Carlos
Ghosn was the world-renowned CEO that saved Nissan from bankruptcy, brought us legendary cars like the GTR, and spearheaded one of the largest automotive
alliances on the planet. Now, he’s an international fugitive, wanted
by Interpol and the Japanese authorities. So how does a star businessman,
someone who is studied in college textbooks and even featured in Japanese manga,
go from being an automotive titan to a hunted criminal? Well, it has to do with the 2008 financial
crisis, Ghosn’s suspiciously high salary, and a possible collusion between Nissan executives
and the Japanese government to end Ghosn’s career. So let’s take a look at Ghosn’s rise to
power at Nissan, and the events that led to his eventual downfall. I’m Guff, this is Albon, let’s get started. Carlos Ghosn started his career at Michelin
in 1978, the largest tire maker in Europe, right after graduating as an engineer from
a college in France. He became a plant manager in 1981. Then worked his way up as the head of research
and development for the “industrial division” in 1984. By 1985, at just 30 years old, he was appointed
as COO of Michelin South America. At the time, Michelin’s South American team
had been unprofitable and it was his mission to turn the company around. In just two years, Carlos Ghosn brought the
South American operations back into the black. And by 1990, he was CEO of Michelin North
America.. Ghosn credited his success at Michelin to
his cross-cultural management tactics. He emphasized diversity as a core business
asset. Ghosn stated that "You learn from diversity
... but you're comforted by commonality" At this point, Ghosn had established himself
as a successful businessman, and so it was time to set out for a new challenge. In 1996, Ghosn went to work at Renault as
the executive vice president. And He was thrown immediately into the fire
because Renault was on the cusp of bankruptcy. By the end of 1997, just one year later, Renault
was back to being profitable thanks to his restructuring of the company. Ghosn was quickly proving himself as a real
whizz kid 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 the fat to maximize
profits. And so, Ghosn thought, let’s do another
one. In 1999, Renault purchased a 36.8% stake in
Nissan, and formed the Renault-Nissan Alliance. This Alliance had Ghosn maintain his position
at Renault while entering Nissan as the COO. Of course, just like every other company prior
to Ghosn’s arrival: Nissan Was Struggling! They were in the hole over $20 Billion in
interest-bearing debt. It became quickly apparent to Ghosn that Nissan
had no idea what they were doing. Nissan sold 46 car models in Japan - 3 of
them were profitable. So, In October of the same year, Ghosn introduced
the Nissan Revival Plan. In this plan, he promised that Nissan would
become profitable by the following year and that the company debt would be reduced by
50% by 2002. He went as far as to vow that he would RESIGN
if he failed to meet these goals. And so this plan was the one that would cement
his reputation as Le Cost Killer. Ghosn cut 21,000 jobs at Nissan, shut down
3 car assembly plants, closed 2 manufacturing plants, cut off half of its suppliers, and
sold off massive Nissan assets such as their aerospace unit And guess, what, he met all of his goals. Nissan was finally on track to real profitability,
and Ghosn was promoted to CEO of Nissan. His success was now recognized globally. In 2002, Fortune Magazine awarded him Asia
Businessman of the Year. In 2003 Fortune identified him as one of the
10 most powerful people in business outside the U.S. Fortune’s Asian edition voted him Man of
the Year. Surveys published by the Financial Times named
him the fourth most respected business leader in 2003, and the third most respected business
leader in 2004 and in 2005. But it wasn’t just the cost cutting that
got him here, It was also his battle against Japanese business customs and culture. He eliminated seniority based promotions and
no longer guaranteed lifetime employment to workers unless high performance was achieved
by the company. As you can imagine though, not everyone was
pleased with this culture shock. Ghosn was recognized for saving Nissan in
the early 2000s, sure. But, he did it by putting people out of jobs
and changing long standing traditions. It was even reported that Ghosn changed Nissan’s
official language from japanese… to English! This irked a lot of the more traditional people
at Nissan, but at the time, it was hard to deny the man’s success. Up until now, he made Michelin see profits
