In 1999, Carlos Ghosn, then the executive vice president of French automaker Renault, arrived in Japan. His mission: save Nissan Motor. As CEO of the struggling company, he would lead a dramatic turnaround, cutting costs and revamping the brand’s faded image. In 2005, Ghosn took the helm at Renault, too. Under his leadership, the Renault-Nissan Alliance — an unprecedented Franco-Japanese carmaking partnership — has become one of the biggest automotive groups in the world.
Carlos Ghosn and Nissan, the Japanese automaker he saved from collapse, were indicted Monday on allegations of financial misconduct, deepening a crisis that already brought down one of the global car industry’s most iconic figures.
Tokyo prosecutors said they indicted Ghosn, 64, and Nissan for under-reporting his income over a five-year period and are investigating allegations that the practice went on for even longer.
Ghosn’s sudden downfall began when he was arrested in Tokyo last month. He has since been ousted as chairman of Nissan (NSANY) and Mitsubishi Motors (MMTOF) and temporarily replaced as head of France’s Renault (RNSDF).
Former Nissan director Greg Kelly, who was arrested in Tokyo at the same time as Ghosn, was also indicted Monday, prosecutors said.
The two men are alleged to have collaborated to under-report Ghosn’s income in Nissan’s securities filings by about 5 billion yen ($44 million) over a five-year period ending in March 2015, according to prosecutors. The maximum punishment in Japan for filing a false financial statement is up to 10 years in prison and a fine of up to 10 million yen ($89,000).
“Nissan takes this situation extremely seriously,” the company said in a statement. “Making false disclosures in annual securities reports greatly harms the integrity of Nissan’s public disclosures in the securities markets, and the company expresses its deepest regret.”
It added that it “will continue its efforts to strengthen its governance and compliance, including making accurate disclosures of corporate information.”
Shares in Nissan dropped nearly 3% in Tokyo.
Ghosn’s downfall has strained the global autos alliance between Nissan, Renault and Mitsubishi Motors.
Renault, which has appointed an acting chief executive but kept Ghosn in his positions of CEO and chairman, said it has not been provided with evidence of wrongdoing.
“We have no specific comment to make on the indictment and at this stage we still haven’t received any evidence in relation to the investigation,” a spokeswoman said.
The French automaker’s stock shed 1.7% in Paris.
Prosecutors said Monday that they are also arresting Ghosn and Kelly again as they investigate additional allegations that the two men under-reported Ghosn’s income by more than 4.2 billion yen ($38 million) between 2015 and 2017.
Ghosn and Kelly have not yet responded publicly to the allegations. Japanese public broadcaster NHK reported Monday that Ghosn is denying the charge against him.
The two men have already been in detention for three weeks.
By rearresting them, the prosecutors will be able to detain them for questioning for even longer. After an arrest, they can hold a suspect for 72 hours without charging them with a crime. They can extend that by as much as 20 days with court approval.
The prosecutors’ decision to go ahead and indict Ghosn and Kelly is an ominous development for the two men. More than 99% of people charged with a crime in Japan are eventually convicted, according to experts.