The future of Nissan, Mitsubishi and Renault depend on what happens to Carlos Ghosn.

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Chairman of auto manufacturer Nissan Carlos Ghosn was arrested in Tokyo on Monday following accusations by the company of financial misconduct.

The arrest of a man regarded as a superstar corporate manager and lauded as a guru for cutting costs and radical restructuring at Nissan has stunned the global automotive industry and sent shockwaves through corporate Japan.

Brazilian-born Ghosn—who is also chairman of Mitsubishi Motors and chairman and CEO of French carmaker Renault—remains in custody with the term of his detention extended by 10 days as of Wednesday. He is accused of under-reporting his salary from Nissan and using the company’s assets for personal gain, principally in the form of real estate purchases.

Prosecutors in Japan said that Ghosn had conspired with senior Nissan staffer Greg Kelly—also in custody in Tokyo—to understate his salary, with the alleged malfeasance commencing in 2010 and involving $44.5 million of undisclosed earnings.

A whistleblower at Nissan alerted the Japanese authorities to the alleged fraudulent activity which involved filing fake securities reports. If convicted, Ghosn faces 10 years in jail. He is expected to be formally sacked by Nissan on Thursday, although he retains his position at Renault and Mitsubishi Motors.

The dramatic arrest and detention of Ghosn shines a light on the less-than-pristine state of corporate governance in Japan, where an opaque operating environment is the norm and where cross-shareholding—long a hallmarks of the Japanese business landscape—has often worked to the detriment of minority shareholders.

Ghosn presided over the creation in 1999 of a tripartite alliance between Nissan, Mitsubishi Motors and Renault under which the companies—which combined account for one out of every nine automobiles sold around the world—share costs and technology across brands. The alliance involves cross-shareholdings whereby Renault has a 43% voting stake in Nissan while the latter holds a 15% non-voting stake in Nissan.

This structure has proved controversial and is often held up as a prime example of opaque governance. Despite having built a “rockstar” reputation as one of the world’s most visible and admired CEOs for turning around the ailing Nissan brand, Ghosn has been accused of running the alliance like a fiefdom and exerting overbearing influence on the trio of companies. That is an accusation that his detractors believe has been fully vindicated by this week’s arrests.

Nissan stock plunged from ¥1,016 a share to ¥941 on Monday in Tokyo as news of the arrests was made public while Renault's fell from €64.6 to €56.26 and Mitsubishi Motors from ¥729 to ¥685 a share on the same day.

Nissan Motor Financial Services—a frequent issuer of yen bonds and widely held by Japanese investors—saw yield spreads on its outstanding debt to Japanese government bonds widen on the news of Ghosn’s arrest.

There was a modest recovery in the stock prices of the alliance members on Wednesday and bond spreads also tightened marginally as investors mulled the viability of the alliance as Ghosn’s fate hangs in the balance.

Prior to Ghosn's arrest, there were formal talks being conducted to cement a full merger of Nissan and Renault. The talks kicked off in March and were widely seen in the industry as likely to succeed in merging the two companies as a single listed corporation, one which would produce an automaker able to rival industry giants Volkswagen and Toyota in terms of sales and product innovation.