Nissan Chairman Carlos Ghosn is expected to be ousted from his role at the company at the recommendation of CEO Hiroto Saikawa after allegations of serious misconduct that violate Japanese financial trading law.
Ghosn went voluntarily with Tokyo prosecutors early Monday and was later arrested, according to local news reports. His ouster will likely be felt around the auto industry as he also serves as CEO of Renault and was the architect of the Renault-Nissan-Mitsubishi alliance.
Allegations against Ghosn
Ghosn and his Nissan colleague, Representative Director Greg Kelly, allegedly submitted false numbers to the Tokyo Stock Exchange securities report. They are accused of under-reporting the size of Ghosn’s compensation package “over many years,” and Ghosn is accused of using company money for personal expenses. Nissan said in a statement that the directors’ behavior constituted “clear violations of the duty of care,” and “numerous other significant acts of misconduct” had been uncovered in regards to Ghosn.
How Nissan found out
A whistleblower first came forward with reports that Ghosn and Kelly had been engaging in improper practices, triggering a several-month long internal investigation at Nissan. The company has also been cooperating with an investigation by the Japanese Public Prosecutors Office.
What Ghosn’s departure means
Ghosn’s ouster at Nissan comes as larger shifts are happening at the Renault-Nissan-Mitsubishi alliance. The companies have reportedly considered changing the structure of their partnership, possibly through a merger. Ghosn’s slow retreat from his roles at each company—including stepping down as Nissan’s CEO last year and suggesting he may step down from his post as CEO of Renault before the scheduled end of his term in 2022—have sparked rumors that he wasn’t on board with plans for further integration and might be thinking of leaving the alliance anyway.
The departure of the alliance’s architect, who has been at the helm since 1999, would have been destabilizing in the best of circumstances. His ouster under conditions revealed on Monday pose a real threat to the business.
Renault did not immediately return Fortune‘s request for comments on the allegations against Ghosn.
Stock prices for Nissan’s partner Renault fell by as much as 13% on the news that Ghosn was to be ousted. The announcement came after the Tokyo market had closed for the day, but Nissan global depositary receipts sank more than 11%.