Nissan Motor on Monday said it plans to dismiss Chairman Carlos Ghosn after an internal investigation found he underreported his income and engaged in other "significant misconduct."
Ghosn was arrested by Tokyo prosecutors on suspicion of underreporting his earnings, according to Japanese broadcaster NHK. The executive earned about $9.7 million in fiscal 2016, but the following year reported his earnings declined 33 percent, NHK said.
Shares of Renault, which owns a 43 percent stake in Nissan, plunged 14 percent early Monday. The news of Ghosn's troubles broke after Japanese markets had closed for the day.
Yokohama-based Nissan, one of the world's largest automakers, said the violations were discovered during an investigation over several months that was instigated by a whistleblower. Ghosn, 64, also allegedly engaged in personal use of company assets, it said.
Nissan said it was providing information to the prosecutors and cooperating with their investigation. The allegations also concern a Nissan representative director, Greg Kelly, it said.
Together, the two under-reported their income by a combined 5 billion yen, or about $44 million, from 2011 to 2015, Japan's Kyodo News service reported.
Nissan CEO Hiroto Saikawa Saikawa apologized profusely for the allegations against Ghosn. "Beyond being sorry I feel great disappointment, frustration, despair, indignation and resentment," he told reporters at a late-night news conference at the company's headquarters in Yokohama.
Ghosn, Kelly to be removed
Saikawa planned to propose to its board that Ghosn and Kelly both be removed from their posts, the company said in a statement.
"Nissan deeply apologizes 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," it said.
The Nissan-Renault-Mitsubishi group is among the biggest auto alliances in the world, selling about 10 million vehicles a year. Before joining Renault, Ghosn worked for Michelin North America.
Ali Kaya, who heads the CGT union at a Renault factory in Flins outside Paris, said "the most shocking thing is that these people were not arrested well before this."
He lamented that the public has grown inured to "astronomical sums" paid to Ghosn and other executives. The powerful, hard-left CGT has long campaigned to cap executive pay.
Renault and the French government are refusing to comment. The French government owns 15 percent of Renault.
The allegations are a serious blow at a time when Nissan and Mitsubishi Motor Co. are still overcoming scandals over their quality testing reporting.
Ghosn is credited with helping engineer a remarkable turnaround at Nissan over the past two decades, resuscitating the Japanese automaker from near bankruptcy after he was sent in by Renault.
He served as Nissan's chief executive from 2001 until April 2017, becoming chief executive of Renault in 2005, leading the two major automakers simultaneously. In 2016, Ghosn became Mitsubishi Motors' chairman.
For the past two decades, he has maintained an unusually high profile in a nation where foreign chief executives of major Japanese companies are still relatively rare.
Ghosn has appeared on magazine covers dressed in kimono, vowing to renew the Nissan brand. He was widely praised in Japanese industry circles for delivering sorely needed cost cuts and introducing greater efficiency at a time when Nissan needed a fresh start.