in South America, turned around Renault completely, and restructured all of Nissan. All of which were deemed impossible before
his leadership. By 2003, Nissan announced that they were out
of debt completely. Their operating profit margin exceeded 11%,
up from 1% in 1999. In 2005, Nissan announced that they sold more
than 3.6 million vehicles in a year. Which was a million more vehicles than just
4 years prior. Ghosn was doing so well at Nissan that in
2005, he was promoted to CEO of Renault as well! He became the CEO of TWO fortune 500 companies
AT THE SAME DAMN TIME. The world’s first person to do so. Ghosn was well and truly unstoppable. But, “Le Cost Killer’s” unstoppable
success, of course, eventually had to come to a stop. 2008, the world financial crisis. Businesses across the planet were in the dumps,
and the automotive industry was no exception. Ghosn’s grueling work over the last 9 years
was unraveling before his eyes so he had to make some changes, and fast. He played some interesting cards, including,
in 2009, releasing Nissan’s first supercar in years, a revival of the Nissan GTR. One year later in 2010, Ghosn told the world
that EVs were the future, and brought us the Nissan Leaf. Which was an unprecedented move, two years
before even the Tesla Model S. But it wasn’t enough, Nissan was still struggling
to claw back market share. Yet, in 2011, a confident Carlos Ghosn proudly
announced to the world that Nissan would be rocketing out of the recession and increasing
their global market share from just 5.8% to a whopping 10% over the next 8 years. It sounded simple, but behind the scenes,
Ghosn was taking drastic measures. The plan was to set impossibly high sales
targets for his Nissan dealers with huge cash bonuses for anyone that could hit them. And every time they hit those sales numbers,
the target would be raised again, in what Ghosn called the “stair step” method. Realistically, very few dealers could hit
those targets, but those bonuses were just too good to pass up. All this led to dealers having insane discounts
at the end of every month just to move cars off the lot, because those cash bonuses from
Nissan were huge paydays for dealers, far more than actually making profit on the cars. It even got to the point where the dealers
themselves would buy the cars from themselves at the end of the month, hold on to them for
a few months and then put them back up for sale as used cars. All in the name of hitting Ghosn’s sales
targets and getting those big bonuses. Of course, that money had to come from somewhere,
and all of these bonuses were being paid out to dealers who weren’t actually making any
money for Nissan, Add to that the fact that, in 2016, Nissan
bought a controlling share of the collapsing Mitsubishi to save their business, despite the fact that Nissan was struggling
keeping their own business afloat. This led to Nissan’s profits being eaten
up by bigger and bigger margins every year. All the while though, Ghosn wanted a higher
and higher salary, something the executive board was very unhappy with. By 2017, Nissan’s global market share was
up to 9.2%, nearly the 10% goal that Carlos Ghosn had confidently promised 8 years earlier. But profits, those were a totally different
story. In 2018, Nissan reported that their profits
were down 44.6% from the previous year. With net income down 57.3%. Yet despite that, Carlos Ghosn was making
16.9 Million dollars a year, making him one of the highest paid executives in Japan. This was a massive blow to the company and
a stark wake up call that the magic of Carlos Ghosn was long gone. All the while, Ghosn was making moves to further
merge Nissan and Renault, despite the Japanese board member’s opposition. This was a legacy play; an effort to ensure
that the Alliance, Ghosn’s finest achievement, would never be broken, even after he retired. That same year, interestingly enough, was
also the year that Carlos Ghosn was arrested. 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 tarmac was not
a Chauffeur and a limousine, but rather it was the japanese authorities and an arrest
warrant. Carlos Ghosn was arrested right as he got
off the plane on charges of financial misconduct, The charges specifically were for failing
to report over 80 million dollars in income over the last decade. As well as taking personal investment losses
and dumping them onto the laps of Nissan. The prosecutors claimed to have evidence direct
