Renault-Nissan-Mitsubishi Chairman Arrested On Trading Violations

Japanese prosecutors arrested Renault-Nissan-Mitsubishi Chairman Carlos Ghosn on suspected violation of trading law Monday morning. Renault SA RNSDF plummeted on the report, and Nissan Motor Co Ltd NSANY fell marginally.

Nissan soon denounced Ghosn for committing years of misconduct, misusing company assets and under-reporting his salary. Japanese media outlets valued the latter crime at about 5 billion yen, or $44 million.

What Happened

Nissan confirmed a whistleblower report had triggered a months-long internal investigation into Ghosn’s behavior, and the automaker had been cooperating with Japanese prosecutors ahead of the arrest.

“The investigation showed that over many years both Ghosn and [Representative Director Greg] Kelly have 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,” Nissan said in a statement.

Why It’s Important

As chairman of the French-Japanese auto partnership, Ghosn is known for leading the turnarounds of Nissan and Renault. The pair now produces one in nine vehicles worldwide and rivals the sales of Volkswagen and Toyota Motor Corp TM.

Back in 2014, Fortune deemed Ghosn irreplaceable — a critical cog in the automaking machine. While Ghosn has already begun to relinquish control of the company to potential successors, he was expected to continue heading the alliance for years.

What’s Next

Nissan has apologized for the misconduct and has proposed Ghosn’s termination. The firm intends to hold a press conference later in the day.

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Photo credit: World Economic Forum from Cologny, Switzerland, via Wikimedia Commons