Carlos Ghosn, head of Nissan Motors, speaks to reporters during a press conference at the 2016 North American Auto Show in Detroit. Photo: Geoff Robins / AFP
Carlos Ghosn, head of Nissan Motors, speaks to reporters during a press conference at the 2016 North American Auto Show in Detroit. Photo: Geoff Robins / AFP

The arrest of Nissan chairman Carlos Ghosn for alleged financial misconduct has sent shockwaves through the auto industry.

Prosecutors in Tokyo said Ghosn, 64, was accused of understating his income by about five billion yen ($44.5 million) over about five years.

Nissan and Mitsubishi have said they are preparing to remove Ghosn, head of the Renault-Nissan-Mitsubishi alliance, from his posts.

Shares in the two companies suffered falls on Tuesday amid questions about the carmakers’ future. Shares in Nissan were down about 4% by midday, while Mitsubishi was down by more than 7% and Renault’s shares lost more than 8% in Europe.

On Tuesday there were still many unanswered questions about the allegations against a man long credited with an almost magical ability to turn around ailing auto companies.

Nissan CEO Hiroto Saikawa said a months-long investigation prompted by a whistleblower had uncovered years of financial wrongdoing, including under-reporting of Ghosn’s salary and misuse of company assets, AFP reported.

“Too much authority was given to one person in terms of governance,” he told reporters at Nissan’s headquarters in Yokohama on Monday. “I have to say that this is a dark side of the Ghosn era which lasted for a long time.”

Saikawa said he was still thinking through whether Ghosn was “a charismatic figure or a tyrant”.

It was an almost unthinkable turn of events for Ghosn, who had earned a virtually unparalleled reputation, particularly in Japan, for his role in resurrecting Nissan.

Ghosn has dominated the country’s corporate landscape and is a well-known figure among the general public, who know him as “Mr Fix It”, partly through a popular manga comic of his life story.

But the tables had turned on Tuesday, with the Yomiuri Shimbun describing executives at Nissan slamming Ghosn as “greedy”.

“He says the right things, but in the end it’s all about money,” the daily quoted employees as saying.

It was unclear how long Ghosn could be held, or even when prosecutors would officially announce the charges against him. 

Analysts predicted that Ghosn’s arrest would rock the Renault-Nissan-Mitsubishi alliance because he was the keystone of that partnership. Satoru Takada at TIW, a Tokyo-based research and consulting firm, told AFP: “He is a man of charisma for the alliance. It is likely to have a negative impact on its brand image.”

Brazil-born Ghosn is known for overhauling Renault and Nissan since the 1990s. Renault came to the rescue of the then-ailing Japanese automaker in 1999 and parachuted in Ghosn, who set about slashing costs and jobs in a huge corporate overhaul.

In 2016, Ghosn also took charge at troubled Mitsubishi after Nissan threw it a lifeline, buying a one-third stake for about $2.2 billion as it wrestled with a mileage-cheating scandal that hammered sales.

with reporting by Agence France-Presse