Nissan rocked by star executive Ghosn’s fall
The Japan News/ANN
The arrest Monday of Nissan Motor Co. Chairman Carlos Ghosn — an unexpected fall for the charismatic international businessman who shepherded the recovery of the Japanese carmaker and led the three-way alliance of Nissan, France’s Renault SA, and Mitsubishi Motors Corp. — has sent shock waves through the automaker.
At about 6:30 p.m. Monday, Nissan put out a shocking press release saying that a number of “significant acts of misconduct have been uncovered” in regard to Ghosn. The single sheet of A4-sized paper concisely described the suspicion that the chairman has understated his compensation in a securities report for years.
Nissan President and Chief Executive Officer Hiroto Saikawa denounced Ghosn at an emergency press conference that started a little past 10 p.m. Monday at the company’s headquarters in Yokohama. The alleged misconduct was “totally unacceptable,” Saikawa said.
If proved to be true, the suspected wrongdoing — the falsification of the securities reports, personal use of company funds for investment, and misuse of company expenses — could demonstrate that Ghosn was treating the company like his own personal possession.
“I feel strong indignation, far beyond regret,” said Saikawa with an agonized expression.
A proposal will be introduced to the Nissan board of directors to remove the two suspects — Ghosn and Representative Director Greg Kelly — and their dismissal appears certain.
Executive: Ghosn is greedy
“Ghosn is greedy,” a Nissan executive officer said. “He says the right things, but all he cares about is money after all.”
The executive compensation Ghosn received in fiscal 2017 totaled about ¥1.9 billion ($16.9 million) — about ¥700 million from Nissan; about ¥900 million from Renault, where he also serves as CEO; and about ¥200 million from Mitsubishi Motors as its chairman.
Ghosn’s name became well known in 1999 when he was sent from Renault to financially troubled Nissan as its chief operating officer. He announced a restructuring program dubbed the Nissan Revival Plan, earning the nickname “Cost Cutter.” Ghosn established his reputation as a corporate manager by closing the carmaker’s Murayama plant in Tokyo, where its flagship car brands had been manufactured.
In recent years, however, there has been discord in the company with regard to Ghosn. Nissan has globally expanded its sales, but Renault’s have been stagnant. The Nissan-Renault-Mitsubishi trilateral partnership was led by Nissan, but the number of executive officers Ghosn invited from outside Japan has increased year after year.
The other suspect, Greg Kelly, is a lawyer who joined the company in 1988 as an employee of Nissan North America Inc. He became corporate vice president of Nissan Motor Co. in 2008 and representative director in 2012. Two directors — Jean-Baptiste Duzan and Bernard Rey — were invited from Renault.
Nissan’s board of directors was treading a delicate balance between the apparent Ghosn faction of four members — including Ghosn himself — and five Japanese members.
Ghosn was seen inside Nissan as someone who keeps receiving high remuneration without confronting his own responsibility even when the company underperforms, while telling his subordinates to strictly achieve targets.
Deepening fault line
The fault line further deepened around 2015 as moves to review the Nissan-Renault capital partnership began to simmer. Management, including Saikawa, was strongly alarmed by moves for the two companies to completely integrate their management in keeping with the French government’s intentions, and nervously watched every step Ghosn made.
When the scandal over improper inspections at Nissan emerged in 2017, Ghosn failed to fulfill his accountability and passed the responsibility down to Japanese executives.
The trilateral alliance was formed by Ghosn, but his alleged misconduct was revealed by a whistle-blower’s report. At Monday’s news conference, Saikawa expressed regret, saying: “Ghosn is also Renault chairman and CEO and chairman of Mitsubishi Motors. Too much power has been concentrated in one individual.”
He then expressed his belief that Ghosn’s arrest was a good chance to pursue a sustainable corporate system by ending management excessively dependent on a specific individual.
A radical change in the company’s management appears inevitable.
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