What Is The True Story Behind Nissan And The Fall Of Carlos Ghosn?

If you’re a business leader living in Japan who can speak English, there’s no doubt you heard about the fall of Carlos Ghosn. Mr. Ghosn, the Lebanese born, Brazilian raised, French leader was famous in Japan for coming in and cutting costs to help Nissan from the brink of bankruptcy.

Ghosn and Michael Kelley, his close lieutenant, were arrested in Tokyo for lying about their finances. The Western media and many highlighted the fact that Japan prosecutors can basically hold someone indefinitely while they investigate an issue (without filing charges). Truly, this is a problem, but Japan is famous for being a safe and orderly country for a reason.

What exactly happened to Carlos Ghosn?
Early on, in November 2018, there was a lot of speculation about how the former icon was arrested. However, the Wall Journal took a deep dive into investigative reporting to flush out the facts. You can read that for yourself here. But what exactly happened?  Here’s a quick compilation we did here in country via Japanese and foreign readily available information.

  • Ghosn overstayed his welcome as the boss of Nissan. 63 years old.
  • Ghosn overstayed his welcome @ Renault as well, causing hopeful successors to leave the company and creating a leadership vacuum
  • Ghosn was under pressure in both Japan and France not to show too much income as both societies look down on over-paid CEOs (ie. American companies such as Tim Cook @Apple, Robert Iger @ Walt Disney, Mark Hurd @Oracle, Brian Duperreault @AIG to name a few)
  • Ghosn began to live on Nissan’s money, with houses in Lebanon, France, and Brazil and expensive jets to fly him there.
  • Ghosn represented a move to make a major Japanese company subservient to a lesser French company they felt was a parasite on their performance (despite financing the return from the brink of bankruptcy years earlier.
  • A European shell company was made to move around Nissan money.
  • Ghosn was trying to hide income. Never mess with the tax man.

Some people outside Japan assume that he was arrested for being a non-Japanese. That’s just completely wrong.  The fact of the matter in Japan, you don’t want to get on the wrong side of the law whether you’re local or international (ex. Mr. Horie of Livedoor). The conclusion from those of us in business in Japan is that the Ghosn case will not decrease the number of non-Japanese CEOs working in Japan.  It will just make people a bit more sensitive about how they try to move money around.

No doubt the Ghosn story will continue to unfold. His detention has been extended again. He should be taken to trial, not under continued arrest without charges. However, if you’re at a publicly traded company, you’d better not be gray with the corporation’s finances.