"Carlos Ghosn, a fugitive who's has been talking for the first time about his escape from Japan".
Carlos Ghosn started his career at Michelin, the largest tire manufacturer in Europe in 1978; he became a plant manager in 1981, then he worked his way up to head of R&D for the industrial division by 1984, and by 1985 at just 30 years old, he was appointed as COO of Michelin South American. At the time Michelin South America's team had been very unprofitable, and then he was going task to turn it around. And then just a few years later, Carlos Ghosn brought the South American division back into the black. By 1999, he was CEO of Michelin North America.
Ghosn credited his success in Michelin to his cross-cultural management tactics. He stated that "you learn from diversity, but are comforted by commonality". And at this point, Ghosn had established himself as a successful businessman, so it was time to set out and look for a new challenge.
In 1996, Ghosn was hired as the executive vice president at Renault, French car manufacture. And he was thrown immediately into the "fire" because Renault was on the course of bankruptcy. And in1997, just one year later, Renault was back to being profitable thanks to Ghosn's restructuring of the company.
Carlos Ghosn was quickly proving himself as the "wit kit" when it came to turning companies around. They even began calling him "le cost killer" at Renault thanks to his precise restructuring methods that cut out all that fact to maximizing profits. And so Ghosn thought, "let's do another one". So in 1999, Ghosn and Renault preached a 36.8% stake in Nissan and formed the Renault Nissan alliance.
This alliance had Ghosn maintain his position at Renault while becoming the COO of Nissan, and of course, just like every other company priority Ghosn's arrival, Nissan was struggling. They were in hold over $20Billion interest-bearing debt, and it became quickly apparent to Carlos Ghosn that Nissan had no idea of what they were doing.
Nissan sold 46 car marvels in Japan, and only 3 of them were profitable. So in October the same year, Ghosn introduced the Nissan revival plan. In this plan, he promised that Nissan will be profitable by the following year, and the company debt will be reduced by 50% by 2002, just three years later. And he went as far as to vow that he will resign if he'd not meet those goals. How did he do it? Well, let's just say, this plan cemented his reputation as "le cost killer" – Ghosn cut 21 000 jobs at Nissan, shut down 3 assembly plants, closed 2 manufacturing plants, cut off half of their suppliers, and sold off massive Nissan assets like their Aerospace unit. And guess what? Ghosn didn't have to resign, because he met all of his goals. Nissan was finally on track for real profitability, and Ghosn was promoted to CEO of Nissan, and his success was now recognized globally.
In 2002, Fortune magazine called him "Business Man of the year". In 2003, they ranked him as one of the 10 most powerful businessmen in the world. But it wasn't just the cost-cutting that got him this level of success, it was also his ability to battle against Japanese business customs and culture. He eliminated seniority-based promotions, and no longer guarantee lifetime employment for workers almost at a certain level of performance was achieved. As you can imagine, though not everyone was pleased with this culture shock. Ghosn may have saved the Nissan, sure, but he did it by putting people out of jobs and breaking long-standing traditions. It was even reported that Ghosn changed Nissan's official language from Japanese to English. This hurt a lot of people at Nissan, but at the time, it was hard to deny the man's success.
And in 2005, Nissan announced that they had sold 3.6million vehicles that year, which was a million vehicles more than just 4 years prior. Ghosn was doing so well at Nissan that in 2005, they promoted him to CEO of two fortune 500 companies at the same time – the first person to ever do this in the world. Carlos Ghosn was well and truly unstoppable. But le cost killer's unstoppable success, of course, had to come to a stop.
The World Financial Crises
2008, the world financial crisis; businesses across the planet were in the dumps. And the automotive industry was no exception. Ghosn's growling work that he put in over the last 9years was slowly unraveling before his eyes – so he's to do something, and fast!
He placed some interesting cars including in 2009, releasing the 2009GTR, Nissan's first supercar in the year, and one year later, in 2010, Ghosn told the world that EVs were the future and released the "Nissan Lee". That was an unprecedented move, two years even before the Tesla Model S. But it wasn't enough, Nissan was struggling to clog back market share. Yet in 2011 of very confidence, Carlos Ghosn announced at the press conference that Nissan will be rocketing out of the recession and increasing the global market share from just 5.8% to 10% over the next 8 years. He made it sound so simple, but behind the scene, Ghosn was taking some drastic measures. He planned to set in possibly high sales targets for the Nissan dealers and offer huge cash bonuses for anyone that can hit that. And any time they hit those sales numbers, the target will be raided again –something Ghosn called " the Stair Step Method".
