Nissan Chairman Carlos Ghosn reportedly arrested over financial misdealing

Renault shares PLUNGE as chief Carlos Ghosn 'faces arrest in Japan'

Prosecutors later said in a statement that Mr Ghosn and Representative Director Greg Kelly conspired to understate Mr Ghosn's compensation starting in 2010.

Nissan said it will dismiss Ghosn as its chairman.

Based on a whistle-blower tip, Nissan has been doing an internal investigation over the past several months into suspected financial misconduct involving Ghosn and director Greg Kelly, the company said.

Nissan did not comment on the scope of the alleged misdealing, but other Japanese news agencies reported that Ghosn underreported his income by $44.3 million (5 billion yen) over five years.

Japanese media said Ghosn voluntarily submitted to questioning by Tokyo prosecutors on Monday.

Karen Brenner, clinical professor of business at New York University Stern School of Business, says the Ghosn situation shows that "boards have to be really alert, especially in good times".

As head of the Renault-Nissan-Mitsubishi alliance, Ghosn has created an industrial behemoth, its combined 470,000 employees selling 10.6 million vehicles a year ago from 122 factories around the globe.

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Nissan issued a statement Monday and said the executive has "been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn's compensation".

That's right... Carlos Ghosn is under investigation by both Nissan and Tokyo prosecutors for what they have called "significant acts of misconduct".

The Nissan CEO told journalists that the scandal would not affect the automaker's alliance with Renault and Mitsubishi.

"I don't think they would want to abruptly destroy it and let Nissan go on a separate path", said Arifumi Yoshida, an auto analyst at Citigroup Global Markets Japan Inc. Management, including Saikawa, was strongly alarmed by moves for the two companies to completely integrate their management in keeping with the French government's intentions, and nervously watched every step Ghosn made.

As for Nissan, it's promising to continue to work with investigators as the full extent of Ghosn and Kelly's actions.

Its investors got their first chance to react to the news on Tuesday - with shares falling 6% at one stage, alongside those of Mitsubishi.

Nissan's Saikawa was asked if Ghosn was a good or bad leader.

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Ghosn is one of the highest-paid executives, if not the highest-paid, in Japan, but is believed to have under-reported his incomes over the last couple of years by millions of dollars and used corporate assets for personal use. Ghosn remained in that post until past year.

In recent years, however, there has been discord in the company with regard to Ghosn.

Shares in French automaker Renault (RNSDF), of which Ghosn is CEO, plunged as much as 13% in Paris. In Japan, Ghosn's nickname was "Le Cost Cutter".

The globetrotting Franco-Brazilian executive has maintained a towering presence even after the French state requested he relinquish some power to help pave succession planning, leading him to give up his role as Nissan's CEO and install Thierry Bollore as chief operating officer at Renault.

Shares in Nissan were down about 4% by midday, Mitsubishi was also down more than 7%.

Renault owns 43.4 per cent of Nissan, while Nissan owns 15 per cent of Renault, with no voting rights in a partnership that began in 1999.

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