Nissan Motor Co.'s board of directors voted unanimously at an extraordinary meeting Thursday to relieve Representative Director and Chairman Carlos Ghosn of his duties in the wake of his arrest on suspicion of violating the Financial Instruments and Exchange Law.
Following the dismissal of the 64-year-old top executive, the Japanese carmaker intends to rebuild its corporate governance, which enabled his misconduct, and will consider reviewing its capital relationship with French auto giant Renault SA.
The board of directors also voted to relieve of his duties Representative Director Greg Kelly, 62, who was arrested along with Ghosn. Nissan is considering holding an extraordinary shareholders meeting, aiming to also remove the two suspects from the board.
Based on an internal investigation, the company acknowledges that Ghosn understated executive compensation, misused corporate investment funds for personal use and abused company expenses. Kelly is also believed to have been deeply involved in the misconduct. The board of directors decided this violated their "duty of care," an obligation directors have to not cause damage to their companies.
Nissan will set up a third-party committee comprising such members as outside directors and lawyers to strengthen corporate governance, which let the suspects continue the misconduct. The committee will probe the causes of the misconduct and present improvement measures.
The board of directors will likely select a new chairman at its next meeting, which will be held as early as next month. Nissan will establish an advisory committee, comprising three outside directors including Masakazu Toyoda, and propose nominations for the post of chairman from among board members. The committee will be chaired by Toyoda.
Mitsubishi Motors Corp., another Japanese carmaker where Ghosn is chairman, is expected to hold an extraordinary board of directors meeting Monday to relieve him of his post.
Nissan intends to maintain the Nissan-Renault-Mitsubishi partnership. Nissan President and Chief Executive Officer Hiroto Saikawa said Ghosn's arrest "is not the kind of incident that will have any impact on the partnerships between Renault and Nissan and between Mitsubishi Motors and Nissan."
But inside the company, there is significant discontent with Renault as the French company, which owns 43.4 percent of Nissan, is increasing its influence over personnel and management affairs. There is also a growing sense of wariness within Nissan that Renault may start trying to integrate the two companies' management systems, in light of the intentions of the French government, Renault's top shareholder.
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