from Nissan’s books, and he faced up to 10 years in prison and a fine of 10 million
yen, or about 90 thousand dollars. But Ghosn insisted on his innocence, saying
that every financial decision in question was approved by Nissan’s board. And where was Nissan’s board in all this? You might think that they were swiftly coming
to Ghosn’s side to back him up and get him out of police custody. This was their standing chairman after all,
and the face of Nissan for the past 20 years. But no, they were nowhere to be seen And Just 3 days after Ghosn’s arrest, the
board had an emergency meeting and voted to dismiss Ghosn as chairman of the company. 4 days after that, the Mitsubishi board, who
were now part of the alliance, met and voted him off of their board as well. And just like that, in the matter of a week,
Ghosn was no longer one of Japan's top executives. His entire world was flipped upside down,
and now he sat in a japanese prison cell, waiting for whatever was to come next. And wait he did. For 108 days, in solitary confinement. Yes, the Japanese government put Ghosn, an
international CEO accused of a non-violent financial crime in a tiny cell by himself
for over 3 months. He was allowed a half hour every day to go
outside, and was supposedly interrogated for sessions as long as 14 hours without his lawyers
present. And let me reiterate, he was accused of this
crime, but not found guilty of it. Ghosn’s trial was not scheduled until 2021. For those of us watching from the US, this
might seem like a blatant disregard for a person’s rights, but in Japan, this is standard
practice. After Ghosn made bail in March of 2019, he
was arrested again in April on new charges of financial misconduct. It seemed like the japanese government had
no intention of loosening their grip on Ghosn, despite the relatively small severity of his
allegations. This time he managed to post bail again, and
negotiated himself out of a cell and into house arrest. And it was there that he got to finally sit
with his lawyers and make a case to fight against the charges of crime leveled against
him. Now, as far as the crimes are concerned, let’s
take a look at the facts By law in Japan, anyone making over 100 million
yen, about $1 million USD, has to publicly disclose their salary. And in a culture where most people aren’t
paid exorbitant wages, this sort of law made sense. In 2010, the year that this law was introduced,
Akio Toyoda, the president of Toyota, didn’t even make enough money to meet the public
disclosure threshold. Carlos Ghosn was making about 10x that threshold,
or about 10 million dollars a year. This was much to the dismay of many Nissan
executives, who weren’t even paid close to that level. But compared to CEOs from the west, Ghosn
was making average money. The CEO of Ford, Alan Mullaly (muh lal lee),
took home 25 million dollars that same year. From Ghosn’s perspective, he was the Chairman
of 2, and later 3 with Mitsubishi, separate automotive giants, and he was being paid less
than American CEO’s of just one. And so every year since 2010, Ghosn’s salary
increased year over year, by millions of dollars. But all of that was totally legal, fully approved
pay for Carlos Ghosn. What wasn’t quite so legal was the nearly
10 million dollars a year being allocated for Carlos Ghosn’s retirement package. Now, Ghosn argues that he never received this
money, because he never retired, so he didn’t have to disclose any of it, But clearly the Nissan board, as well as the
japanese government disagreed. Perhaps more damning than this retirement
package though, was the nearly 8 million euros paid to Ghosn by the Nissan Mitsubishi BV
Holding company. This was an Amsterdam based holding company
that served pretty much no other purpose other than to take money and put it in Carlos Ghosn’s
pockets, without Nissan nor Mitsubishi knowing about it. Ghosn’s defense is that Nissan knew about
it and 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 money to settle them, Ghosn purchasing luxury
properties all over the world with Nissan money, as well as throwing lavish parties
with, yup, Nissan footing the bill. But Ghosn says, Nissan was consulted on every
single one of these things and the proper approvals were made. Nissan vehemently disagrees, And yet there seems to be no strong evidence
from either side to help their case. And for that matter, getting paid way too
much money and spending lavishly sounds like standard fare behavior for a CEO. So why all this theatre? Why is the Japanese government involved, when
