Nissan widens boardroom powers in wake of Ghosn scandal

[PARIS] Nissan Motor Co took steps to tighten up its corporate governance, giving more powers to the board, after the arrest of former chairman Carlos Ghosn for alleged financial improprieties.

The board decided to widen the scope of decisions that require its approval and will determine on an interim basis the compensation packages awarded to directors and executives, according to a statement on Thursday.

Chief executive officer Hiroto Saikawa has pledged to address corporate-governance shortcomings that have ensnared the company in the scandal involving Ghosn, who was accused of misdeeds including under-reporting his income. Last month Mr Saikawa blamed the company's governance for allowing "the situation to continue" while outside observers have cited a lack of internal controls. Its rules gave unusual powers to its former chairman.

The carmaker said the decision on who decides compensation would remain in effect until a committee on improving governance hands down its proposals. Nissan also updated its corporate governance code last month to clarify its policy on cross-shareholdings, which has direct bearing on its partnership with French carmaker Renault SA.

The board "re-emphasised its commitment to its alliance partnership with Renault and Mitsubishi Motors," according to the statement. Renault's board will also meet on Thursday, Bloomberg News reported.

Ghosn held pivotal roles in Japan and France as chairman of Nissan and chief of Renault, as well as head of the alliance that binds together both carmakers. Nissan, where allegations of wrongdoing surfaced, moved swiftly to remove him from his post after his arrest on Nov 19, while Renault nominally kept him in place as it awaits more evidence of misconduct.

Ghosn has disputed the allegations, though prosecutors in Japan have doubled down, re-arresting the executive last month and bringing new accusations that range from hiding investment losses to misuse of company funds.

In a court appearance on Tuesday, Ghosn said that he had been wrongly accused and unfairly detained, calling the allegations "meritless and unsubstantiated". The following day, he lost an appeal against his continuing detention, diminishing the prospects of an early release on bail. His detention is scheduled to end Friday, although prosecutors have the right to appeal to a court for an extension.

His arrest came after a months-long investigation by Nissan into his conduct, a probe that was kept from its French partner. If proven, each of Ghosn's alleged offences may carry a sentence of as much as 10 years, prosecutors have said.

Renault is the largest shareholder in Nissan and the Asian company in return is the second-largest shareholder in the French carmaker. The two companies also have minority shareholdings in Germany's Daimler AG. Nissan said it also has minority cross-shareholding with other companies.

BLOOMBERG