Nissan To Discuss Governance After Ghosn Arrest

December 17, 2018 – Nissan Motor Co. board will meet this week to discuss how to enhance corporate governance following the arrest of former chairman Carlos Ghosn for alleged financial misconduct.

The Japanese automaker initially planned to decide on Ghosn’s successor at the meeting and had considered tapping CEO Hiroto Saikawa as interim chairman, but is now expected to forgo a decision, apparently taking into consideration its alliance partner Renault SA’s retention of Ghosn as its chairman and CEO, sources close to the matter said.

A panel of three external directors — former industry ministry official Masakazu Toyoda, racing driver Keiko Ihara and Jean-Baptiste Duzan, a former Renault executive — is currently tasked with selecting nominees for Ghosn’s successor as chairman among the board members.

Focusing more on enhancing corporate governance for now, Nissan will likely set up a new committee within the board comprised mainly of external directors and give it the authority to decide on board members’ remuneration, the sources said.

Critics have said that Ghosn, who is credited with rescuing Nissan from near-bankruptcy in the 1990s, was allowed to have extensive powers and make decisions at his own discretion over company management.

Nissan apparently hopes to reduce the influence of Renault, its largest shareholder backed by the French government, on its management and review the alliance to make it more equitable.

Renault wants to maintain its influence on the Japanese automaker and protect its business interests.

Although smaller in earnings compared to Nissan, Renault owns a 43.4 percent stake in the Japanese automaker, which holds a 15 percent stake in its French peer but without voting rights and 34 percent in Mitsubishi Motors Co., the third partner in the alliance.

The online version of The Wall Street Journal reported Sunday that Thierry Bollore, deputy CEO of Renault, sent a letter dated Dec. 14 to Nissan’s Saikawa urging him to call an extraordinary shareholders’ meeting promptly to discuss Renault’s representation on Nissan’s nine-member board and within the ranks of its top managers.

A current agreement between Nissan and Renault says that the Japanese automaker is to receive senior executives from the French peer, although that does not include the post of chairman, other sources have said.

Renault last week retained Ghosn in his position as chairman and CEO at the firm, saying that no evidence of wrongdoing had been found in an internal probe, in stark contrast to Nissan’s quick move to strip him of the role of chairman following his arrest on Nov. 19.

Ghosn was indicted Dec. 10 on a charge of violating the financial instruments law by allegedly understating his remuneration in the company’s securities reports by 5 billion yen ($44 million) during the five years through March 2015.

He was also served with a fresh warrant for continuing the alleged misconduct amounting to a further 4.2 billion yen for the three years through March this year. Ghosn has denied the allegations.

Nissan’s internal probe, triggered by a whistleblower report, has found “significant acts of misconduct” by Ghosn, including the understatement of remuneration and also personal use of company assets, according to Saikawa.