Financial Times Europe - 09.11.2019 - 10.11.2019

9 November/10 November 2019 ★ FTWeekend 21

Spectrum

style was driven by necessity and time
constraints rather than a fundamental
shift in management philosophy or
approach.
His increasing responsibilities meant
Ghosn stopped attending annual meet-
ings with key Nissan dealers, who grew
frustrated. The company’s position in
JapanfellfromnumbertwobehindToy-
ota to number five. In spring 2016, deal-
ers demanded “Q&A time” with Ghosn
to grill him on Nissan’s flagging per-
formance.
“Before, there was a sense that he
would listen to our voices on the ground
and manage the company together, but
that feeling of unity was lost,” says the
head of a large dealer for Nissan in
Japan.
At the same time, Ghosn was coming
to the apex of his powers as a global CEO
overseeing $200bn a year in revenue.
He had begun to refer to himself as the
“re-founder”ofNissan.
As the company’s financial position
became healthier, his colleagues
observed that he was increasingly pre-
occupied with his own reputation. His
suits became sharper — a new Louis
Vuitton number was ordered for every
motor show. “The PR function was
essentially there to serve his public
image, way beyond what it was sup-
posedto,”saysoneformeremployee.
Jean-Marc Daniel, an economist and
university friend of Ghosn, says that
even as the former Nissan boss gained
confidence as a manager, he constantly
battled a sense of exclusion and a need
tobelongbothinFranceandJapan.
“He was always just outside the real
circle,” Daniel says. “He felt he had to
protect himself, gather wealth, become
more authoritative, but that in turn iso-
latedhimmore.”
The globetrotting CEO loved nothing
more than holding press conferences
alongside heads of state. His grasp of at
least five languages and melting-pot
upbringing gave him a cultural dexter-
ity that allowed him to blend into any
setting, whether American car plants or
MiddleEasternpalaces.
“To some extent, he was everybody
and nobody in a national sense. He
played on that, because of his upbring-
ing,” says one former director who often
travelledwithhim.
His visits abroad became like those of
a head of state. Personal assistants with
headsets would jump out of vehicles
ahead of him, alerting others that “the
president is arriving”. A team on the
ground would spend weeks planning his
schedule.
Once, a speaking engagement was
cancelled because the venue, which was
under construction, did not have a for-
maladdress,meaningaideswereunable
to plan to the minute the time it would
taketoreachthenextengagement.
Few inside Nissan publicly criticised
Ghosn for fear of retaliation in “a corpo-
rate culture in which no one can make
any objections or say ‘no’”, according to
thegroup’sgovernanceprobe.
“Part of the problem stemmed [from]
Nissan executives who let their guard
down and were afraid to speak up
against Ghosn,” says Suzuki. “That
resulted in an environment of compla-
cency where Ghosn felt he could get
awaywithanything.”
In autumn 2016, Ghosn pulled strings
to secure the Palais de Versailles as a
venue for a lavish party in honour of his
second wife Carole. The party would
become one focus ofbroader 2019

Continued from page 20

investigations rdered by both Nissano and Renault into whether the carmak- ers ended up paying for services, properties and other expenses that appeared tosolelybenefitGhosnandhisfamily. That included nearly $20m spent on company-owned houses for Ghosn in Beirut, Rio de Janeiro and Paris through Nissan’s non-consolidated subsidiaries. It was these properties that triggered a secret investigation by a small group of executives in early 2018, just as Ghosn wasdeclaringhisdesiretomakethealli- ance between Nissan and Renault “irre- versible”. Ghosn’s representatives say all the expenses were authorised and tied to legitimate business purposes, and that his family believed the residences were corporate housing whose purchases wereapprovedbyNissan.

