Nissan Motor Co-chairman Carlos Ghosn has been arrested for alleged financial misconduct and will be fired from the board this week.
It is a dramatic fall for the charismatic leader, hailed for rescuing the Japanese car-maker from close to bankruptcy.
Mr Ghosn, one of the best known figures in the global car industry, is also chairman and chief executive of Nissan’s French partner Renault.
Nissan said an internal investigation, triggered by a tip-off from a whistleblower, revealed Mr Ghosn engaged in wrongdoing including personal use of company money and under-reporting of his earnings for several years.
Nissan chief executive Hiroto Saikawa said too much power had been concentrated on Mr Ghosn, a rare foreign executive who enjoyed corporate superstar status in Japan for reviving the ailing Japanese brand.
“Looking back, the concentration of power was something we need to deeply reflect on,” he said, confirming the arrest of Mr Ghosn in Japan on Monday.
Mr Saikawa said he could not give specifics on the personal use of company money, but said the wrongdoing was serious and unacceptable and had gone on for years. Mr Ghosn could not be reached for comment.
“To have so greatly violated the trust of many, I feel full of disappointment and regret,” Mr Saikawa told a news conference.
“It is very difficult to express this…. It’s not just disappointment, but a stronger feeling of outrage, and for me, despondency.”
French President Emmanuel Macron said the government, the Renault’s top shareholder, will be vigilant about the carmaker and its alliance with Nissan.
Mr Saikawa said he would propose at a board meeting on Thursday to remove Mr Ghosn.
Known as “Le Cost Killer” for overseeing turnarounds including cuts at Renault, Mr Ghosn has remained popular in Japan despite the massive job cuts that he brought and recent controversy over his lucrative pay package.
Japanese media reported that Mr Ghosn had under-reported around 10 billion yen (about $120 million) worth of annual compensation as around 5 billion yen for several years.
Ousting Mr Ghosn, 64, is bound to raise questions about an alliance that he personally shaped and had pledged to consolidate with a deeper tie-up, before eventually stepping back from its operational leadership.
Renault owns 43.4 per cent of Nissan, while Nissan owns 15 per cent of Renault, with no voting rights in a partnership that began in 1999. Since 2016, Nissan has held a 34 per cent controlling stake in its smaller Japanese rival, Mitsubishi.
The Asahi newspaper reported on its website that prosecutors had begun searching the offices of Nissan’s headquarters and other locations on Monday evening.
Brazilian-born, of Lebanese descent and a French citizen, Mr Ghosn began his career at Michelin in France, moving on to Renault.
He joined Nissan in 1999 after Renault bought a controlling stake and became its CEO in 2001. Mr Ghosn remained in that post till last year.
In June, Renault shareholders approved Mr Ghosn’s 7.4 million euros ($11.6 million) pay for 2017. In addition to this, he received 9.2 million euros in his final year as Nissan chief executive.