TOKYO — Nissan Motor‘s “total dependence” on Carlos Ghosn, its former chairman, left the Japanese carmaker open to corporate malfeasance, CEO Hiroto Saikawa said in an interview with Nikkei, marking the 100th day since the arrest of the man once regarded as the company’s savior.
Saikawa acknowledged that there had been little discussion over governance. He admitted that the company had given the Brazilian-born tycoon — who denies all charges — a great deal of freedom owing to his success in turning around Nissan.
Saikawa expressed regret that the automaker failed to pay closer attention to corporate governance around 2005.
“The memory of 1999 [when Nissan management was under pressure] was too vivid, so much so that it was strongly felt that Nissan could only grow and stabilize with [Ghosn] as chairman,” Saikawa said.
Saikawa noted that 2005 marked a “huge turning point,” with Ghosn being appointed as CEO of Renault, Nissan’s French alliance partner. When Ghosn became head of the two automakers, he began to accumulate more power, Saikawa said.
Saikawa touched again on the success of Ghosn, who arrived from Renault in 1999. Saikawa hoped then that Ghosn would “ensure Nissan’s autonomy if he became Renault’s chief,” but admits that “the board did not delve deeply enough into the potential governance problems.”
Ghosn later referred to himself as the “founder” of the Renault-Nissan alliance, cementing himself as its charismatic and undisputed leader while ignoring the governance issues that began to emerge.
His autocratic management style was already well-entrenched when an internal investigation over his suspected misconduct began in the spring of 2018, leading to the then chairman’s arrest in November of the same year.
But how could the internal investigation take place without Ghosn noticing it?
According to Saikawa, Ghosn’s visits to the company became less frequent until they dropped to only a few days a month. Saikawa says that “he became distant, and his power began to slip away.” Saikawa added that the Nissan inspection scandal in 2017 changed the corporate culture, making it easier for management and staff to report irregularities and suspected infractions of the law.
In his first interview since his arrest, Ghosn told Nikkei that he had “no doubt” that his arrest was the result of a “plot and treason” by Nissan executives against him, as he had wanted to more deeply integrate Renault with its two Japanese partners. However, while pointing out that “the result of the internal investigation came to me in October 2018,” Saikawa argues that “whether it was going to be a criminal case or not,” Ghosn had totally disregarded his responsibilities as chairman.
But it is odd that board members — Saikawa included — were not aware of Ghosn’s alleged fraud. Because of this, Nissan has been indicted for allegedly making false disclosures in its annual securities reports about the compensation paid to its former chairman.
Saikawa explains that “[Ghosn] used close associates” to hide his misconduct, a possible reference to former representative director Greg Kelly, who was Ghosn’s right-hand man and who was also arrested in November. “It is not that the board was not aware, but that we were unable to know,” he explained.
Regarding his own accountability, Saikawa said that he would fulfill his responsibilities as CEO. “It is up to me to solve the confusion surrounding the company and continue our partnership with Renault,” apparently hinting at the possibility of remaining CEO even after the automaker’s annual general meeting in June.
Going forward, the focus will be on the structure of the Renault-Nissan alliance. Renault has 43.4% of Nissan and the right to appoint senior executives and some board members. It wants to choose Ghosn’s successor at Nissan, but the Japanese company has balked at this.
Saikawa met with Renault Chairman Jean-Dominique Senard during the latter’s visit to Japan in February, and says that “the chairman will be decided internally,” a stance that Senard “fully understands.” Relations with Renault are returning to normal and any differences will be resolved, he added.
Saikawa was confident that Nissan would make the final decision on who would be the next chairman. However, with the French state determined to make the alliance irreversible and with considerable influence as Renault’s biggest shareholder, the outcome is far from clear.