Carlos Ghosn is a wonderful case from …
(CNN) –
A week ago, Carlos Ghosn was on top of one of the world's most powerful auto empires. Now he is in a Tokyo prison cell.
The dramatic case of the iconic global business leader is a story about bombshell allegations, corporate intrigues and crumbling cultural tensions.
A 40-year-old automotive veteran, Ghosn, collected three major car manufacturers – Renault (RNSDF) in France and Japan's Nissan (NSANY) and Mitsubishi Motors (MMTOF) – with the aim of rivaling the best dogs: Volkswagen (VLKAF), Toyota (TM) and General Motors (GM).
His vision seemed to work: Ghosn's alliance makes one of nine cars sold all over the world. But the future has now been forced after being arrested in Japan, triggered as leader of Nissan and resigned to Renault. Mitsubishi is expected to burn him on Monday.
The Brazilian born boss is accused of exploiting his position on the top of Nissan, which he drove for over 1[ads1]5 years. Claims include hiding millions of dollars of personal income and using the company's assets for its own benefit.
Since his reputation is rubbish, and the empire he built is under pressure, Ghosn in is a Tokyo prison cell and faces the view of 10 years in prison if he is convicted. He is not yet to respond publicly to the claims.
What has Ghosn allegedly done?
Ghosn was arrested by Tokyo prosecutors on Monday when he later retired from a plane from Beirut, where he grew up. His arrest followed an internal investigation at Nissan that the company said "significant default" acts for many years, including emphasizing its income in financial reports and misusing the company's assets.
Prosecutors claim that he and another Nissan director Greg Kelly collaborated to undermine Ghosn's income by about $ 5 billion over a five-year period ending March 2015.
Japanese public broadcaster NHK reported that Ghosn also failed to properly reveal homes given to him by Nissan in four different countries. NHK added that prosecutors suspect that Ghosn may have pocketed money intended for other Nissan leaders.
Nissan, who has not confirmed the details reported by NHK and other Japanese news, has accused Kelly of being "mastermind" behind the scheme.
How did we get here?
Ghosn was appointed Nissan's CEO in 2001 and is credited with pulling a fantastic turnaround on the company, which was in financial trouble at the time.
Since then, he has developed deeper integration between Nissan and Renault. Mitsubishi joined the alliance in 2016 after Nissan acquired a 34% stake. Together, the three companies have more than 470,000 people in almost 200 countries.
But the partnership is unlike. Nissan, who is much bigger and sells more cars than Renault, only has a 15% non-voting share in the French company. Renault has a much stronger 43% stake in Nissan.
"Renault has achieved a better deal than Nissan," said analysts at the investment company SC Capital this week.
Some analysts suggest that this has stirred displeasure among Nissan leaders, who were also uncomfortable about the possibility that Renault and Ghosn sought a full blown fusion.
A number of analysts and commentators have suggested that Ghosn became victim of a "palace bump" by Nissan leaders nervously over how much power he had gathered.
Asked about the speculation, a Nissan spokeswoman said the company "strongly believes that the investigation showed serious mistakes for several years" and that the actions it took against Ghosn were "fully needed".
What's next for Ghosn?
Japanese prosecutors have not yet registered Ghosn, a French citizen who grew up in Lebanon on some charges. He is being held in a detention center in Tokyo, where prisoners are usually fed basic meals three times a day and sleep on Japanese futons.
Prosecutors on Wednesday were allowed to catch Ghosn for a further 10 days as they continued to question him. He has access to his lawyer and to French consular services.
His long Nissan career is almost certainly over. The members of the board voted unanimously on Thursday evening to escape Ghosn who is looking for a longer meeting.
Earlier this week, Renault stopped briefing Ghosn as his chairman and CEO, instead of appointing a temporary replacement.
What is the future of the alliance?
Both Nissan and Renault have said Ghosn's arrests will not affect the alliance. Officials from the French and Japanese authorities have echoed these feelings.
"The long-term alliance partnership with Renault remains unchanged," said Nissan Thursday after turning Ghosn on, adding that it would try to "minimize potential impact and confusion."
But a great uncertainty remains. Analysts say Ghosn was the power that held the three companies together.
A nightmare scenario for Nissan can occur if prosecutors fail to get a successful case against Ghosn, and he returns as Renault leader. SC Capital analysts wondered that Ghosn could regalit by trying to throw Nissan out of the alliance and seek a connection with a major competitor like GM instead.
It's likely unlikely, as the cost of the alliance failure would be great. The companies estimate that they save over $ 5 billion ($ 5.7 billion) each year by sharing technology and other resources.
"If the whole alliance is blowing badly … it would be the worst strategic mistake a car maker made for decades," said Travis Lundy, analyst at Smartkarma's investment research network.
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