20 ★ FT Weekend 9 November/10 November 2019A
year ago on a cloudy after-
noon,Carlos Ghosn andedl
in Tokyo’s Haneda airport.
As chairman of the global
c a r m a k i n g a l l i a n c e
between Renault, Nissan and Mitsubi-
shi, he was one of the industry’s most
feted leaders, a businessman with dec-
ades of dealmaking behind him, as well
as one of the more improbable turn-
rounds in corporate history.
He was due to have dinner at a favour-
ite sushi restaurant that evening with
one of his daughters and to chair a board
meeting the next day. But before he
could leave the airport,he was arrested.
As a moment of public theatre, with
prosecutors raiding the corporate jet on
the runway, the arrest was eye-catching.
For Japan’s business community, and
the country as a whole, it seemed
unprecedented. But for a small group
within Nissan, it was not a surprise.
It would later transpire that the arrest
was the result of nearly a year of secret
investigations within the company and
a deal between whistleblowers and the
authorities.
For close observers of Ghosn and his
leadership, it was incredible that a man
who had run his empire so minutely and
for so long should have been blindsided
by a plot this big. When he landed on
November 19, he was, in his own words,
completely “ambushed”.
Arrested in the airport — rather than
on the jet as was initially reported — the
first call he made for legal help was,
unwittingly, to one of the key figures
behind his downfall.
For others, the incident was an inevi-
table breaking point. Tensions had sur-
rounded Ghosn for some time. There
was the clash with Renault’s largest
shareholder, the French government,
over his increasingly astronomical pay.
There was the absence of truly inspiring
new cars in Nissan’s pipeline and the
resentment of dealers. There were the
fundamental governance issues raised
by one man overseeing three listed com-
panies.
And then there was the overarching
question of whether Ghosn could push
Nissan and Renault into a full merger in
time to strike a career-topping deal with
Fiat Chrysler Automobiles (FCA): a race
not only against competitors, but
against the seismic disruption coming
via electric vehicles, autonomous driv-
ing and ride sharing.
“He had turned into an emperor
without clothes,” says the chief execu-tive of a large dealer for Nissan in Japan.
Ghosn was relentlessly driven by the
search for scale — his desire to create an
ever-bigger automotive empire — but
that expansion made it progressively
harder to balance the diverging needs of
the companies he ran.
“He lost sight of the business,” says
one person close to Nissan’s board. “He
tried to make the alliance bigger and
big ger to overcome Toyota and
Volkswagen. That was his ambition, but
it was too much to pursue for a leader.”
Today, a year after his arrest and
almost two decades after taking control
of Nissan, Ghosn is confined to Tokyo
under the terms of a $13.5m bail agree-
ment. His corporate legacy is unravel-
ling. Last month, FCA agreeda deal with
Peugeot hat killed all hope of a tie-upt
with Renault-Nissan. A scathing gov-
ernance probe by Nissan has con-
demned the “personality cult” and
opaque, unquestioned authority of the
Ghosn era.
No start date has been set for the trial,
which could ultimately cost him many
more years of freedom. He can see his
children butnot his second wifeCarole.
When he leaves his flat, he is tailed by
three agencies: the police, prosecutors
and a private detective believed to be
hired by the very company he once
saved from bankruptcy.
He has slowly regained some weight,
say his family, after 129 days in a bleak
Tokyo detention centre, but his reputa-
tion has been savaged; his lavish corpo-
rate perks laid bare. Even the designer
suits he wore have come under scrutiny.
The question of what triggered
Ghosn’s downfall from corporate mes-
siah to a man facing criminal charges of
financial misconduct remains in dis-
pute. His camp blame a “poisoned” plot
that saw him fall victim to a government
and corporate conspiracy against him
and his plans to merge Nissan and
Renault.
Yet the charges against him are
weighty: he is accused of falsifying
financial statements by understating his
pay by more than $80m and misusing
company assets for his own gain — all of
which he denies.
Company documents and extensive
interviews with current and former
executives of Nissan and Renault, gov-ernment officials, financial advisers and
confidants form a picture of a business
leader whose long years at the top had
made it difficult to tell where his dreams
for his companies ended and his per-
sonal ambitions began.
His story is also that of a man who, for
nearly 20 years, tested the question of
whether an outsider could ever really
become part of corporate Japan. Within
the country, Ghosn was one of the few
foreign CEOs singled out for real praise.
