Carlos Ghosn: Nissan and Mitsubishi shares slump after chairman's arrest

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France's finance minister has declared Carlos Ghosn is no longer capable of leading Renault, after the executive, one of the leading figures in the global vehicle industry, was arrested on Monday by Japanese prosecutors.

Prosecutors said on Tuesday that they were holding Mr Ghosn for allegedly collaborating to falsify securities statements and under report Mr Ghosn's income.

Of French, Brazilian and Lebanese background, Ghosn also is a towering corporate figure in France, where Renault is one of the heavyweight industrial survivors.

Nissan's chief executive Hiroto Saikawa planned to propose to its board that Mr Ghosn and Mr Kelly both be removed from their posts, the company said in a statement. Kelly was also arrested.

"To have so greatly violated the trust of many, I feel full of disappointment and regret", Mr Saikawa told a news conference.

Yokohama-based Nissan Motor said it is cooperating with prosecutors in their investigation.

While there could be some scrutiny of the relationships between the companies, they're so intertwined now that cutting them apart would be hard, said Kelley Blue Book analyst Michelle Krebs. Ghosn is also accused of personal use of company assets. He said in September that he would continue to pare back his roles at the three individual companies, while continuing to head their alliance.

On Monday, Saikawa acknowledged that too much power had been concentrated in Ghosn.

Saikawa gave few details about the nature of the improprieties, including refusing to confirm reports that Ghosn under-reported his income by 5 billion yen, or around $60 million (AUD), over five years from 2011. The properties had no business goal and were not listed as benefits in TSE filings, NHK said.

French President Emmanuel Macron said his government, which owns 15 percent of Renault, would work to preserve that alliance.

But experts said it is unlikely he will be able to stay on there or at Renault, where he is also chief executive.

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Companies in the alliance own parts of each other and share investments in new technologies, among other things.

"In terms of structural issues, 43 percent is held by Renault and the head of Renault is now serving as (chairman) of Nissan", Saikawa said.

Shares in Renault, where Ghosn is CEO, plunged as much as 13% in Paris.

In the hours after news broke of Ghosn's alleged behaviour, both Nissan and Renault reaffirmed their commitment to the carmaking venture.

Mr Ghosn signed a contract this year that would have run through 2022. His compensation, high by Japan's moderate standards for executive pay, has been an issue over the years.

According to NHK and the Kyodo News Service, Nissan paid Ghosn almost 10 billion yen ($89 million) over five years through March 2015, including salary and other income, but he reported receiving only about half that amount.

The allegations are a serious blow at a time when Nissan and Mitsubishi Motor Co are still overcoming scandals over their quality testing reporting.

Ghosn is credited with helping Nissan improve the profitability of its business operations. His triumph made him something of a national hero in a country where foreign CEOs of major Japanese companies are relatively rare.

For years, France's Renault and Japan's Nissan struggled to make money in the global auto business.

The arrest is an astonishing reversal of fortune for Ghosn, often feted for his success at turning around failing companies with hard-nosed tactics that earned him the nickname "Le Cost Killer" in France.

In June, Renault shareholders approved Mr Ghosn's 7.4 million euros ($11.6 million) compensation for 2017.

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