Carlos Ghosn — The three-ring circus
The Brazilian-born son of Lebanese parents headed three of the world’s largest automakers at the same time — until he was arrested for understating his salary
Foreign Correspondent
Like all men, I have trouble multitasking, and I can only do one thing at once. Men who can do many things at once — unlike women, or so they tell me — are rare. That’s likely one explanation why Carlos Ghosn is good at his jobs. Yes, jobs. Up to last week, he was the chairman of Nissan, Renault and Mitsubishi — all at the same time, which, to my way of thinking, would be the consummate definition of multitasking, if ever there was one. He’d be the type of man who could make you an omelette, do your laundry, paint your house and darn your socks all before breakfast. My mind hurts just thinking about it.
But Ghosn’s career in the car industry has hit a brick wall — at least in Japan. For now, Renault are sticking by their man.
Back in Tokyo, both Nissan and Mitsubishi have removed the highly influential and effective Ghosn from their companies following his arrest last Monday by the Japanese police. His crime, they say, was to understate his annual pay. It’s a stunning reversal of fortune — literally — for the first executive ever to lead two Fortune 500 companies at the same time. He’s such a popular figure in Japan that he has his face sculpted in rice for bento boxes sold to businessmen, and has a manga comic book story produced on his life story.
Nissan did not hold back in its statement on Ghosn, accusing him and a senior colleague of “significant acts of misconduct”, including understating his pay to regulators and misusing company assets. The ousting leaves the Renault-Nissan-Mitsubishi alliance — the maker of one in every nine cars manufactured worldwide last year — without its totemic leader as the electric and autonomous car revolutions threaten to upend the business models of established car manufacturers.
Born in Brazil in 1954 to Lebanese immigrants, Ghosn’s ascent to the pinnacle of the global car industry began in France, where he studied at the prestigious Ecole Polytechnique in Paris before joining Michelin, the French tyre manufacturer. At 27, he was the manager of a Michelin factory in France; at 36, he was chief executive of the firm’s North American operations.
In 1996, Ghosn was poached by Renault, where he made his mark with a deep restructuring — earning a reputation for a sleek but ruthless management style, and a nickname: “Le Cost Killer”.
He repeated the trick at Nissan, slashing employee numbers, but gaining a heroic reputation in Japan for the rapid turnaround. Mitsubishi, dented by a fuel economy fixing scandal, joined the alliance in 2016, creating the world’s top-selling passenger car manufacturer through linked shareholdings.
Yet, Ghosn provoked ire as he gained the superstar salary to match. In 2016, he lost a vote on pay as the French government, a major shareholder, objected to a €7.4 million (Dh31 million) package. He also earned a 735 million Japanese yen (Dh23.89 million) salary from Nissan and 227 million yen from Mitsubishi for the year ending in March 2018, according to annual filings.
Sort of a coup at play
So, the swiftness of Ghosn’s fall is certainly enough to raise suspicions that there might indeed be some sort of a coup at play. After all, it’s not as if all the companies didn’t know just exactly how much they were paying Ghosn.
Barely 18 months into his reign as Nissan’s CEO, Hiroto Saikawa had little good to say about his predecessor at an evening press conference in Yokohama. While he had plenty to offer about the seriousness of the allegations against Ghosn and his fellow director Greg Kelly, he mentioned little in mitigation. The activity under investigation involves alleged under-reporting of income in securities filings and personal use of company assets and expenses.
Given Ghosn’s two-decade involvement with Nissan, you’d expect even the most scrupulous director to take a more-in-sorrowthan-anger tone in announcing his departure. That’s not how things went down, though, as blame was apportioned to “the concentration of power in one individual” and Saikawa focused on “eliminating the negative aspects” of the “long regime of Mr Ghosn”.
After grudgingly admitting that some good came from Ghosn’s early years with Nissan, in recent years, he’d been having a negative impact on the day-to-day operations of the company, Saikawa said. Given an opportunity to make a compliment when asked whether Ghosn was a “tyrant” or a “charismatic leader,” he demurred. Saikawa denied that the revelation of the conduct by an internal whistle-blower was a “coup d’etat”, but that he had to do so is a clue to how much it looks like one. In this extraordinary performance, the tensions bubbling under the surface of the Renault-Nissan-Mitsubishi alliance in recent years have finally burst to the surface in a brutal fashion.
Renault’s stake in Nissan typically accounts for the largest share of its equity-accounted earnings. From the perspective of Japan, the French company can resemble a parasite attempting to control its intrinsically stronger host.
Ghosn, who turns 65 in four months’ time, had been focusing over the past year on resolving the structure of the group so that it could have a future without him as its leader. Now, at least, that’s a reality they must deal with.