Within two years of bringing Mitsubi- shi into the alliance, Ghosn had become one of the industry’s best-paid executives. In 2017-18, he earned a combined pay package of $17m — compensation he privately felt was more than justified after he rejected an offer to run rival General Motors that might have dou- bled his pay. The only other Japanese CEO of a listed company who earned more that year was Kazuo Hirai, Sony’s formerboss,whoearned$25m. Asked by the FT just months ahead of his arrest whether it had ever occurred to him that he was paid too much,

Ghosn laughed: “You won’t have any CEO say, ‘I’m overly compensated.’ It’s not up to me, the board is sovereign on this.” His former colleague at Renault who worked with him for nearly a decade added: “The one thing that has never changed is his relationship with money. He always thought it was a measure of success.” Ghosn’s compensation — and the tens of millions of dollars more he was sup- posed to receive after retirement — is now at the heart of the allegations that ledtohisdownfall. Hehasbeenchargedwithfourcounts: two accuse him of failing to report more than $80m in deferred compensation that he was set to receive over eight years up to March 2018. His lawyers say Nissan never committed to pay the money and that he never received any unreportedcompensation. In September this year, Ghosnagreed to pay $1m o settle fraud charges witht the US Securities and Exchange Com- mission over allegations he hid more than $140m of his pay package at Nis- san.AlthoughGhosnneitheradmitsnor denies any of the charges made by the SEC, “the settlement with SEC does weaken Ghosn’s claims that he was framed”,YasuyukiTakai,aformerpros- ecutor and now a defence lawyer, previ- ouslytoldtheFT. Another breach of trust charge involves a private asset management companycreatedtohandleGhosn’syen- based Nissan salary. Prosecutors allege that, at the height of the 2008 financial crisis, this company attempted to address unrealised losses from a deriva- tivestransactionofY1.85bn($16.7m)by transferringthemtoNissan. Ghosn is also alleged to have trans- ferred, via a series of payments across fouryears,$14.7mfromaNissansubsid- iary account to one held by a Saudi friend’s company. Ghosn’s lawyers say the currency swap transactions imposednofinanciallossonNissan,and payments were made for “legitimate andvitallyimportantbusinessservices” forthegroup. The potentially most damaging alle- gationlandedinAprilwhenprosecutors accused Ghosn of diverting $5m from Nissan to benefit companies with ties to him and his family. While they did not name the businesses involved, an inter-

nal investigation found that about $35m in payments were made to Suhail Bahwan Automobiles (SBA), an Omani distributor with ties to a friend of Ghosn,between2011and2018. Some of this money is alleged to have been either invested in a company partly owned by Ghosn’s son or used to purchase a luxury yacht by a company owned by his wife, according to people withknowledgeoftheinvestigation. Ghosn has maintained that the payments to SBA were “legitimate sales and marketing bonus and incentive payments” that were fully vetted and approved by several senior Nissan executives. He also deniedthe money was trans- ferred for the benefit of himself or family members. But legal experts expect the trial to raise questions over why a man who was managing the world’s most complex car business needed several companiesbasedinLebanon. At the Yokohama event in 2016, Ghosn anointed Hiroto Saikawa as co- CEO of Nissan. He believed he was installing a sidekick who would be loyal underanycircumstances. But by summer 2018, clear signs of discordwereemerging.Thegroup’sper- formance was flagging, particularly in its core US market. A year after taking over from Ghosn, Saikawa tried to dis- tance himself from the lofty expansion targetssetbyhisboss. The final break came as the pair clashed over the future of the alliance. From early 2018, Ghosn had pushed for deeper integration, under pressure from the French government. But Nis- san executives, including Saikawa, repeatedly argued the Japanese company was not ready for a full merger,

fearing a de facto French takeover, and instead sought to fix a structure where Nissan only held a non-voting 15 per centstakeinitsFrenchpartner. At the heart of those discussions was Hari Nada, Nissan’s then head of legal and a lieutenant who had gained Ghosn’s deep trust. But Nada had also formed a secret team to look into the chairman’sfinancialdealings. Willingly or not, he agreed to a plea bargain in summer 2018 with Tokyo prosecutors and provided pivotal infor- mation that helped them build a case againstGhosn. Amid the initial furore around Ghosn’s arrest, his allies suggested that its roots lay in some dark collusion between prosecutors, the Japanese government and Nissan — evoking a fear that the justice system was being weaponised to bring down a foreigner and solve a corporate problem. This impression was amplified by the harsh conditions imposed on Ghosn, from his long stretches in jail to the ban on con- tactinghiswife. People close to Saikawa said he did not know about the internal investigation into Ghosn until early October. His work with Nada was focused primarily on how to talk their boss out of what theyfearedwouldbeanunevenmerger.

