Nissan’s chairman arrested over allegations of financial misconduct

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Nissan Chairman Carlos Ghosn, one of the Japanese multinational automobile manufacturer auto industry’s most high-profile executives, has been arrested in Japan after an internal investigation revealed “significant acts of misconduct” over many years by him and another top executive.

The stunning announcement ripped through a powerful global alliance, slamming the stocks of Nissan (NSANY) and Renault (RNSDF), where Ghosn also serves as chairman.

Together with Japan’s Mitsubishi Motors (MMTOF), Nissan and Renault make up the biggest global car making alliance, which makes one of every nine cars sold around the world. The three companies employ more than 470,000 people in nearly 200 countries.

Nissan said in a statement that it had been investigating Ghosn, a 40-year veteran of the auto industry, and another board member for months following a whistle blower report.

“These two gentlemen were arrested this evening, that is what I understand,” Nissan CEO Hiroto Saikawa said at a press conference in Tokyo late on Monday.

Japanese prosecutors confirmed the arrests of Ghosn, 64 and the other board member, Greg Kelly, on suspicion of violating financial laws by filing false statements. According to the prosecutors’ statement, the two men allegedly collaborated to under-report Ghosn’s income by about 5 billion yen ($44 million) over a five-year period ending in March 2015.

The maximum punishment in Japan for filing a false financial statement is up to 10 years in prison and a fine of up to 10 million yen ($89,000).

Nissan said its internal investigation also found “numerous other significant acts of misconduct … such as personal use of company assets.”

As a result, CEO Saikawa will propose to Nissan’s board of directors to “promptly remove Ghosn from his positions as chairman and representative director,” at a meeting on Thursday, the company said. He will also try to have Kelly removed from the board.

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