Nissan’s executive board could have easily just fired Ghosn with clear proof of these
oversteps. Well, Ghosn says, because the board is corrupt. As you may have picked up by now, Nissan never
saw totally eye to eye with their French partner. Renault’s large share in Nissan meant that
they always had a controlling share of the Japanese carmaker, and with Ghosn firmly planted in his seat
on top, it was never a truly Japanese company like Honda or Toyota. Ghosn’s success over the years had always
managed to keep those feelings at bay, But when Ghosn’s performance began to pull
Nissan further and further into the red, the board members became more and more irate with
him. Ghosn himself says the final straw was his
push to further bring Renault and Nissan closer together by completing a full merger of the
two companies. An act that he himself said would make it
so that the Renault Nissan relationship would be unbreakable. Japan’s unique culture is home to a strong
feeling of nationalism, and a full merger of the two companies meant that Nissan would
never be able to grow independent of their french partners, and for the Japanese executives at Nissan,
that was the line that couldn’t be crossed. This is where, Ghosn claims, the plot against
him started Hari Nada, a senior vice president at Nissan,
began working with Japanese prosecutors in 2018 to build a case against Ghosn. Nada, along with a few other Nissan executives,
essentially planned the various steps needed to get Ghosn arrested and then subsequently
dismissed from his positions at Nissan and Mitsubishi. Supposedly, they went so far as to even try
to hack Ghosn’s email to get dirt on him that could be used in their case. And of course, all this came to fruition in
November of 2018 when Ghosn was arrested on that airport runway. The kicker? Hari Nada negotiated a plea deal with the
prosecutors to ensure that he would not be charged with any crimes. Why would he need to do that, you ask? Well, that’s because Nada was part of the
group of people tasked with fudging the books at Nissan. Which he was happy to do until an internal
investigation by Nissan’s lawyers led them to his trail in 2018. So Nada was a snitch, sure, but the rest of
the Nissan executives were acting in good faith, right? Well, maybe not. Because in 2019, news broke that the then-acting
CEO of Nissan, Hiroto Saikawa, an executive who was integral in the case against Ghosn,
had been illegally increasing his salary for years as well. The exact same crime that Ghosn was accused
of. And there are allegations that a handful of
other executives were all doing the same thing. So if it wasn’t the money that led Nissan
to turn on him, then perhaps Ghosn was right all along, perhaps it was a nationalism-fueled effort
by Nissan executives to thwart Ghosn’s plan of merging Nissan with Renault, Their last-ditch attempt to keep Nissan as
Japanese as possible. And so maybe Ghosn had a real chance at making
his case in a Japanese court and proving that he was innocent, or at least, not as guilty
as he was made out to be. But none of that mattered, because in late
2019, Ghosn broke his bail conditions and escaped japan. December 29th 2019, Michael Taylor, a former
US Green Beret, and his son Peter, were hired by Carlos Ghosn to help him escape from Japan. The plan was surprisingly simple: charter
a jet to Turkey, stuff Ghosn in a Concert Equipment Box, and put him on the jet as cargo. The box of course was custom made to be big
enough to fit Ghosn, and also big enough that it wouldn’t fit into the X-Ray scanners
at the airport. Ghosn was given a burner phone used to communicate
with the Taylors to make sure he was okay, and that was it. The plane took off from Kansai International
Airport in Japan and made its way to Turkey. After landing in Turkey, Ghosn got out of
his box and used his Lebanese passport to get a one way ticket to Beirut, Lebanon. And that’s where Ghosn is, to this very
day. Living in peace with his family, with no fear
of extradition, thanks to there being no extradition treaty between Japan and Lebanon. The Japanese authorities didn’t find out
until two days after the escape, because their security footage of Ghosn was only checked
once a week. So that’s it. Ghosn was Free. Just a week or so after the daring escape,
a very charismatic Ghosn decided to have a press conference in Beirut. He invited the world’s press to come and
hear his side of the story, and ask him whatever questions they wanted. He seemed triumphant, deftly switching between