In the weeks ahead of Ghosn’s arrest, NadasuggestedtoseveralNissanexecu- tives that they should enlist the support of Japan’s Ministry of Economy, Trade and Industry (METI), which had earlier expressed concerns about the way Paris washandlingtalks. Some Nissan executives believed Tokyo could be drawn into efforts to “neutralise” Ghosn. “It was useful for Nissan to invoke government support to legitimise what they were doing,” says one person close to the Japanese government. Ghosn’s lawyers have alleged “unlawful collusion between the prosecutors, government officials at METI and executives at Nissan” to prevent Ghosn from “further integrat- ing Nissan and Renault, which threat- ened the autonomy of one of Japan’s industryflagships”. Nada could not be reached for comment for this article. METI officials said they never intervened in Renault- Nissan merger talks and denied any involvement in Ghosn’s arrest. Nis- san declined to comment on judicial proceedings. The trial will resolve some, but by no means all, of these questions. As one person close to the prosecutors remarkedtotheFT,thisisatrulyexcep- tional case, created by the truly excep- tional position that Ghosn had created for himself at the heart of corporate Japan.

One year after the airport arrest, a vacuum remains at the heart of Nissan. Saikawa, who oversaw a 30 per cent drop in Nissan’s share price after Ghosn’s departure, was ousted in mid- September following revelations he received excess payments. Rivalries long suppressed by Ghosn’s hold over thecompanyexploded,withtheinfight- ing mostly focused around Nissan’s searchforanewchiefexecutive. InhisfinalyearasCEOin2016,Ghosn had presented an ambitious list of new projects that would define the “new Nissan”. “He showed me the list and I thought he was joking,” said Alfonso Albaisa, Nissan’s design chief. “It was suddenly an eye-opener... We are basically doing the whole portfolio over.” As Nissan plans to launch eight new electric cars by 2022 and power its vehicles with its hands-off, semi-autono- mousdrivingtechnology,neitherGhosn nor Saikawa will be there to show off the company’sengineeringprowess. Perhaps worse is the knowledge that the deal with FCA that Ghosn wanted so much has now slipped through the alliance’s fingers. “It was probably one of the best deals you could dream about,” says one person close to Nissan’s board. “Circumstances have decided otherwise.” To run a global carmaker in the early 21st century — amid threats from upstart electric car brands, competition from ride-sharing companies such as Uber, and deepening changes in con- sumer behaviour — requires ambition, visionanddecisiveness. These qualities made Ghosn a uniquely brilliant leader for many years. But over time, and taken to an extreme, they became liabilities rather than assets. Ultimately, they proved his downfall.

Leo Lewis and Kana Inagaki are FT Tokyo correspondents, David Keohane is an FT Paris correspondent and Peter Campbell is the FT’s global motor industry correspondent

Spain, Portugal,

the former West Germany and

Ireland remain unusually resistant

to rightwing nationalism

Nationalist

nostalgia? No

thanks — been

there, done that

T

he “SpainIsAFascitEstate” hashtag has been trending on Spanish Twitter. Despite the spelling issues, and although today’s Spain plainly isn’t a fascist state, the sentiment is heartfelt. I was in Barcelona last week, watching the Catalan nationalist demonstrations, and realising how much local anger goes back to Spanish dictator Francisco Franco’s suppression of Catalonia. For many protesters here, the struggle for Catalan independence has echoes of the Franco era — Catalan leaders jailed for the oddly archaic crime of “sedition”; police sent from the rest of Spain to squash Catalan aspirations, often violently; Spain’s prime minister refusing even to talk to Catalonia’s president. Franco, who died in 1975, has become a central issue in Sunday’s election. Last month, in what was partly an act of electioneering, the Socialist government removed him from his monumental tomb and handed him to his family for a private reburial. Meanwhile, in reaction both to his dishonouring and to Catalan nationalism, the far-right Vox party is polling at about 13 per cent. In a handful of European countries, the present is overshadowed by memories of an authoritarian, nationalist, insular regime. These countries include Spain, Portugal (fascist until 1974), the former West Germany (built in reaction to Nazism) and Ireland (under the thumb of the Catholic Church till the 1990s). Today, despite the rise of Vox, they all share one characteristic: they remain unusually resistant to rightwing nostalgic nationalism. Most

