Why you should care
Because sometimes the mighty fall hard.
In the pages of the Japanese manga comic magazine “Big Comic Superior,” a young Carlos Ghosn discovers his first superpower as identifying the make and model of cars simply by listening as they drive by. “The True Life of Carlos Ghosn” goes on to chronicle Ghosn’s heroic rescue of Nissan from the brink of collapse.
Of all the highfalutin praise showered upon Ghosn as one of the most revered international businessmen of this century — “one of the true icons,” Alan Murray, chief content officer of Time Inc., called Ghosn by way of introduction at a Viewpoints Executive Breakfast in 2012 — the 2001 superhero treatment was perhaps the most over the top. One of the comic’s editors at the time told The Wall Street Journal, “[Ghosn] has a message of hope that has woken people up to new possibilities, and we wanted to convey that message.”
His kryptonite arrived this week.
On Monday, Ghosn, 64, the chairman of the board of Nissan and chairman/CEO of Renault and Mitsubishi, was arrested for allegedly underreporting his compensation to the Japanese government over a number of years. A whistleblower reported that he’d been misrepresenting his salary — to the tune of $44 million — as well as using company assets for personal purposes. Nissan’s CEO, Hiroto Saikawa, said at a press conference that Ghosn, along with Nissan’s first American appointed director, Greg Kelly, were the “masterminds” of a long-running con to undermine financial authorities.
When you’re a famous person with a lot of power, it leaves fertile ground for an ethical misstep.
Robert Föehl, executive-in-residence for business law and ethics at Ohio University
Nissan and Mitsubishi will recommend Ghosn be removed from his current positions, while Renault has named an acting CEO but has not officially fired Ghosn … yet.
The news is a blow not only to the automakers led by Ghosn but to the entire Japanese business community. Few foreigners are welcomed into top leadership roles in the country, and Ghosn was a notable exception. Upon joining Nissan in 1999, he turned the flailing company around, in part by slashing more than 20,000 domestic jobs. Ghosn then combined the technology, components and R&D resources of Nissan, Renault and Mitsubishi — a revolutionary solution that was heavily criticized at the time but turned out brilliantly. In 2017, the Alliance accounted for 11 percent of all cars sold globally and was on pace to sell more this year, making it the world’s largest auto group by unit sales.
Ghosn, whose parents are Lebanese, was born in Brazil but raised mostly in Beirut. He was educated at elite French private schools and got his start in the auto industry as a plant manager for Michelin tires in France. He quickly rose in the ranks, becoming CEO of South American operations for Michelin, Brazil, before moving to Nissan. But it was after creating the Renault–Nissan–Mitsubishi Alliance that Ghosn made a name for himself as an exemplary businessman. In 2010, he was named “Most Respected CEO” by CEO Quarterly magazine. He was inducted into the Japan Automotive Hall of Fame the same year and named ”Asia Business Leader of the Year” by CNBC in 2011.
How was a seemingly heroic do-gooder able to hoard millions while deceiving authorities and the public for years? “When you’re a famous person with a lot of power, it leaves fertile ground for an ethical misstep,” says Robert Föehl, executive-in-residence for business law and ethics at Ohio University. People with that much celebrity, wealth and power develop an ego, Föehl says, which leads them to morally disengage. Subconsciously, Ghosn may believe he was justified in underreporting his salary.
Still, Föehl doesn’t see this as a sign of rampant power abuse within the international business world. “Sure, there are other unethical business leaders, but we shouldn’t lose all faith in international business as a whole,” he says.
Many have lost all faith in Ghosn though. At the Nissan press conference, Saikawa said Ghosn’s actions raised feelings that “go far beyond regret to anger.” What’s more, the scandal may push Japan back toward isolated business practices, at a time when globalization is under strain and a national fortress of solitude might have some appeal.