In the early 2000s, as Japan struggled
with stagnation, whole sections of
Tokyo bookshops were devoted to the
magic bullets he was supposedly firing
at its languishing business culture.
For Nissan, he was a messianic figure.
This view changed over time: for some
he became a tyrant, to others a man
driven by greed and to still others a
leader who allowed the paragon of Fran-
co-Japanese co-operation to become
fatally unbalanced in favour of France.
“In his mind, he’s still a CEO,” said a
person close to Ghosn, “but he’s not the
CEO of a multibillion-dollar global com-
pany, he’s the CEO of this group of law-
yers and others all trying to clear his
name.”Three years before his arrest, an
immaculately suited Ghosn had walked
on to a stage at Nissan’s headquarters in
Yokohama. In 16 years as the first non-he became known asLe cost killer or af
radical restructuring that transformed
the French carmaker. His objectives at
Renault were clear from the start. “For
the first time, I was signing on to a com-
pany where my prospects were unlim-
ited and my path lay open before me,”
he wrote in his autobiography.
In 1999, Renault rescued Nissan from
near-bankruptcy in a deal that
ultimately left it with a 43 per cent
voting stake in the debt-laden Japanese
carmaker. It was a historic transaction
struck at a dismal economic time
for Japan.
Ghosn, then a vice-president at the
French company, was sent to Tokyo.
Many Nissan employees, who were
losing faith in their own management
team, were mesmerised by his cha-
risma. In an oral history of the Renault-
Nissan alliance compiled by Keio Uni-
versity, Toshiyuki Shiga, who later
became chief operating officer, recalled
hearing Ghosn speak during a visit in
1998 before the deal was struck: “The
power of his presentation was amazing.
I thought Nissan would not be able to
change without someone like him.”
The now famous “Nissan revival
plan”, released just four months after
Ghosn was named the group’s chief
operating officer in June 1999, was
widely acclaimed for its success in
transforming a troubled company into a
profitable carmaker within a year.
The steps he took broke almost every
taboo in Japan at the time: the closure of
five plants, a cut of 21,000 jobs and a
tearing down of ties to thekeiretsu, the
business groups who underpinned
Japan’s postwar economic growth.
“A lot of suppliers disappeared,
including many of my friends. But the
parts makers that survived are now very
competitive,” says Akihiko Shido, who
became chief executive of Yorozu, a key
automotive parts supplier for Nissan,
just six months after Ghosn arrived in
Japan.
“I had complex feelings at the time
but what Ghosn achieved was extraordi-
nary,” he says, adding that the allega-
tions of financial misconduct have not
changed his assessment.
Even his fiercest critics acknowledge
Ghosn’s ability to deliver results, with
his razor-sharp focus on performance
and numerical targets. “The initial
V-shaped recovery was not achieved
because he was a foreigner, but it was
because he was Carlos Ghosn,” says
Yutaka Suzuki, a former Nissan execu-
tive tipped to become the Japanese
group’s CEO before Ghosn took the top
job in 2000.
“It was perfectly natural for him toseek proper compensation when he was
sent to Nissan, but he seems to have
crossed the line with the various prob-
lems that have emerged since then.”The Ghosn of the late 1990s — with
his factory jacket, ill-fitting suits and
geeky glasses — was a different type of
leader to the one of recent years. People
who worked with him describe a boss
who talked to staff, suppliers, dealers
and factories, and whose management
style was open and transparent.
Although the father-of-four would
respond to texts from his family within
the hour, his nickname was “Seven-
Eleven”, with workdays that he said
“began at dawn and ended long after
sunset”.
Ghosn’s drive inspired those around
him. “He had a technique in those days
of almost making you feel you could do
the impossible,” recalls a former Nissan
executive. In turn, he demanded his
staff be as flexible, and globally foot-
loose, as him. In one instance, a Europe-
based director was told he was moving
to Japan the following week.
He rarely lost his temper. “Ghosn
doesn’t like conflicts. He didn’t want to
force people to do things,” says one per-
son who worked alongside him. If he
was disappointed in the performance of
an underling, he would give them a
chance to explain why and to come up
with a plan to fix it. “He was an excellent
listener,” the person adds.
