Ghosn custody extended as Nissan crisis deepens

Carlos Ghosn was probably the best-known foreign CEO in Japan. (Photo: AFP/Toshifumi Kitamura)

The 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.

Prosecutors are stepping up their investigation over allegations that Ghosn under-reported his pay by about ¥5 billion (US$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.

Ghosn 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.

"There is everything you need, heating, a bed but conditions are spartan," said Kanezuka's colleague Lionel Vincent.

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

'TOO MUCH AUTHORITY'

Nissan's board will decide Thursday whether to remove him as chairman.

That would be a staggering reversal of fortune for the once-revered manager, creator of 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.

He said "too much authority" had been placed in his hands and lamented the "dark side of the Ghosn era."

Renault said it was sticking with the fallen manager as chief executive but named chief operating officer Thierry Bollore as deputy CEO.

"This leadership guarantees the correct functioning of the Renault company," French Economy Minister Bruno Le Maire told reporters on Wednesday.

"The leadership of Renault is solid, but it is provisional," he added.

He said he would meet his Japanese counterpart on Thursday to discuss "prolonging" the alliance.

After an emergency board meeting earlier, Renault urged its sister company Nissan to share evidence against Ghosn from a months-long internal investigation.

It said 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.

The scandal - the latest in a string to affect Japan Inc. - wiped millions off the stock value of all three companies.

Nissan bounced back marginally on the Tokyo stocks exchange, after plunging following Ghosn's arrest.

Ghosn appeared to have some support on the streets of Tokyo.

"I think this is someone who was able to do what we Japanese, stuck in our ways, were not able to do," passer-by Yoshiaki Watanabe told AFP.

MERGER PLAN REPORT

Ghosn was once the darling of corporate and popular Japan - even having a manga comic inspired by him. He 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 Killer" 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-per cent stake in Renault.

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

Comparison of key statistics for Renault and Nissan (2017 figures). (Graphic: AFP/Aude Genet)

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.

'GREEDY'

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 in total last year.