A week ago, Carlos Ghosn was sitting atop one of the world's most powerful auto empires. Now, he's sitting in a Tokyo jail cell.
The dramatic downfall of the iconic global business leader is a tale of bombshell allegations, corporate intrigue and simmering cultural tensions.
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A 40-year auto industry veteran, Ghosn brought together three big carmakers — Renault (RNSDF) of France and Japan's Nissan (NSANY) and Mitsubishi Motors (MMTOF) — with the aim of rivaling the top dogs: Volkswagen (VLKAF), Toyota (TM) and General Motors (GM).
His vision appeared to be working: Ghosn's alliance makes one out of every nine cars sold around the world. But its future has now been cast into doubt after he was arrested in Japan, ousted as chairman of Nissan and Mitsubishi, and sidelined at Renault.
The Brazilian-born executive is accused of taking advantage of his position at the top of Nissan, which he ran for more than 15 years. The allegations include concealing millions of dollars of personal income and using company assets for his own benefit.
As his reputation is trashed and the empire he built comes under strain, Ghosn is stuck in a Tokyo jail cell, facing the prospect of 10 years in prison if convicted. He's yet to respond publicly to the allegations. (Japan's public broadcaster NHK, citing unnamed sources, reported over the weekend that Ghosn has denied the allegations.)
What has Ghosn allegedly done?
Ghosn was detained by Tokyo prosecutors last Monday when he reportedly stepped off a flight from Beirut, where he grew up. His arrest followed an internal investigation at Nissan that the company said found "significant acts of misconduct" over many years, including understating his income in financial reports and misusing company assets.
Prosecutors allege that he and another Nissan director, Greg Kelly, collaborated to understate Ghosn's income by about 5 billion yen ($44 million) over a five-year period ending in March 2015.
NHK reported that Ghosn also failed to properly disclose homes that were provided for him by Nissan in four different countries. The broadcaster added that prosecutors suspect Ghosn may have pocketed money that was meant for other Nissan executives.
Nissan, which hasn't confirmed the details reported by NHK and other Japanese news outlets, has accused Kelly of being the "mastermind" behind the scheme.
How did we get here?
Ghosn was named Nissan CEO in 2001 and is credited with pulling off a stunning turnaround at the company, which was in financial trouble at the time.
Since then, he has engineered deeper integration between Nissan and Renault. Mitsubishi joined the alliance in 2016 after Nissan bought a 34% stake in it. Together, the three companies employ more than 470,000 people in nearly 200 countries.
But the partnership is unequal. Nissan, which is much bigger and sells more vehicles than Renault, holds only a 15% non-voting stake in the French company. Renault holds a much more powerful 43% shareholding in Nissan.
"In pure monetary terms, Renault has been getting a better deal than Nissan," analysts at investment firm SC Capital wrote last week.
Some analysts suggest that this has stirred discontent among Nissan executives, who were also uncomfortable about the possibility of Renault and Ghosn seeking for a full-blown merger.
A number of analysts and commentators have suggested that Ghosn was the victim of a "palace coup" by Nissan executives nervous over how much power he had accumulated.
Asked about the coup speculation, a Nissan spokesman said that the company "believes strongly that the investigation revealed serious misconduct spanning multiple years" and that the actions it took against Ghosn were "fully necessary."
What's next for Ghosn?
Japanese prosecutors have yet to indict Ghosn, a French citizen who grew up in Lebanon, on any charges. He is being held at a detention center in Tokyo, where prisoners are typically fed basic meals three times a day and sleep on Japanese futons.
Prosecutors on Wednesday received permission to detain Ghosn for a further 10 days as they continue questioning him. He is being given access to his lawyer and to French consular services.
His long Nissan career is almost certainly over. Its board members unanimously voted on Thursday night to oust Ghosn as chairman following a lengthy meeting.
The board of directors at Mitsubishi followed suit on Monday, voting unanimously to remove Ghosn as chairman.
Renault stopped short of firing Ghosn last week as its chairman and CEO, instead appointing an interim replacement.
What's the future of the alliance?
Both Nissan and Renault have said Ghosn's arrest won't affect the alliance. Officials from the French and Japanese governments have echoed those sentiments.
"The long-standing alliance partnership with Renault remains unchanged," Nissan said Thursday after firing Ghosn, adding that it would try to "minimize the potential impact and confusion."
But a great deal of uncertainty remains. Analysts say Ghosn was the force that held the three companies together.
A nightmare scenario for Nissan could arise if prosecutors fail to bring a successful case against Ghosn and he returns as Renault chairman. The SC Capital analysts speculated that Ghosn could retaliate by trying to kick Nissan out of the alliance and seeking a tie-up with a bigger rival like GM instead.
That is probably unlikely, as the costs of the alliance failing would be huge. The companies estimate they save over 5 billion euros ($5.7 billion) every year by sharing technology and other resources.
"If the entire alliance blows up badly ... that would be the worst strategic mistake made by an automaker in decades," said Travis Lundy, an analyst at investment research network Smartkarma.