In his first public appearance following his spy-novel exfiltration from Japan and its criminal justice apparatus, Carlos Ghosn put on a masterful performance.
The former chairman of Nissan Motor, brought down by allegations of financial misconduct, all of which he denies, persuasively made the case that he was arrested on flimsy charges; that the charges were devised by Nissan executives as part of a palace coup to scuttle his plans to merge Renault and Nissan; and that the prolonged detention, interrogation, isolation and procedural delays he and other presumptively innocent criminal suspects in Japan face are cruel and contrary to international norms.
Ultimately, however, what stood out was his conspicuous failure to produce any evidence to rebut the late-breaking and most serious criminal charge against him, that he committed an “aggravated breach of trust” by diverting Nissan funds through an Omani car dealership to his wife’s cosmetics business and son’s venture capital firm.
Unless and until he can offer evidence that absolves him of the most serious criminal charge against him, vindication will elude Ghosn.
At his Beirut news conference Ghosn did address various charges of impropriety that are not included in the criminal indictment: payments from a so-called CEO reserve to Middle Eastern dealerships; mansions in Rio de Janeiro and Beirut; exorbitant consulting fees paid to his sister; his lavish party at Versailles.
He made a convincing case that these transactions and perquisites were approved and above board. But the charges he rebutted were straw men. They are not included in the criminal charges for good reason.
Even if not illegal, however, those transactions and perquisites are symptoms of an apparent blurring of company business and Ghosn’s private interests that seems to have escalated in the later years of his tenure at Nissan.
Ghosn’s demands that he be paid in line with the multimillion dollar packages enjoyed by CEOs of other global car companies became a chronic source of friction between him and Renault.
At his news conference Ghosn proclaimed: “Consensus does not work.” The implication was that his top-down autocratic style was the reason Nissan had succeeded under him and was now failing under a rudderless “partnership of equals” between Renault and Nissan.
Ghosn got it exactly wrong. In the end, his disregard of consensus — especially in managing a Japanese organization — was his fatal miscalculation.
The palace coup was led by formerly loyal lieutenants whose trust he had lost. Those lieutenants deserve much blame for having looked the other way over the years. But Ghosn bears as much responsibility for creating a culture within Nissan at odds with fundamental Japanese values: humility and modesty; subordination of individual to group interests; consensus.
It is remarkable that Ghosn, a man with multicultural roots in Lebanon, Brazil and France, misread Japanese culture and values so badly.
He failed to recognize the sale of 37% of Nissan to Renault in 1999 at a time of national financial crisis was a humiliating defeat, not just for Nissan but for Japan itself. In the early years Ghosn paid lip service to the notion that Renault and Nissan were independent, but increasingly he skewed the terms of “alliance agreements” in ways that had Nissan supporting and subsidizing an uncompetitive Renault.
A psychological tipping point was reached when Renault’s market capitalization dipped below the value of its Nissan shares — meaning Renault itself had negative value in the market. Like the spouse of a spendthrift, Nissan’s Japanese employees resisted having to prop up, and take orders from, a controlling foreign shareholder whose product they viewed as inferior.
Nissan’s headquarters in Yokohama, pictured on Jan. 9: the company’s Japanese employees resisted having to prop up a controlling foreign shareholder whose product they viewed as inferior. (Photo by Rie Ishi) The stronger Nissan became in relation to Renault, the more bitter the indignation felt by Nissan’s Japanese employees. Paradoxically, it was Nissan’s very success that emboldened Ghosn to demand additional compensation and perquisites and because of which he started to lose touch with the mood of the Japanese managers and employees populating the lower floors of Nissan’s headquarters in Yokohama.
Lulled by years of seeming deference from his Japanese lieutenants, he was tone deaf to the deeply felt resentment that led to his arrest at Haneda Airport and the damage that has followed — to himself, to Nissan and to Japan’s international reputation.
His final exit from Japan, in defiance of Japanese law and sovereignty, will deny him the vindication and sympathy he badly wants.
Stephen Givens is a corporate lawyer based in Tokyo.