Realistically, very few dealers could hit those targets. But those cash bonuses were too good to just pass off. All of this led two of his dealers to have the same discount at the end of every month just to hit those sales targets. Because those cash bonuses were huge paydays for dealers, far more than the profit from actually selling the cars himself. It even got to the point where dealers themselves brought their cars at the end of the month, and then just held onto them for two or three months, and then lease them again as used cars. All in the name of hitting Ghosn's sales targets and getting those fast bonuses. Of course, that money had to come from somewhere, and Nissan was paying out all of these bonuses to dealers who are making Nissan earning money.
Add to that, the fact that in 2016, Nissan bought a controlling share of Mitsubishi's failing business, even though Nissan themselves were struggling to keep their own business from the flop, and they all led to Nissan profit being eaten up by bigger and bigger margins every year.
All that while, though Ghosn wanted a higher salary, something the executive board wasn't happy with, they argued that if Nissan didn't pay him the big bucks then, there was no reason for him to jump shape, and then go to Ford or GM, or he could make more money.
Regardless, by 2017, Nissan's global market share was up to 9.2%, nearly the 10% goal that Carlos Ghosn promised 8years earlier. But the profits, those were a different story – In 2018, Nissan retorted that profits were down 44.6% from the previous year with net income down 57.3%, yet despite that, Carlos Ghosn salary has blown to $16.9million a year, making him one of the highest-paid executives in Japan. All this was a massive blow to the company and has stalk up call that "is Carlos doing us magic"? –was long gone. And all that while, Carlos Ghosn was making moves to merge Nissan and Renault despite the Japanese board members' opposition. That meant, Nissan and Renault would become one company.
This was a legacy play – a way to ensure that the alliance, which was Ghosn's financial achievement would never be broken, even after he retired, that's a mere interestingly enough, was the year that Carlos Ghosn was arrested.
Carlos Ghosn's Arrest
On a chilly November day, in Tokyo, Carlos Ghosn's jet touched down at the airport, just in time for a Nissan executive meeting, but waiting for him on the tall mark was not the usual fourth limousine, rather it was the Japanese authorities, and then the arrest warrant. Carlos Ghosn was arrested right as he got off the plane on charges of financial misconduct. The charges especially were for failing to report $80million of income over various years in the last decades, as various charges of taking personal investment losses and dumping them into the Lab of Nissan.
The prosecutors claimed to have evidence direct from Nissan's books and Ghosn faced up to 10 years in prison and a fine of ¥10million. But Ghosn insisted on his innocence, saying that every financial decision he ever made was approved by the Nissan board.
"And where was Nissan's board in all these?" Well, you might think that they were swiftly coming into Ghosn's side to back him up, and get him out of police custody. This was their outstanding chairman after all, and the face of Nissan for the last 20years. But, NO! They were no way to be seen. But just three days after his arrest, the board held an emergency meeting and voted to dismiss Ghosn as the chairman of the company. Four days after that, the Mitsubishi board, which was now also part of the alliance voting him off their board as well. And Just like that, in a matter of a week, Ghosn was no longer one of Japan's top executives.
His entire world was flipped upside down; he went from a cooperate luxury jet to a Japanese prison cell pleading for what was to come next. And wait, he did for 108days in solitary confinement. Yes! The Japanese government put Ghosn, an international CEO, accused of a nonviolent crime in solitary confinement for over 3 months. He was allowed a half-hour every day to go outside. And was supposedly interrogated up to 14 hours per session without his lawyer's presence. Let me redirect, he was accused of his crime, not found guilty for it. Ghosn's trials were not even scheduled until 2021.
For those of us reading this from the U.S., this might seem like a blatant disregard for someone's right. But, in Japan, this is standard practice. Ghosn finally managed to make bail in March of 2019, only to be arrested again in April on new charges of financial misconduct. It seems like the Japanese government had no intention of losing its grip on Carlos Ghosn despite the relatively small severity of his allegations. This time, he managed to post "bailed again by the end of April" and negotiated his way out of the cell. And it was there that he finally got to sit with his lawyers and created a case to fight this allegation. Now, as far as the crime terms are concerned, let's take a look at the facts.
The Facts as far as the Crime terms are concerned
By law in Japan, anyone making ¥100 million or roughly $1million has to publicly disclose their salary. And culturally, most people are paid exorbitant wages – these laws sort of made sense.
