- Kiyoshi Ota/Getty Images
- Former Nissan chairman Carlos Ghosn was arrested in Japan last month on allegations of financial misconduct.
- He’s been re-arrested several times and remains in a Japanese jail.
- Nissan has deposed him as chairman, but the Renault side of the Renault-Nissan-Mitsubishi alliance has stood by him.
Last month, Carlos Ghosn was arrested in Japan when his private jet landed at Tokyo’s Haneda Airport. The now-former chairman of Nissan was nabbed alongside a Nissan director, American Greg Kelly.
That was in mid-December, and both men have been sitting in a Japanese jail ever since. From media reports, it doesn’t sound like a country club incarceration, either. For Ghosn – the architect of an alliance among Nissan, France’s Renault, and Mitsubishi that was the world’s largest automotive conglomerate by sales volume in 2017 – it’s hard time, after a high-flying career.
Ghosn has now been re-arrested three times; Japanese prosecutors allege that he’s hidden millions in compensation and even employed financial engineering to conceal personal investment losses. Kelly hasn’t been re-arrested three times, but he’s being investigated as a Ghosn enabler.
There are 2 main theories about what’s going on here
- Thomson Reuters
There are now two main theories about what’s going on here.
Number one is that Ghosn did everything he’s been accused of, but that for years Nissan and Renault – a complicated, multinational colossus – looked the other way. Ghosn has long been a celebrity CEO in the auto industry, and although his star has dimmed in recent years as he eased toward retirement, it was widely thought by conjoining Renault and Nissan, then adding struggling Mitsubishi, he has pulled off the impossible.
Number two is that a “palace coup” is underway at Nissan, and that the Japanese carmaker wants to either shatter the alliance or revamp Renault’s outsized influence. Renault owns 43% of Nissan, yet Nissan contributes most of the profits to the tripartite entity. Renault recently affirmed Ghosn’s role as chairman and CEO and concluded that he didn’t do anything wrong.
Parts of both theories are probably right. Ghosn was imperious and had enemies. He wasn’t a kinder, gentler auto executive. He brandished his accomplishments and his position. But did he do anything illegal? We don’t know yet – everything is currently at the level of allegations.
On the other hand, the reactions of Nissan and Renault clearly show that the Japanese side wants him gone – and not just gone, but disgraced and perhaps imprisoned – while the French side is fighting for its stake in the alliance.
By Japanese law, Ghosn can remain jailed for a while. This is of course why he and Kelly were arrested in the country (Kelly was convinced to fly to Japan for a meeting despite plans for surgery). And thus far, the investigation and reports about it have revealed a web of financial entities that the alliance created to deal with biggest Ghosn problem: that the executive thought he was underpaid relative to his peers in the global car business.
He was underpaid relative to, say, General Motors CEO Mary Barra: she made $23 million in 2017, while Ghosn made $17 million. But Barra’s compensation was a mix of salary and stock, while Ghosn brought home his millions through three separate companies. And according to a Reuters breakdown, he still did better than just about everybody else in the industry, and that doesn’t even account for decades of perks, ranging from business jets to residences.
Ghosn’s only offense might have been greed
- Issei Kato/Reuters
So Ghosn could have been sort of greedy. Whether that greed was illegal is what we’re all waiting to find out. And we’ve been waiting too long. Ghosn and Kelly should be able to defend themselves at this juncture (Kelly might be able to, if he avoids re-arrest).
Ghosn’s defense actually might not look that good. Coming up with ways todefer=”defer”millions in compensation and establish shell companies to shift money around might not have been overtly illegal, but it looks like an arrogant executive using the Byzantine structure of his companies to shield his earnings from scrutiny.
Having watched Ghosn in action for over a decade, I think it’s unlikely he’d admit any wrongdoing. He’s typically rather brusk and to-the-point, and he’s far enough along in his career that he might not actually care if he comes off as a Machiavellian global plutocrat, bending every rule in the book while arguing that his ends justify his means.
At the same time, the world is getting an education in Japanese justice – or the lack of it. Every time Ghosn is re-arrested, the presumption of guilt intensifies. If this continues for much longer, it’s difficult to imagine how he gets a fair hearing in Japan, which would help anyone who wants him out at Nissan to realize their goal.
Renault didn’t fold up, however, and if the palace-coup theory is correct, then Nissan miscalculated. The French government might have no choice but to get behind Ghosn, given its stake in Renault.
Before any of that happens, the Japanese should free Carlos and allow the accused man to present his case.