Business News
Crisis-hit Nissan CEO resigns
Yokohama, Japan: Nissan’s CEO will step down next week, the board said Monday, deepening the crisis at the Japanese car giant still reeling from the arrest and ouster of former chief Carlos Ghosn’s over alleged financial misconduct.
It is yet another blow for the firm that has seen sales plunge and been forced to slash jobs since the stunning arrest of Ghosn for allegedly hiding part of his salary from official documents to shareholders.
Hiroto Saikawa will leave the company on September 16, chairman of the board Yasushi Kimura told reporters, after he admitted receiving excess pay by altering the terms of a bonus.
Saikawa is suspected of improperly adding 47 million yen ($440,000) to his compensation under a scheme in which directors can earn a bonus if their company’s share price rises above a certain level in a set period.
Nissan officials were keen to stress that there was no illegality but that he should not have delegated the task to a junior executive.
“At the end of the day, the operation which should have been carried out by the president himself was carried out, delegated to others, which is a violation of the rules,” said Motoo Nagai, a board member.
Saikawa apologised last week for the payment, while denying any wrongdoing.
“I left the issue to someone else so I had thought it was dealt with in an appropriate manner,” he told reporters.
The “share appreciation” scheme has now been scrapped, the board announced.
The current chief operating officer, Yasuhiro Yamauchi, will take over as acting CEO on September 16, when Saikawa officially leaves.
The board hopes to find a permanent replacement by the end of October.
Alleged overpaymentsÂ
The carmaker is currently undergoing an overhaul intended to strengthen governance after the Ghosn scandal.
In June, Nissan shareholders voted in favour of various measures including the establishment of three new oversight committees responsible for the appointment of senior officials, pay issues and auditing.
They also approved the election of 11 directors as the firm restructures, among them two Renault executives as well as Saikawa.
The reforms were designed to put Nissan on a more stable footing after the arrest of Ghosn, who has been sacked from his leadership roles at the Japanese firm and others.
He is awaiting trial on charges of under-reporting millions of dollars in salary and of using company funds for personal expenses.
Ghosn has denied any wrongdoing and accuses Nissan executives opposed to his plans to further integrate the firm with France’s Renault of plotting against him.
‘Dark side’Â
Saikawa, a one-time Ghosn protege, turned sharply against his former mentor after his arrest, referring to the “dark side” of the tycoon’s tenure and accusing him of accruing unchecked power that allowed his alleged wrongdoing to go undetected.
But the CEO himself came under pressure in the scandal’s wake, facing calls to resign from shareholders who view him as too heavily associated with the Ghosn era.
And while he resisted calls to step down immediately, he has always said he planned to hand over the reins after Nissan is back on track.
The Ghosn scandal has proved disastrous for Nissan, which in July announced that net profit plunged nearly 95 percent in the April-June quarter, and confirmed it would cut 12,500 jobs worldwide.
The Japanese firm has also struggled to steady its relationship with Renault as part of a tripartite alliance with Mitsubishi Motors that Ghosn founded and once led.
Renault holds a 43-per cent stake in the Japanese automaker, which in turn controls 15 per cent of the French firm but has no voting rights – an arrangement that has caused tensions.
“There are working theories” on a possible reform of the cross-holding structure between the two firms, a source close to the issue told AFP, adding that “nothing is official”.
Key developmentsÂ
Arrested on jet
Prosecutors arrest Ghosn and his right-hand man Greg Kelly on a private jet after it touches down in Tokyo on November 19. They are accused of financial misconduct, including under-reporting Ghosn’s salary.
The auto titan oversaw the alliance of Renault, Nissan and Mitsubishi Motors, creating the world’s top-selling auto company.
Ghosn and Kelly deny wrongdoing. Their detention for investigation is extended to December 10.
FiredÂ
French car giant Renault announces on November 20 that Ghosn is “temporarily incapacitated” and chief operating officer Thierry Bollore will take over.
Nissan’s board votes unanimously on November 22 to “discharge” Ghosn as chairman. Four days later, he is also fired as boss of Mitsubishi Motors.
Charged, new allegationsÂ
On December 10, Japanese prosecutors formally charge Ghosn and Kelly with under-reporting his salary between 2010 and 2015. They are immediately rearrested on allegations of further under-reporting in the past three years.
On December 21, they arrest Ghosn again over fresh allegations that he transferred losses from personal financial investments to Nissan. His detention is prolonged until January 11.
Kelly wins bail on December 25 on condition he stays in Japan.
First court appearanceÂ
In his first public appearance since his arrest, Ghosn attends a court hearing on January 8 in handcuffs. “I have been wrongly accused and unfairly detained based on meritless and unsubstantiated accusations,” he says.
The judge says his detention is justified because he poses a flight risk and could tamper with evidence.
On January 11, prosecutors file two new formal charges of financial misconduct against Ghosn. On January 15, the court denies his bail request.
First bail approvedÂ
On January 21, Ghosn issues a personal appeal for bail, vowing he would not seek to leave Japan before a trial and offering to wear an electronic tagging bracelet. It is rejected.
On January 31, Ghosn tells AFP from prison that his detention would “not be normal in any other democracy”. He shakes up his legal team on February 13.
On March 5, the court approves Ghosn’s third request for bail which is set at one billion yen ($9 million, eight million euros).
He walks out of his detention centre on March 6.
RearrestÂ
He is rearrested in a dawn raid of his Tokyo apartment on April 4, with investigators now probing suspect payments to a Nissan distributor in Oman.
“I will not be broken,” Ghosn says.
On April 9, Ghosn’s representatives release a video recorded shortly before his arrest in which he accuses “backstabbing” Nissan executives of a “conspiracy”.
He repeats that he is “innocent”.
On April 22 authorities hit him with a further charge of aggravated breach of trust, alleging he siphoned off money for personal ends from cash transferred from Nissan to a dealership in Oman.
Bail IIÂ
On April 25, the court grants Ghosn a second bail of $4.5 million. It bans him from leaving Japan and imposes other conditions, including requiring court permission to see his wife.
On May 26, his lawyers say his family has asked the UN group on arbitrary detention to intervene against his “judicial persecution”.
On June 4, Renault in France reveals that an internal audit identified 11 million euros of questionable expenses at the Dutch subsidiary, RNBV, which is jointly owned with Nissan.
This included “certain spending by Mr Ghosn” and over-charging for his plane travel.
France, which holds a 15-per cent stake in Renault, says it will cooperate with a case being planned by the carmaker against Ghosn.
Management reformsÂ
On June 25, Nissan shareholders approve a radical governance overhaul and restructuring designed to turn the page on the Ghosn era.
But the bad news keeps coming – a month later, the firm announces it will cut 12,500 jobs after a steep plunge in quarterly net profits.
Saikawa fallsÂ
After months of insisting he wanted to set Nissan back on a growth path before stepping down, Saikawa finally resigns amid allegations that he himself padded his salary.
Saikawa denies wrongdoing but apologises after accusations surface that he improperly added 47 million yen ($440,000) to his compensation by altering the terms of a bonus.