In 2010, the year that these laws were introduced, Akio Toyoda, chairman of Toyota didn't even make enough money to meet the public disclosure threshold. That same year Carlos Ghosn was making about ten times that threshold there about $10million a year. This was much to be dismayed by Nissan executives who weren't even paid close to that amount. But compare this CEO's of the West, Ghosn was making average money, for example, the CEO of Ford, Allen M. took home $25 million that year. From Ghosn's perspective, he was the CEO of two, later 3 with Mitsubishi, separate automotive giants, and he was being paid less than America's CEO of just one. And so, over the years, Ghosn's salary increased by millions of dollars. But all of that was legal fully approved paid for by Carlos Ghosn. But wasn't quite so legal was the nearly $10 million a year that was secretly being allocated for Ghosn's retirement package.
Now, Ghosn never received this money because he never retired. And so he never had to disclose. But, the Nissan board, as well as the Japanese government, disagreed. Perhaps more damning than his retirement package, though, was the nearly €8million paid to Ghosn by the Nissan, Mitsubishi BV holding company. This wasn't Amsterdam's best-holding company that served very few purposes other than to take the money and put it into Carlos Ghosn's pockets without Nissan or Mitsubishi knowing about it.
Ghosn's defense is that Nissan knew about it. And they were the ones that approved it. But either way, it doesn't seem like the most transparent way to earn a living. Beyond that, there were charges of Ghosn taking personal investment losses and using Nissan funds to settle them. Ghosn purchasing luxury properties all across the planet with Nissan money as well as throwing lavish parties with Nisan footing the bills. But Ghosn says that Nissan was consulted on every single one of these things and the proper approval was made.
Nissan vehemently disagreed yet, at that point there wasn't any strong evidence to support either side. And this might just be my opinion, but getting paid way too much money, and leaving lavish life sounds like standard fair behavior for any CEO. So, why all this theatre? Why was the Japanese government involved, when if Nissan had approved, they could just easily have board bidding and fired Carlos Ghosn. Well, Ghosn says, because the board is corrupt, as you may have picked up by now, Nissan never really saw either eye with their French passerby partner.
Renault's largest stake in Nissan meant that they always had a controlling share of the Japanese carmaker. And with Ghosn's formerly planted in his seat up top, Nissan was never truly a Japanese company like Honda or Toyota.
Ghosn's side of the story: The Conspiracy And Allegation
Ghosn's success of the years has always managed to keep those feelings at bay, but when Ghosn's performance started pulling Nissan further and further into the red, the board members became more and more outage with him. Ghosn himself says the final straw was his push to bring Renault and Nissan together by merging the two companies. And acted, he said, it was to make Renault and Nissan unbreakable.
Now Japan's uniquely hammered in its culture is owned to a strong feeling of nationalism. And afore merger if the two companies met that Nissan would never be able to again be independent of their French partners.
And according to Ghosn, for the Japan executives and Nissan, this was the line that couldn't be crossed, and where Ghosn's claim's the plot was these; Hari Nada, senior vice president at Nissan began working with Japanese prosecutors in 2018 to builds case against Carlos Ghosn.
Nada along with other Nissan executives essentially planned the steps they needed to take to get Carlos Ghosn arrested and subsequently dismissed from his positions at Nissan and Mitsubishi.
Supposedly, they went even as far as to trying to hack Carlos Ghosn's email to get more debts on him. And of course, all of these came to fruition, in November 2018, when Ghosn was arrested on that airport runway. The kicker of all this stuff, Hari Nada did strike the plead deal with Japanese prosecutors to ensure that he would be charged if crimes. "Why would he need to do that?", you ask. Well, that's because he was part of the team that was responsible for forging the books at Nissan, which he was more than happy to do until an internal investigation in Nissan essentially let them do his trial in 2018. And that, when he went to the prosecutors and struck a plead deal.
So, Nadal was a snitch, sure. But the rest of the executives surely were acting in good faith. Right? Well, maybe not, because in 2019, news broke that the then acting CEO of Hiroto Saikawa, an executive that was integral in the case against Carlos Ghosn had been illegally increasing his salary for years as well as, literally, the same crime that Carlos Ghosn was accused of, and there were allegations that that are a handful other executives were doing, the same thing.
So, if it wasn't Ghosn's salary that led Nissan to turn on him, then maybe his conspiracy was a nationalistic effort by Nissan executives to thwart Ghosn's plan of merging Nissan and Renault, essentially, a last dished effort to keep Nissan as Japanese as possible. If that was true then maybe Ghosn had a real chance for himself in Japanese courts and proving theft he was innocent, or at least, not as guilty as they were making him out to be. But none of that matters, because in late 2019, Carlos Ghosn broke his bill conditions and escape Japan.
