Carlos Ghosn, the chairman of Nissan and chief executive of Renault, faces arrest in Japan and will be sacked by the car manufacturers for alleged financial violations.
Renault’s market value dived by €2bn (£1.78bn) to €17bn after the report, with shares falling by 11%. The value of Nissan securities listed in Germany fell by 12%.
Ghosn was suspected of having understated his income on financial statements and had agreed to voluntarily speak to prosecutors. He was exposed by a whistleblower, Nissan said.
In a statement, Nissan said that “over many years” Ghosn and another senior executive, Greg Kelly, had been “reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation”.
Nissan added: “Numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.”
Hiroto Saikawa, the chief executive and only remaining survivor of the firm’s top three executives, will propose to the board that Ghosn and Kelly be dismissed, citing “clear violations of the duty of care as directors”.
Ghosn, a rare foreign top executive in Japan, is regarded as one of the leading figures in the car industry, having turned Nissan around from near bankruptcy.
He had also in recent months made his mark on British politics, making outspoken comments on the effects of a hard Brexit on Nissan’s famous Sunderland factory. Ghosn was also personally involved in acquiring assurances from prime minister Theresa May that the car manufacturing sector would not be harmed in the aftermath of the Brexit vote in 2016.
Brazilian-born, of Lebanese descent and a French citizen, Ghosn began his career at tyre manufacturer Michelin in France, before moving on to Renault. He joined Nissan in 1999 after Renault bought a controlling stake and became its chief executive in 2001.
Ghosn was the key figure behind the alliance between Nissan and Renault in 1999, joined by Mitsubishi in 2016, creating a top-four car firm through a series of interlinked shareholdings. The alliance, which sold 10.6m cars in 2017, has more than 450,000 employees worldwide.
Kelly was a representative director at Nissan. A US citizen who trained as a lawyer, Kelly joined Nissan’s North American arm in 1988.
Nissan said it was cooperating with Japanese prosecutors.
Nissan’s statement said: “Nissan deeply apologises for causing great concern to our shareholders and stakeholders. We will continue our work to identify our governance and compliance issues, and to take appropriate measures.”
Renault declined to comment.