French and Japanese officials scrambled Tuesday to reassure investors about the stability of the Nissan-Renault-Mitsubishi alliance, after fresh claims emerged following the arrest of auto industry titan Carlos Ghosn on financial misconduct charges.
Nissan and Mitsubishi shares plunged Tuesday after Ghosn, chairman at both carmakers, was arrested in Japan for allegedly failing to report all his Nissan pay and for inappropriate use of corporate assets.
Ghosn has not been heard from since his arrest, though sources confirmed he was being held by Tokyo prosecutors.
Nissan's board has already said it will seek to oust the architect of the three-way alliance, which combined sells more cars worldwide than any other automaker.
Sources told AFP in France that Renault too intends to strip Ghosn of his CEO title and hand over control to his number two, Thierry Bollore, in tandem with the board's lead independent director.
In a statement Tuesday, French Finance Minister Bruno Le Maire and his Japanese counterpart Hiroshige Seko reaffirmed their "strong support" for "one of the greatest symbols of Franco-Japanese industrial cooperation."
Le Maire had told French radio earlier that Ghosn was "de facto no longer in a position to lead the group".
Yet investors have been unloading shares in the three carmakers since the charges emerged against Ghosn, the architect of an alliance he has held together since 1999.
The three companies are joined through a series of cross-shareholdings and share factories in order to benefit from economies of scale.
Nissan shares dropped 5.5 per cent in Tokyo and Mitsubishi was off 6.8 per cent, while in Paris Renault was down a further 3.1 per cent after tumbling 8.4 per cent on Monday.
Ratings agency Standard and Poor's said Tuesday that Nissan is facing a downgrade after Ghosn's arrest, since "rebuilding its management culture swiftly will not be easy".
Andre Spice, a business professor at City University of London, told AFP that "with him out of the picture, old differences between the companies could come to fore. The alliance could fall apart."
The arrest of 64-year-old Ghosn, the superstar executive credited with rescuing both Renault and Nissan and then fusing them into a behemoth which sold 10.6 million cars last year, sent shockwaves through the auto industry and beyond.
Japanese prosecutors have said Ghosn is being held on suspicion of under-reporting his income by around five billion yen (USD 44.5 million) over five years.
Nissan CEO Hiroto Saikawa said a months-long investigation prompted by a whistleblower had uncovered years of financial wrongdoing, including the misuse of company assets.
Public broadcaster NHK reported that Nissan had provided Ghosn with houses in four countries "without any legitimate business reason," paying "huge sums" for residences in Rio de Janeiro, Beirut, Paris and Amsterdam.
It was a stark indictment of the Brazilian-born executive known as a hard-nosed workaholic willing to take drastic measures, including shuttering factories and cutting thousands of jobs.
Nissan's representative director Greg Kelly, who was arrested along with Ghosn, reportedly ordered other executives to "hide salaries", the Yomiuri Shimbun said.
It also reported that some compensation due to other executives ended up going to Ghosn, without specifying how the process had worked.
Local media reported that prosecutors had negotiated a plea bargain for only the second time since Japanese law changed this year, potentially allowing Nissan executives who are cooperating to receive lesser charges or lighter penalties.
In France, Le Maire said officials had found no evidence of wrongdoing by Ghosn, though the government has clashed with him before over what it termed "excessive" pay.
The French state owns 15 per cent of Renault and 22 per cent of its voting rights.
As Ghosn's once towering legacy unravelled, few voices were emerging in support of someone long considered the most dominant force in the auto industry.
Instead, his handpicked successor as Nissan CEO, Hiroto Saikawa, accused him of accruing too much power in a harshly worded news conference on Monday.
"Too much authority was given to one person in terms of governance," Saikawa told reporters at Nissan's headquarters. "I have to say that this is a dark side of the Ghosn era which lasted for a long time." Media reports were also pointing Tuesday to a lavish party in 2016 for his second marriage at the grandiose palace of Versailles outside Paris, complete with a Marie Antoinette theme.
The Yomiuri Shimbun on Tuesday quoted Nissan executives slamming Ghosn as "greedy".
"He says the right things, but in the end it's all about money," the daily quoted an unnamed senior employee as saying.
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