But a critical turning point arrived in- Ghosn was appointed Renault’s
CEO, putting him at the helm of two
companies and creating the concentra-
tion of power that Nissan executives
would later claim led to glaring lapses in
governance standards.
Ghosn’s new, and entirely unique,
managerial challenge was to maintain
the most fragile of balances: between a
French company in thrall to the large
stake held by the state and a Japanese
company that had taken a decisive lead
as the stronger industrial partner.
His increased responsibilities in Paris
— and the political complexities the role
involved — meant he spent less time in
Japan, particularly with the lower
reaches of the company.
“Carlos Ghosn was, from 1999 to
about 2005, a much more collaborative
boss, constantly visiting thegemba —the
factory floors — talking to the employ-
ees,” says Patrick Pélata, a former chief
operating officer at Renault, who left the
company in 2012 and is now an automo-
tive consultant. “But he hugely changed
as a boss over the years... He became
more autocratic and told people he did
not want to see problems.”
People familiar with Ghosn’s thinking
insist he was not overwhelmed by the
four roles he eventually played: chair-
man of Nissan and Mitsubishi, CEO of
Renault and head of the alliance. They
add that his change in management
Continuedonpage 21The downfall of Carlos Ghosn
A year ago, a titan of the car industry was arrested in Tokyo. As he awaits trial on financial misconduct
charges,Leo Lewis,Kana Inagaki,David KeohaneandPeter Campbell vestigate how his legacy unravelledin
Above: Carlos Ghosn
attending a conference in
London in September 2018Below: Ghosn leaving the
Tokyo detention centre
in April this year
Manuel Vazquez/Contour by Getty Images;
ReutersJapanese head of the company, he had
wrenched the business from the edge of
collapse to the forefront of the global
auto industry.
He had successfully steered Nissan’s
fiendishly nuanced and politically
charged alliance with Renault into a
relationship capable of bearing fruit.
On this particular day, he was
announcing Nissan’s purchase of a 34
per cent stake in Mitsubishi Motors — an
apparent masterstroke of dealmaking
that brought one of Japan’s most
renowned corporate names into his
empire at a deep discount.
Even by the standards of someone
fond of proclaiming “win-win” situa-
tions, it was a magisterial moment.
“Today, our global alliance has reached
an inflection point,” he declared. The
deal he had negotiated took three sec-
ond-tier carmakers — Nissan, Renault
and Mitsubishi — into the elite club pro-
ducing 10m ehicles a year, in an indus-v
try selling 92m vehicles overall. The
only other members were his bitter
rivals Volkswagen and Toyota.
But behind the scenes, in a series of
secret meetings in anonymous hotel
rooms, Ghosn had something even more
ambitious in mind:a deal with Fiat
Chrysler. The proposed agreement
would have created the legacy he
dreamt of — an industry behemoth.
It would also have set out the route
that would allow him, then 62, to ascend
to the status of “chairman emeritus” — a
semi-retirement role overseeing the
huge new alliance and guaranteeing him
homes around the world, a lump sum of
$40m and a performance-linked annual
salary of $6m.
Ghosn’s obsession with scale was as
great as rival carmakers had long sus-
pected. In 2018, the alliance beat Toyota
and sold almost as many vehicles as
Volkswagen. At the end of each year,
every vehicle that could possibly be
included in the count was added to
boost the total. “He never said it, but he
wanted to be the biggest in the world,”
says one former aide.
A deal with FCA, say people close to
Ghosn at the time, would also have
brought the satisfaction that he had
been right to ignore the advice he had
given himself when talking to investors
in the early 2000s: that every CEO
should step down within five years.
Ghosn had always been ambitious.
Born in Porto Velho, Brazil, to a family of
Lebanese immigrants, he was educated
in Lebanon from the age of six before
studying engineering in Paris at the
prestigious École Polytechnique.
He landed his first job at Michelin and
was poached by Renault in 1996, where‘He had a technique in
those days of almost
making you feel you coulddo the impossible’
A former Nissan executive$80m
The amount by which
Ghosn is accused of
understating his pay129
Number of days Ghosn
spent in a Tokyo
detention centreNOVEMBER 9 2019 Section:Weekend Time: 11/20198/ - 15:37 User: adrian.justins Page Name:WIN20, Part,Page,Edition:WIN , 20, 1