English, French, and Arabic depending on who was asking him a question. And he wasn’t shy about throwing his former
colleagues under the bus. He told the world that he firmly believed
that Hari Nada, Hiroto Saikawa, and the rest of the executives colluded with the Japanese
government to rid Japan of him and the french influence of Renault. He called out specific prosecutors and government
officials, he truly 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 foul,
so it was hard to take Ghosn’s word at face value. That is, until Ravinder Passi, Nissan’s
topmost lawyer, blew the whistle on what was really happening behind closed doors. Passi had been leading an internal investigation
into the Ghosn scandal since his arrest in 2018. He worked closely with the Nissan board members
and especially with Hari Nada. And that’s where he began to discover some
serious conflicts of interest. By 2019, Passi found out in his investigation
that Nada had struck a plea deal with the Japanese prosecutors, And he found out that a number of executives,
like Saikawa, the standing CEO, had been taking massive amounts of illegal earnings through
falsified share appreciation. This was huge. It showed that not only did Nissan’s board
commit the same crimes that they were accusing Ghosn of, But it was also proof positive that they had
a significant conflict of interest, and were incentivized to throw Ghosn to the flames
just to save their own skin. Not only that, but the Japanese prosecutors
surely weren’t so inept to have missed this glaring detail in their investigation either. Yet, not once did it appear to be an issue
when they needed board members to be witnesses, or contribute information. Ravinder Passi, though, did see issue with
all this, and so in an effort to help the investigation, he sent a memo to the Nissan
board outlining his concerns. He got no response. That is, until 3 days later, when he was notified
that he was being removed from the Ghosn Investigation team. Oh, and despite having been living in japan
for 8 years, he was being sent back to the UK Oh, AND, he was being demoted from General
Counsel to a position in a tiny team of 3 people. Passi, understandably, was completely caught
off guard. 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. After that, Passi was followed by unmarked
vehicles for months, with strange men taking pictures of him and his family And not too long after, the Yokohama police
raided his home and confiscated his phone and laptop as “evidence”. Passi later 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 this entire case on its head. Ravinder Passi worked at Nissan for 16 years,
a friend and colleague to Hari Nada and the rest of the Nissan execs, But as soon as he took one step out of line,
Nissan, and the Tokyo prosecutors, essentially became the mafia, Beating him down until they could make him
disappear, all so they could make the law work for themselves. Conclusion: Carlos Ghosn to this day says that there isn’t
a chance that he would get a fair trial in Japan. And even though the team that helped him escape,
along with his close colleague Greg Kelly, are still over there facing years in prison,
Ghosn still feels he did the right thing. And considering the blatant corruption that
still lives in Nissan HQ, and the extremely questionable conduct of the Japanese prosecutors,
I’m not sure if I can blame him. Ghosn certainly is an ultra-wealthy, cutthroat
businessman, who definitely put the almighty dollar above morals on a number of occasions,
but is he the villain in this story? If he is, then there’s one thing for certain,
there are far worse villains out there pretending to be heroes.
Ghosn hasn’t been Nissan’s CEO in a hot minute.
The title is a bit clickbait-y. The story has enough drama without the need to embellish it.
The real tea (in my opinion) is the fact that some Nissan board members totally knew what he was doing and orchestrated his fall while protecting themselves (and never left the board).
Corrupt governments? You don’t say
Previous Discussion: Nissan's CEO Is Now A Wanted Criminal
I remember the dumpster of an AMA Ghosn did some years ago on Reddit.
Carlos Ghosn: I survived solitary confinement, I'll survive in a box.
“now”
Check out [www.nissan.com](www.nissan.com)
Fuuuuuck Ghosn. He's the one that pushed hard for CVTs and abandoning regular automatic transmissions to save money. Nissan went from being just as reliable as Toyota to a joke now with the majority of their owners being considered sub-prime.
Excellent video