Nissan Motor Co. (NSANY) CEO Hiroto Saikawa said Monday that chairman Carlos Ghosn has been arrested and that the board will propose removing the world's best-known auto executive at a special meeting Thursday following allegations of "serious misconduct" that followed an investigation in cooperation with Japan's Public Prosecutors Office.
Renault SA (RNLSY) shares plunged to the lowest level in four years, wiping more than $2 billion from the company's market value, after Nissan said Ghosn misused company funds following a report from Japan's Asahi newspaper, and other media outlets, that the Renault CEO faces arrest for allegedly violating the country's financial instruments and exchange linked to his role as chairman of Nissan.
Nissan said in a statement that a months-long investigation found that Ghosn and Representative Director Greg Kelly understated their compensation in annual securities reports, while Ghosn also used company money for his personal benefit. Executives at Renault in Paris were not immediately available for comment when contacted by TheStreet.
"Because the significant acts of misconduct that were uncovered through our internal investigation constitute clear violations of their duty of care as directors, the Chief Executive Officer will propose to the Board of Directors to quickly remove Carlos Ghosn from his positions as Chairman and Representative Director," Nissan said in a statement. "Our company has been providing information to the Public Prosecutors Office, and have been fully cooperating with their investigation."
Renault shares tumbled 10.3% lower in Paris trading following the report and changing hands at €57.84 each, the lowest since October 2014, while Nissan's German-listed units tumbled 12.2% on the Deutsche Boerse.
Ghosn stepped down from his role as CEO of Nissan last year as the 64-year old began paring back his position as the world's most visible auto executive amid escalating tensions with the French government, which owns a 15% stake in Renault, and shareholder pressure to either merge its alliance with Nissan or deepen ties between the two auotmakers and Mitsubishi.
His 2017 payout, which included €7.4 million from Renault and €9.2 million over his final year at the helm of Nissan, was also approved following a 56% to 43% vote by shareholders even as the French government, which owns a 15% stake, rejected the compensation plan.
France's President, Emmanuel Macron, told reporters in Brussels Monday that it is "too early to comment on the reality or materiality of the accusations", but added that, as a shareholder, "the French government will remain extremely vigilant regarding the stability of the alliance, the (Renault) group and ... its employees, who have the full support of the state."
Nissan CEO Hiroto said the company would make efforts to ensure that the arrest of Ghosn, as well as his possible sacking, would not hurt its alliance with Renault.
Ghosn won backing for another four-year term at the held of the Renault board in June, and told La Figaro newspaper in Paris that a plan for the future of the three-way alliance would be revealed "well before the end of my term, or even rather at the start."
Nissan, Japan's second-largest automaker behind Toyota Motor Co. TM, said its profits over its second quarter, which ended in September, fell 21% from the same period last year to 101.2 billion yen ($897 million) -- the lowest in nearly a decade -- thanks in part to slumping sales in Europe and North America.