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Nissan Chairman Carlos Ghosn's custody extended by 10 days; co could face charges over alleged financial misconduct

Tokyo: Japanese authorities Wednesday extended Nissan Chairman Carlos Ghosn's detention by 10 days, as it emerged the car giant itself could face charges over the alleged financial misconduct that laid low its once-loved leader.

Monday's stunning arrest of the millionaire auto tycoon, who is credited with turning around the Nissan-Renault-Mitsubishi Motors alliance, sent shockwaves through the global car sector, corporate Japan and beyond.

On Wednesday, several media reported that the Tokyo district court had ordered the 64-year-old Brazil-born businessman held for a further 10 days as prosecutors step up their investigation over the alleged under-reporting of Ghosn's package by about five billion yen ($44.5 million).

Prosecutors had 48 hours after his arrest to either press formal charges, release him or request this 10-day custody extension to continue the probe.

The titan of the car industry is being held in a detention centre in northern Tokyo in conditions far removed from his flashy lifestyle.

"In principle, he will be all alone in a cell," lawyer Ayano Kanezuka told AFP.

A file photo of Carlos Ghosn. Reuters

A file photo of Carlos Ghosn. Reuters

"There is everything you need, heating, a bed but conditions are spartan," said Kanezuka's colleague Lionel Vincent, who also said there would be an inner courtyard with bars.

The crisis appeared to be going from bad to worse for Nissan, as the Asahi Shimbun reported that prosecutors believe the firm also had a case to answer.

Both Nissan and the authorities declined to comment.

Nissan's board will decide Thursday whether to remove him as chairman, a staggering reversal of fortune for the once-revered manager who created the three-way alliance which together sells more cars worldwide than any other automaker.

Ghosn's fate appears all but sealed after his hand-picked replacement as CEO, Hiroto Saikawa, launched an astonishing broadside at his mentor, saying "too much authority" had been placed in his hands and lamenting the "dark side of the Ghosn era." Saikawa pointedly refused to offer the deep "apology bow" that usually accompanies corporate scandals in Japan and played down the role Ghosn had personally played in reviving the firm's fortunes.

However, in France, Renault said it was sticking with the fallen manager as chief executive although it named chief operating officer Thierry Bollore as deputy CEO, handing him the "same powers" as the "temporarily incapacitated" Ghosn.

After an emergency board meeting, Renault urged its sister company Nissan to share "evidence seemingly gathered" against Ghosn from a months-long internal investigation, saying it was unable to comment on the charges without this information.

Paris and Tokyo have been scrambling to contain the fall-out from the arrest, with the finance ministers of both countries declaring strong support for "one of the greatest symbols of Franco-Japanese industrial cooperation."

The scandal -- the latest in a string to affect Japan Inc. -- wiped millions off the stock value of all three companies but Nissan bounced back marginally in opening Tokyo trade, climbing nearly half a percentage point in a falling market.

And Ghosn won some support on the street of Tokyo, with passer-by Yoshiaki Watanabe telling AFP: "I think this is someone who was able to do what we Japanese, stuck in our ways, were not able to do."

Ghosn was once the darling of corporate and even popular Japan -- even having a manga comic inspired by him -- and has been the glue holding the auto tie-up together since 1999.

He had a reputation as a workaholic and won the nickname "Le Cost Cutter" in France for his slash-and-burn approach to corporate restructuring.

Under his stewardship, Nissan and Renault became deeply entwined.

Renault owns 43 per cent of Nissan while in turn the Japanese firm has a 15-percent stake in Renault.

Nissan has become the alliance's key player however, posting sales of 12 trillion yen ($106 billion) last year compared with Renault's 59 billion euros ($67 billion).

According to the Financial Times, Ghosn was working on a merger of the two carmakers that Nissan opposed because it feared the Japanese company could be relegated to a secondary role.

Jeff Kingston, director of Asian Studies at Temple University Japan, told AFP that Ghosn was "a victim of his own hubris and success."

"He trampled on Japanese cultural norms with his flamboyant glory-hogging ways, and his massive compensation incited jealousies and invited retaliation," he told AFP.

Local media reported that Nissan's representative director Greg Kelly, who was arrested along with Ghosn, ordered other executives to "hide salaries."

Some compensation due to other executives reportedly ended up going to Ghosn, although it is not clear how the scheme worked.

Public broadcaster NHK reported that Nissan had paid "huge sums" to provide Ghosn with luxury homes in Rio de Janeiro, Beirut, Paris and Amsterdam "without any legitimate business reason."

Even when his reputation was sky-high, he attracted criticism for a flashy lifestyle at odds with traditional Japanese corporate culture and his salary -- an estimated 13 million euros in total last year.

Media reports also spoke of a lavish Marie Antoinette-themed party in 2016 for Ghosn's second wedding, at the grandiose palace of Versailles.


Updated Date: Nov 21, 2018 15:01 PM

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