TOKYO – Mitsubishi Motors Corp. followed top shareholder Nissan on Monday in removing Carlos Ghosn as chairman, in the wake of the disgraced executive’s arrest for alleged financial misconduct.
Mitsubishi’s decision came after a 70-minute meeting of its board. Ghosn, who has been detained since being picked up by prosecutors Nov. 19, did not attend.
CEO Osamu Masuko will become temporary chairman until an shareholders meeting is held, the Japanese carmaker said in a statement. Masuko said he was stunned by Ghosn’s downfall.
“I was shocked. I just couldn’t believe it,” Masuko told reporters after the vote in the showroom of the company’s global headquarters building in central Tokyo. “I still don’t understand why.”
Mitsubishi said it removed Ghosn because the disgraced executive had lost the support of Nissan, Mitsubishi’s biggest shareholder, and was unable to perform his leadership duties.
Nissan Motor Co. owns a controlling 34 percent stake in the smaller Japanese carmaker.
Ghosn’s ouster from Mitsubishi casts a longer shadow over the future direction of the mammoth Renault-Nissan-Mitsubishi alliance. Since Renault bought its controlling stake in Nissan, the alliance has subsumed Mitsubishi and other automakers and expanded into the world’s biggest auto empire, with global sales of 10.6 million vehicles in 2017.
Ghosn became chairman of Mitsubishi after Nissan took control in late 2016, displacing Masuko who was then chairman and CEO. Masuko remained CEO and representative director at the time.
Mitsubishi’s eight-member board includes Ghosn and two other directors dispatched from Nissan. Masuko is its only director from Mitsubishi Motors. The board has one director from Mitsubishi Heavy Industries and another from trading house Mitsubishi Corp.
Two independent outside directors round out the Mitsubishi board. Ghosn will keep his seat on the board as a director until he resigns or is voted out by shareholders.
Mitsubishi’s maneuver reverts power to Masuko, one of Japan’s longest-serving automotive chiefs. He has effectively been running Mitsubishi since 2005, when he was appointed president.
Ghosn and fellow Nissan director Greg Kelly were arrested last week and are under investigation for allegedly under-reporting Ghosn’s income and misusing company assets. But citing unidentified sources, Japanese media reported Nov. 25 that both men have denied wrongdoing.
At a Nov. 22 emergency meeting, Nissan’s board removed Ghosn as chairman and stripped both Ghosn and Kelly of their status as representative directors with special rights to legally represent the company in business transactions. Both men remain directors on the board, pending a shareholder vote to remove them. Nissan has not announced when that may take place.
Prosecutors are originally reported to have suspected Ghosn of understating his income by some 5 billion yen ($44.3 million) over five years financial filings. But Japan’s Nikkei newspaper has since reported that the amount of under-reported compensation is much greater.
Nissan arranged to have about 1 billion yen ($8.9 million) of deferred compensation paid annually over eight years, totaling some 8 billion yen ($71 million), the Nikkei said.
Ghosn, according to media reports citing unidentified sources, is also alleged to have channeled corporate money to buy homes around the world for his private use.
Ghosn retains his position as CEO and chairman of Nissan’s alliance partner Renault, although the French carmaker has been delegated his duties to second-in-command Thierry Bollore and board director Philippe Lagayette, while Ghosn remains in detention in Japan.