TOKYO (Reuters) – Nissan Motor Cos shares dropped more than 6 percent on Tuesday as President Carlos Ghosns arrested one day earlier sent shock waves through business and doubtfully threw the future of Japan's No.2 automaker and its global alliance.
Nissan said Monday an internal investigation triggered by a tip-off from a whistleblower had revealed that Ghosn was engaged in offense, including personal use of the company's money and under-reporting this year how much he earned. He was arrested and would be kicked out of Nissan's board this week, said it.
Ghosn is also the leader and CEO of Nissan's French partner, Renault, and head of Japan's Mitsubishi Motors Corp., the third partner in the alliance.
Ousting Ghosn will ask questions about an alliance that he personally shaped and promised to consolidate in a deeper context before finally withdrawing from his operational leadership.
It also focuses on the future of Nissan ̵
Ghosn's alleged inaccuracies also lead to governance issues in the alliance where the three parties' rule all is led by a single leader.
Talked to a news conference on Monday evening, Nissan's CEO Hiroto Saikawa admitted that too much power had been concentrated on Ghosn and that the implications of his management of both Renault and Nissan had been without doubt since 2005.
Prosecutors said in a statement that Ghosn and Representative Director Greg Kelly conspired to undermine Ghana's five-year compensation that began in finance 2010 as being about half of the actual $ 9.998 billion ($ 88.9 million).
Ghosn joined Nissan in 1999 and became CEO in 2001. He was in that post last year and had received 9.2 million euros ($ 10.53 million) in salary for the past year as CEO.
"By underreporting his corporate salary, he basically deprived Nissan shareholders of the opportunity to judge whether the amount of his salary was appropriate," Toru Ibayashi, Managing Director of Wealth Management at UBS Securities Japan, said about Nissans claims.
Japanese public broadcasting NHK reported that Nissan paid billions of yen for the purchase and renovation of homes for Ghosn in Rio de Janeiro, Beirut, Paris and Amsterdam, referring to unlisted sources.
The properties had no business purpose and were not listed as the benefits of filing to the Tokyo Stock Exchange, NHK said. CEO Saikawa concluded Monday to discuss details about Ghosn's personal use of the company's money.
Nissan spent 2 billion yen at home for Ghosn in Rio and Beirut via a Dutch subsidiary, with Kelly monitoring the transaction, reported the Nikkei newspaper, quoting unnamed sources.
There have been no comments from Ghosn or Kelly about the allegations, and Reuters could not contact them for comment.
In a sign of wider political downturn, Hitoshi Kawaguchi, Nissan's senior vice president of government relations, met with Japan's supreme government spokesman Tuesday, told the media that he had requested good relations between Japan and France, maintained.
The Asahi newspaper cited unnamed sources saying that a company worker gave prosecutors information about Ghosn in return for easier treatment, the second instance of a case in Japan – a system introduced in June.
Nissan shares fell to a two-year low of 940 yen and later traded down 5 percent to 955 yen.
Shares of Mitsubishi, who also said on Monday, would remove Ghosn as its chairman , increased by about 6 percent. Renault shares lost 8.4 percent on Monday.
Ghosn's fall is unlikely to lead to a sharp drop in car sales and downsizing the Nissan shares, "said Fujio Ando, adviser to Chibagin Securities.
"The fact that the case was discovered because of a whistleblower is also positive at all when it comes to corporate governance. If this had been revealed by outsiders, it would be another story, he said.
Reporting by Chang-Ran Kim and Sam Nussey; Further Reporting by Hideyuki Sano, Ayai Tomisawa and William Mallard; Editing Stephen Coates and Muralikumar Anantharaman