Ghosn's Escape from Japan, the Defence, and Evidence
December 2019, Michael Taylor a former U.S. Green beret, and his son, Peter was hired by Carlos Ghosn to help him escape Japan. The plan was surprisingly simple –chatter a jet from Japan to Turkey, stuff Carlos Ghosn into a concert equipment box (sort of a music box), and then put him in a jet as cargo. The box was of course customs made, to be big enough to fit Ghosn, but also big enough that it wouldn't fit in the X-ray machine at the airport. Ghosn was given a certain device used to communicate with the Taylor's to make sure he was okay. And that was it!
The plane took off from Kansai (Osaka) in a national airport and made its way to Turkey. And after landing in Turkey, Carlos Ghosn got out of the box and used his Lebanese passport to gets a one-way ticket to Beirut. And that's where Ghosn is still this very day. Living in peace with his family, with no fear of extradition thanks to there not being an extradition treaty between Lebanon and Japan.
The Japanese authorities didn't even find out until two days after he escaped, because they only check their security camera footage once a week. So that's it. Ghosn was free. And just a week or so, after this daring escape, he decided to have a press conference in Beirut. He invited the world's press to come and listen to his side of the story and ask him whatever questions they wanted. And at that press conference, he seemed triumphant deafly switching between English, Arabic, and French, depending on who was asking him what question. He told the world that he firmly believed Hari Nada, Hiroto Saikawa and the other Nissan executives collided with the Japanese government to get rid of him. And the French influence of Renault, he even called out specifically the prosecutors in government officials. He wasn't holding back. But of course, he would say those things, he was the one being charged with the crimes.
So far, there wasn't anyone else crying fouls so it was hard to take Ghosn's words at "face valley". That until Ravinder Passi, Nissan's topmost lawyer blew the whistle on what was going on behind the closed doors.
Passi had been leading an internal investigation into the Ghosn scandal since 2018. Be worked very closely with the Nissan executive board and specifically, Hari Nada. That's when he started discovering some serious conflicts of interest.
By 2019, Passi had struck up a plead deal with Japanese prosecutors. And he found out that a member of executives like Saikawa, this ending CEO, had been taking massive amounts of illegal earnings through falsified share appreciation. This was huge, not only did this show that Nissan's own executive's board was doing the same crimes Ghosn was accused of but it was also proved positive that there was a significant conflict of interest. And the board was incentivised to throw Ghosn under the boss to save their skin. Not only theft, but the Japanese prosecutors surely want, so enmeshed to have missed this glaring detail in their investigation either. Yet not once did their Japanese government think it was an issue when they needed board members to contribute information or be witnesses.
Ravinder Passi, the Nissan lawyer though did see the issue and all these, and so, to help the investigation, he sent a memo to Nissan's board outlining his concerns. And he got no response, that's until three days later when he was being removed from Ghosn's investigation teams. And even though he had been living in Japan for the last 8years, and raising his kids there, he was being sent back to the UK. Oh, and he was being demoted from the general counsel to a position in a tiny team of three people.
Ravinder Passi understandably was cut off glory with all of these. He was just trying to help Nissan get a handle on this investigation, but as soon as he brought up that there might be something wrong, he got iced out, not only that but afterward, Passi was followed by unmarked vehicles four months with strange men taking pictures of him and his family. And now, not long after that, Yorker hummer police raided his house and confiscated his laptop and his mobile, saying they it was evidence.
Passi went on to say that this was Nissan and the Japanese police harassing and bullying him until he left both the company and the country of Japan. Because now, he had the potential to turn their entire case on his head. Ravinder Passi worked at Nissan for 16years; he was a close friend and colleague of Hari Nada and the rest of the executives. But as soon as he took one step out of the line, Nissan and the Tokyo prosecutors essentially became the mafia beating him down until they made him disappear. Also, they could make the law work for themselves.
Carlos Ghosn, to this day, says there isn't a chance that he will get a fair trial in Japan. And even though the team that helps him escape along with his close friend and colleague, Grey Kelly, are facing years in prison, Ghosn still feels that he did the right thing. And considering this seemingly bleak corruption that still leads in Nissan in age cue, and the extremely questionable conduct of the Japanese authorities, I'm not sure if I can blame him. Carlos Ghosn certainly is an ultra wealthy-cutthroat businessman who put the almighty dollar above morals on many abnegations. But is he the villain in this story? If he is, then there is one thing for certain; there are far worse villains out there pretending to be heroes.
