Nissan chairman Carlos Ghosn was arrested today for allegedly the week's financial company will be fired from the Japanese company board.
The development marks a dramatic fall for a charismatic leader hailed for rescuing the Japanese carmaker from close to bankruptcy.
Ghosn is also the chairman and chief executive of Nissan's French partner Renault and his figures in the global car industry, and his departure will raise questions about the future of the alliance.
Nissan said that an internal investigation, triggered by a tip-off from a whistleblower, revealed Ghosn was engaged in wrongdoing.
This includes personal use of company money and how much has it been earning.
Nissan CEO Hiroto Saikawa said that he had been concentrated on Ghosn, a rare foreign executive who enjoyed corporate superstar status in Japan for reviving the ailing Japanese brand.
"Looking back, we need to deeply reflect," he said, confirming the arrest of Ghosn in Japan.
Saikawa said he could not give specifics on the personal use of company money, but it was said to be serious and unacceptable and had gone on for years.
"To have great respect for the trust of many, I feel a full disappointment and regret," Saikawa told a news conference. It is very difficult to express this. It's not just disappointment, but it's a stronger feeling of outrage, and for me, despondency, "he added.
French President Emmanuel Macron said the government, the French carmaker's top shareholder, will be vigilant about Renault and its alliance with Nissan.
Saikawa said he would propose a board meeting on Thursday to remove Ghosn and Representative Director Greg Kelly.
Renault shares tumbled 11% in Paris to be among the worst performing stocks in Europe, while Nissan's German-listed securities plunged 10%.
Known as "Le Cost Killer" for overseeing turnarounds including Renault cuts, Ghosn has been popular in Japan despite the massive work cuts and recent controversy over his liberal pay package.
Japanese media reported that Ghos had reported around 10 billion yen worth of annual compensation as around 5 billion yen for several years.
Removing Ghosn, 64, is bound to raise questions about an alliance that is personally shaped and has to be consolidated with a deeper tie-up, before eventually stepping back from its operational leadership.
Renault owns 43.4% of Nissan, while Nissan owns 15% of Renault, with no voting rights in partnership that began in 1999.
Since 2016, Nissan has held a 34% controlling stake in its smaller Japanese rival, Mitsubishi.
The news is likely to raise questions about Nissan's accountability at a time when Japan has been pushing companies for better governance.
"The problem of governance was significant," Saikawa said.
The Asahi newspaper reported on its website that prosecutors had begun searching the offices of Nissan's headquarters and other locations today.
A Brazilian born, of Lebanese descent and a French citizen, Ghosn began his career at Michelin in France, moving on to Renault.
He joined Nissan in 1999 after the Renault controlling stake and became its CEO in 2001. Ghosn remained in that post till last year.
In June, Renault approved shareholders Ghosn's € 7.4m compensation for 2017. In addition to this, he received € 9.2m in his final year as Nissan chief executive.