Ghosn case risks harm­ing Ja­pan’s stature on world stage

The Sunday Telegraph - Money & Business - - Business - Ben Mar­low

Pic­ture this: one of the world’s most prom­i­nent busi­ness­men steps off a plane in a for­eign coun­try and is im­me­di­ately ar­rested and carted off to jail. His al­leged crimes? Em­bez­zle­ment on a grand scale and de­lib­er­ately hid­ing the true scale of his mega-salary. Sound fair? I am of course speak­ing about Car­los Ghosn, the chair­man and ar­chi­tect of the pow­er­ful global car al­liance Re­nault-nis­san-mit­subishi. If you thought the oust­ing of WPP’S Sir Martin Sor­rell was ex­tra­or­di­nary, the fi­nan­cial scan­dal en­gulf­ing Ghosn and the big­gest car­maker on the planet makes that look like a mi­nor skir­mish.

Ghosn is a busi­ness ti­tan with few equals. He was a “god” that other ma­jor in­ter­na­tional play­ers strug­gled to get time with, one grandee told me this week. At Davos, he was the main at­trac­tion. Peo­ple moved aside when he strode through the main congress hall.

The Brazil­ian may well have com­mit­ted the crimes he is ac­cused of and, if found guilty, he should feel the full force of the law. Yet, there is some­thing deeply trou­bling about his treat­ment since Ja­panese pros­e­cu­tors pounced at a Tokyo air­port last week.

Firstly, de­spite a month-long in­ter­nal in­ves­ti­ga­tion by Nis­san, Ghosn knew noth­ing about the charges un­til he stepped off his pri­vate jet. He hasn’t been al­lowed to speak pub­licly, yet his ac­cusers have trashed his name and le­gacy in pub­lic. Then, just days later Nis­san’s board voted unan­i­mously to oust Ghosn as chair­man, de­spite no for­mal charges against him.

Some com­men­ta­tors have hailed Ghosn’s down­fall as ev­i­dence that big busi­ness is fi­nally be­ing held to ac­count in a coun­try that has for decades been def­er­en­tial to large cor­po­ra­tions and their lead­ers.

Non­sense. This is a an elab­o­rate power grab or­ches­trated by Nis­san with the full back­ing of the Ja­panese state. Nis­san has long been frus­trated by the im­bal­ance in the ar­range­ment. Although it is the much larger com­pany, the French have 43pc of Nis­san’s shares and vot­ing rights, com­pared with the Ja­panese group’s 15pc non-vot­ing stake in Re­nault. Not only that, but Nis­san has been per­form­ing more strongly.

Ghosn, how­ever, was plan­ning to strengthen ties fur­ther through a merger, a move that would have been strongly op­posed by the Ja­panese car­maker’s board, re­ports claim. It is telling that Nis­san acted alone and Re­nault is hold­ing firm, re­fus­ing to oust Ghosn. The Ja­panese needed him gone to pre­vent fur­ther loss of con­trol of an im­por­tant na­tional as­set.

For fur­ther ev­i­dence that Ghosn is the vic­tim of a witch hunt, con­sider the out­come of some of Ja­pan’s re­cent big cor­po­rate scan­dals: a bil­lion dol­lar ac­count­ing fraud at Toshiba but no in­dict­ments; not a sin­gle ar­rest at car parts man­u­fac­turer Takat, which fit­ted tens of mil­lions of ve­hi­cles with killer airbags; and a case against the ex­ec­u­tives of Tokyo Elec­tric Power ac­cused of crim­i­nal neg­li­gence over the nu­clear melt­down at Fuk­ishima that was twice dropped.

Ghosn’s heavy-handed treat­ment risks dam­ag­ing, rather than en­hanc­ing, Ja­pan’s stand­ing on the global stage. Mean­while, with­out the Brazil­ian’s guid­ing hand, the fu­ture of the Re­nault-nis­san-mit­subishi al­liance looks pre­car­i­ous.

‘This is an elab­o­rate power grab or­ches­trated by Nis­san with ... state back­ing’

Per­sim­mon’s dilemma over boss

In the un­likely event that Roger Devlin, the new chair­man of mil­lion­aire fac­tory-come­house­builder Per­sim­mon, needed a re­minder that high pay re­mains a red-hot topic, he was pro­vided with one this week.

The rev­e­la­tion that Denise Coates, the founder and ma­jor share­holder of on­line gam­bling com­pany Bet365, had paid her­self £265m, was front page news ev­ery­where.

It will have fo­cused Devlin’s mind as he pre­pares to choose a suc­ces­sor to Jeff Fair­burn, who must now work out how to spend a £75m bonus while keep­ing the low­est of pro­files in his spendthrift home county of York­shire.

The firm favourite to re­place Per­sim­mon’s best paid ex­ec­u­tive is its sec­ond-best paid, Dave Jenk­in­son, who is cur­rently stand­ing-in while a for­mal search takes place for a new boss. Jenk­in­son made £41m from the now in­fa­mous share bonus scheme, though handed £3m of it back as part of the com­pany’s at­tempts to quell the back­lash.

In­sid­ers say Jenk­in­son is more than ca­pa­ble of lead­ing the house­builder but, as one of the old guard, the pay row will haunt it when it is des­per­ately try­ing to move on.

Yet, there is gen­uine anger among the Per­sim­mon faith­ful that Fair­burn was ousted. Over­look­ing his nat­u­ral suc­ces­sor could spark a full-scale re­bel­lion, putting an out­sider on the back foot from the start. Devlin is be­tween Scylla and Charyb­dis.

Thin-skinned adopt Trump tac­tic

One week, two cases of high-pro­file com­pany bosses blam­ing the me­dia for their woes. First Bab­cock’s boss Archie Bethel com­plained about the pub­lic­ity granted to Boat­man Cap­i­tal, the shad­owy re­search firm that ac­cused it of bury­ing bad news. Then Mother­care’s chief Mark New­ton-jones whined that re­ports of the chain’s end­less trou­bles had caused fur­ther dam­age.

Call it the Don­ald Trump ef­fect: de­flect­ing at­ten­tion from your own short­com­ings and fail­ures by at­tack­ing the press for do­ing its job.

It is a deeply wor­ry­ing trend. Bosses of pub­lic com­pa­nies may not like the scru­tiny, but it’s part of the job that they are paid hand­somely for. They should be ca­pa­ble of re­spond­ing ra­tio­nally to ques­tions about their stew­ard­ship with­out shift­ing the blame.

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