Carlos Ghosn, head of Renault-Nissan-Mitsubishi alliance, detained by Japanese authorities, will be fired as Nissan chairman

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Ghosn is known for the fact that Nissan has almost gone bankrupt. Photo credit: REUTERS

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UPDATED: 19-11-1919 19:19 ET – adds details

TOKYO – Nissan Motor Co. is preparing to fire President Carlos Ghosn for allegedly underreporting his earnings and use of corporate assets for personal use, according to a spokesman for the company.

CEO Hiroto Saikawa, 65, will recommend the board of directors of the automaker to fire Ghosn, said Nissan spokesman Nicholas Maxfield Monday in Japan.

The company also plans to dismiss fellow board member Greg Kelly, 62, who has taken the lead as director of human resources.

Ghosn believes that Nissan has reported too little revenue over several years and has misused company assets. Kelly was "deeply involved" in the schedule, Maxfield said.

While Nissan did not immediately comment on the extent of the alleged under-reporting of income, the Jiji news agency said that Ghosn underestimated nearly 10 billion yen ($ 88.7 million) in compensation as almost 5 billion yen. The Kyodo news agency said it took place five years ago, from 2011 to the present.

According to reports in the media, Japanese prosecutors have arrested Ghosn for alleged violations of the country's financial laws. Ghosn volunteered with prosecutors in Tokyo, reported the newspaper Asahi.

A representative for the Tokyo Public Prosecutor's office said it did not comment on individual cases and a Renault spokesman also declined to comment.

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French President Emmanuel Macron, whose country owns 15 percent of the shares of the Renault Group, said: "The government, as a shareholder, remains extremely vigilant about the stability of the alliance."

Macron and Ghosn have a controversial history; as minister of finance under former president Francois Hollande, Macron had criticized the salary of the CEO of Renault as excessive and urged the state to increase its share in the automaker to 20 percent in 2015 compared to the previous 15 percent.

Fall from grace

Ghosn, 64, one of Japan's highest paid managers, is the joint chairman of the alliance Renault-Nissan-Mitsubishi and one of the most legendary leaders in the sector.

This marks a staggering fall from grace for the man who cleared the way for Nissan's comeback and was credited with leading one of the few successful automobile partnerships in the automotive industry, the long-running connection between Nissan and Renault from France.

Ghosn extended the alliance with Mitsubishi Motors Corp. in 2016, by developing Nissan's purchase of a controlling stake in the smaller Japanese rival. Mitsubishi had no immediate comment on his plan after the news, a spokesman said.

Nissan did not say who would replace Ghosn as chairman, nor if the board would decide to remove him.

Nissan was expected to hold a press conference on Monday about the allegations at the global headquarters in Yokohama, just south of Tokyo.

Greg Kelly, representative of Nissan Motor

Controversial compensation

The news also casts a shadow over the future of the Renault-Nissan-Mitsubishi alliance. Ghosn was expected to resign as chairman of the alliance in the coming years, and he has worked behind the scenes to formulate a structure that will ensure that car manufacturers work together and retain their independence and brand identity.

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In Japan, Ghosn was a controversial figure for his excessive salary, routinely the top among the auto executives of this nation. Nissan, as a whole, claims that it has to pay its executives more than the Japanese average to attract top talent worldwide talent in an international industry.

Nissan reported in securities applications that it paid approximately 1.1 billion yen ($ 10 million) for 2016 and about $ 6.5 million in the most recent fiscal year. Reportedly he took home about $ 8.5 million to Renault and about $ 2 million from Mitsubishi in the last period. At Renault, his package for 2017 was scrupulously taken over by Renault shareholders, but only after he had agreed to a discount of 20 percent.

Ghosn was sent out by Renault in 1999 to take over a waving Nissan as COO. He became Nissan president of the following year and was CEO from June 2001. He became co-current president of Renault and chairman of Mitsubishi Motors in 2016. He gave up his CEO title last year at Nissan.

Saikawa joined Nissan in 1977 and from 2013 to 2016 was the most important competitive officer. Previously he held positions as chairman of the Management Committees of America and Europe, as well as the Executive Vice President of Purchase.

Reuters and Bloomberg contributed to this report.

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