, new details of Ghosn’s alleged malfeasance were trickling out in the Japanese media. National broadcaster NHK reported that prosecutors suspect Ghosn received about 100 million yen ($885,300) in unreported funds from a Netherlands-based subsidiary.

Ghosn is also alleged to have used a Nissan subsidiary based to buy homes around the world — in Paris, Amsterdam, Beirut and Rio de Janeiro — for his personal use. That company is also based in the Netherlands, but it was unclear whether the two Dutch entities were the same.

NHK also reported that Ghosn also allegedly funneled company funds to pay for family trips. The Asahi newspaper reported that Ghosn’s elder sister received about $100,000 a year from Nissan for an advisory position that “did nothing for the company.”

Deputy Chief Prosecutor Shinji Akimoto of the Tokyo district public prosecutors’ office told a press conference on Nov. 22 that the investigation wasn’t politically motivated.

“Falsifying the financial statement is categorically one of the most serious crimes in the Financial Instruments and Exchange Act,” he said. “When a crime is suspected and there is evidence, we will carefully judge if it warrants an indictment. We won't do that, with an agenda in mind.”

Meanwhile, Ghosn has secured a high-profile Japanese defense attorney who formerly led a Tokyo prosecutors’ office team focused on corporate crime, according to NHK.

Without Ghosn or Kelly -- both men reportedly have been locked in a Tokyo detention center since their arrest -- Nissan’s vote was expected to go ahead with the remaining seven members.

They include CEO and representative director Hiroto Saikawa, a Nissan lifer, as well as Nissan executive Hideyuki Sakamoto and former Nissan Vice Chairman Toshiyuki Shiga.

Bernard Rey, a former president of the Renault Formula One team, is also on the board.

The three external directors are: former Renault financial officer Jean-Baptiste Duzan, race car driver Keiko Ihara and Masakaza Toyoda, a longtime official at Japan’s power Ministry of Economy, Trade and Industry.

You can reach Hans Greimel at hgreimel@crain.com -- Follow Hans on Twitter: @hansgreimel

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