The Ghost of Ghosn — The Fall of a Business Genius
On December 29, 2019, two men left a hotel in Tokyo carrying an audio equipment box and headed to the Kansai Airport. The box they carried was never x-rayed or checked by customs officials because it was considered too big to fit inside the x-ray machine. At 23:10, they left the airport and landed at Turkey’s Istanbul Atatürk Airport at 5:26 on the morning of 30 December 2019. From there, they took a private jet to Beirut, Lebanon.
It was after they landed in Lebanon that Japanese prosecutors realized that a man kept under surveillance at the hotel was missing. By fleeing from Japan to Lebanon via Turkey, he had broken his bail conditions. His name is Carlos Ghosn.
The 68-year-old Carlos Ghosn is now seen as an international fugitive. But before now, he was seen as an effective global business leader. He was the CEO of Michelin North America, chairman and CEO of Renault, chairman of AvtoVAZ, chairman and CEO of Nissan, and chairman of Mitsubishi Motors. He also served as the chairman and CEO of the Renault–Nissan–Mitsubishi Alliance, the largest automobile group in the world.
Before he was appointed deputy CEO in 1996 and subsequently rose to become CEO, Renault was on the brink of bankruptcy. In the early 2000s, his aggressive campaigns which resulted in the turnaround of Nissan from its near-bankruptcy in 1999 earned him the nickname “Mr. Fix It”. His turnaround of Renault is such a legendary feat that his management principles are studied in top business schools.
Most got to know him in Asia but before then, Ghosn had made his business genius known in South America when he turned Michelin South American in Brazil into Michelin’s most profitable division globally in just 3 years. He was a man who changed the management styles of 3 very distinct companies in 3 very different regions (South America, Europe and Asia). He said he was the only business leader who agreed with Elon Musk in 2007 that “the future is going to be electric”. Under his watch in 2010, Nissan launched the electric Leaf which has won numerous awards such as 2010 Green Car Vision Award, the 2011 European Car of the Year, the 2011 World Car of the Year, etc. Before Tesla Model 3 took over in 2020, the Leaf was listed as the world’s all-time top-selling plug-in electric car from 2010 to 2019.
“Le Cost Killer” was so phenomenal that every year from 2001 till he was arrested in 2019 he won top global business and personal awards. In 2001, at the height of Bill Gates’ fame, Ghosn topped Time magazine’s list of Global Influentials. In 2004, he became the first foreign business leader to receive the prestigious Blue Ribbon Medal from Emperor Akihito of Japan. In 2011, CNBC listed Ghosn as Asia Business Leader of the Year. In 2012, Ghosn was awarded the Grand Cross of the Order of Isabella the Catholic, an honorific designation to civilians in recognition of services that benefit Spain. Beginning in November 2001, Ghosn’s life story was turned into a popular superhero comic book series in Japan, titled The True Story of Carlos Ghosn. His face has been reproduced in Lebanese postage stamps. The government of Morocco awarded him the exceptional Grand Cordon of the Order of Ouissam Alaouite. The French government made him a Knight.
So what went wrong?
On November 19, 2018, Ghosn was arrested at Tokyo International Airport on suspicion of underreporting his remuneration and misappropriating company cash. Nissan’s board of directors unanimously voted on November 22, 2018, to terminate Ghosn’s position as Chairman, effective immediately. The executive board of Mitsubishi Motors followed suit on November 26, 2018. Initially, Renault and the French government stuck by him, believing he was innocent until proven guilty. They eventually concluded that the situation was untenable, and Ghosn was compelled to resign as Chairman and CEO of Renault on January 24, 2019.
According to sources, he set up a shell business and used it to spend $18 million on homes in Rio de Janeiro, Beirut, Paris, and Amsterdam. He also used the corporation to pay for his family’s vacation. He built up structures with the help of his top aide to avoid declaring his full salary, which has been estimated to be worth up to $80 million. Ghosn was accused of withholding certain compensation that had been approved by shareholders and was supposed to go to other executives. According to the Nikkei newspaper, Ghosn may have diverted money intended for investment purposes to buy real estate for himself. In a quid pro quo arrangement, he had Nissan indirectly pay $14.7 million to the vice-chairman of one of Saudi Arabia’s largest conglomerates. This is in exchange for a personal letter of credit.
So in November 2018, a trap was set. Ghosn was lured to Tokyo for an urgent, high-level meeting. As soon as he got to Japan, he was promptly arrested. His arrest was informed based on information provided by an unidentified non-Japanese executive in Nissan’s legal department. A Nissan spokesperson said it discovered “serious misconduct by Carlos Ghosn,” which was later confirmed by numerous federal agencies conducting their own extensive, independent investigations.
Since Renault belongs to France and Nissan to Japan, both countries have sought his re-arrest. The two men who took him out of the Japanese hotel in a musical instrument are an American former special forces soldier and his son. They have been jailed in Japan. The two pilots and an airport official in Turkey who facilitated his transfer from Turkey to Lebanon have also been jailed. His aide is awaiting sentencing. However, Ghosn is in Lebanon living the life of a free man with his wife. Mr Ghosn has citizenship in Lebanon, France and Brazil. He cannot be extradited. Lebanon does not have an extradition treaty with Japan. And because he is a French citizen, France cannot extradite him from Lebanon. France, as a rule, doesn’t extradite its citizens.
While an Interpol “red alert” prevents Ghosn from travelling internationally, he is making the most of his time in Lebanon. He’s started a new consulting job that he is doing over Zoom calls. He’s worked with several undisclosed automobile startups as well as environmental technology companies that deal with wastewater, fertilizer, and plastic recycling.
While he has revealed that he may one day submit to the French courts, he has stated that he will not do so for those in Japan. “I will no longer be held captive by a skewed Japanese court system where guilt is presumed, discrimination is pervasive, and basic human rights are denied,” Ghosn asserted.
Till then, we should not be surprised to see the dramatic story of this former boardroom juggernaut taken up by Netflix.
References: The Washington Post, Bloomberg, The Guardian, The Wall Street Journal, InsideEVs, CleanTechnica, The Telegraph, Time Magazine, Fortune Magazine, Financial Times, Nikkei