Japan: Ghosn arrest puts Nissan-Renault-Mitsubishi merger at risk

Ghosn was the architect of a link up between Renault, Nissan, and Mitsubishi, the world’s second largest car manufacturing group. Nissan and Mitsubishi have already announced their intention to remove him as chairman of their firms, while the French government has announced he cannot remain chairman and CEO of Renault.

Ghosn is accused of underreporting compensation beginning in 2011, a year after Japan’s Financial Services Agency required listed companies to disclose executive salaries topping 100 million yen (US$880,000). Though Ghosn’s disclosed salary totaled 4.98 billion yen (US$44.2 million) over the next five years, he received around US$88 million, sources say.

Shareholders at subsequent annual meetings continued to raise issue, even over his disclosed pay, saying that Nissan could have averted some of its layoffs if Ghosn’s salary were trimmed. But Ghosn’s disclosed salaries remained high by Japanese standards, often referencing global industry standards.

Under these circumstances, “Misstatement of income constitutes betrayal of shareholders,” said Toshiaki Yamaguchi, an attorney with compliance issue expertise.