of their citizens seem to think: we tried that, and it wasn’t fun. These are Europe’s non-nostalgic (or at least low-nostalgia) nations. Spain is an illustrative case. It’s not that most Spaniards feel shame about fascism. The nation has avoided discussing it much since Franco’s death. But most Spaniards do remember his rule as a time of poverty and insularity, when “Europe stopped at the Pyrenees”. Despite the recent financial crisis, Spain’s present is manifestly better than its past. Income per capita rose tenfold from 1975 to 2015. There isn’t a big market there for nostalgic populists promising to “Make Spain Great Again”. It’s similar in Portugal, Ireland and western Germany. Cas Mudde, scholar of populism, cautions that no country is immune to the far right. Yet these places do seem less vulnerable to it.

Portugal’s far-right Chega party polled just 1.3 per cent in October’s parliamentary elections, Identity Ireland got 0.05 per cent (or precisely 181 votes) in the 2016 Irish elections, while the far-right Alternative für Deutschland is polling at about 10 per cent in western Germany, less than half its level in the east. The east-west divide derives from contemporary eastern discontent, but also from differing historical memories. West Germany taught its citizens guilt and horror about Nazism. By contrast, the east’s communist regime didn’t emphasise guilt, while eastern memories of Nazism were overshadowed by communism and later the traumatic transition from it. The low-nostalgia countries are more Europhile than most. Between 75 and 88 per cent of Spaniards, Germans, Portuguese and Irish believe their countries have benefited from EU membership, well above the EU average of 68 per cent, according to Eurobarometer, the European Commission’s polling wing. These countries tend to choose modernity over tradition: in Irish referendums since 2015, 62 per cent voted to legalise gay marriage and 66 per cent to overturn the ban on abortion. It is also significant that in a time of anti-immigration sentiment across Europe, many Irish and Portuguese people in particular know how it feels to be an immigrant. That helps explain why both countries have elected prime ministers of Indian descent. Barack Obama’s famous self-presentation at the Democratic National Convention of 2004 — “In no other country on Earth is my story even possible” — is now wrong.

Contrast the low-nostalgia nations with countries where many voters do long for yesterday: Donald Trump’s America, Brexit Britain, Vladimir Putin’s Russia and France, where Marine Le Pen reached the run-off of the last presidential elections. Of course, there are countries whose politics don’t fit this divide. Hungary and Poland have benefited as much as Spain from modernity and the EU (since 1995, Poland’s economy has outgrown even South Korea’s) but their dominant historical memory is Soviet occupation, so they are tempted by nationalist authoritarianism. Brazil experienced nationalist authoritarianism even more recently than Spain — military rule lasted until 1985 — but many Brazilians are so disappointed with modernity that they have elected a president peddling nostalgia for themilitares. Most countries eventually forget their nationalist-authoritarian past. In France, the memory of the Vichy regime now inoculates only the oldest generation against the far right: just one in 10 over-seventies voted for Le Pen in the first round, less than half the national average. Similarly, about 60 per cent of Germans now think the crimes of the national past should be “left alone”, found a recent large survey by More in Common, an advocacy organisation that fights extremism. But today’s nationalist-authoritarian experiments could eventually come to serve as terrible warnings to future generations. One day, the memory of Trump may deter the US from trying that path again.

[email protected]; @KuperSimon More columns at ft.com/kuper

Simon Kuper

Opening shot

‘The one thing that has

never changed is Ghosn’s relationship with money.

He always thought it was a measure of success’ A former colleague of Ghosn’s at Renault

$17m

Ghosn’s combined pay package as chairman of the carmaking alliance between Renault, Nissan and Mitsubishi

Above: Ghosn at the wheel of a new Bluebird Sylphy in Tokyo in August 2000, soon after becoming president of Nissan. He transformed the near-bankrupt company into a profitable carmaker within a year

Below: with French president Emmanuel Macron at the Paris auto show in October 2018 Koichi Kamoshida/Liaison; Getty Images

Harry Haysom

NOVEMBER 9 2019 Section:Weekend Time: 11/20198/ - 15:37 User: adrian.justins Page Name:WIN21, Part,Page,Edition:WIN , 21, 1

Financial Times Europe - 09.11.2019 - 10.11.2019

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