Carlos Ghosn is a Lebanese businessman who was born in Brazil (/goUn/; French: [kaRlos gon]; Arabic: krlws GSn; Lebanese Arabic pronunciation: [‘ka:rlos ‘gos?n], born 9 March 1954). Ghosn is also a citizen of France. He is an internationally sought-after fugitive as of January 2020. Ghosn served as the CEO of Michelin North America as well as the chairman and CEO of Renault, AvtoVAZ, Nissan, and Mitsubishi Motors. In addition, Ghosn served as the chairman and CEO of the Renault-Nissan-Mitsubishi Alliance, an alliance formed by these three automakers through a complicated cross-shareholding contract. Since 2010, the partnership has held a 10% share of the global market, and as of 2017, it was thought to be the biggest vehicle group globally.
Ghosn was appointed as Louis Schweitzer’s deputy at Renault in 1996 and given the responsibility of rescuing the firm from the brink of bankruptcy. Ghosn developed a cost-cutting strategy for the years 1998 to 2000 that included a personnel reduction, changes to the production process, standardization of car parts, and a push for the introduction of new models. Major organizational changes were also made by the company, including the introduction of a lean production system with delegated responsibilities (the “Renault Production Way”), a reform of work practices, and the centralization of research and development at its Technocentre to lower the costs of vehicle conception while accelerating such conception. Ghosn earned the moniker “Le Cost Killer.” He gained the moniker “Mr. Fix It” in the early 2000s for planning one of the auto industry’s most aggressive downsizing initiatives and leading Nissan out of its financial crisis in 1999.
After Nissan’s financial turnaround, he was named Asia Businessman of the Year by Fortune in 2002. He was named one of the top ten business leaders outside of the United States by Fortune in 2003, and the Asian version of Fortune named him Man of the Year. He was ranked third most recognized business leader in 2004, and fourth most respected in 2003, according to surveys conducted by PricewaterhouseCoopers and the Financial Times. His life has been depicted in Japanese comic books, and he swiftly rose to fame in Japan and the corporate world.
On April 1, 2017, Ghosn resigned as CEO of Nissan, but he remained the company’s chairman. On November 19, 2018, he was detained at Tokyo International Airport on suspicion of underreporting his pay and flagrantly misusing business resources. Nissan’s board unanimously decided to remove Ghosn as chairman of the company on November 22, 2018, with immediate effect. On November 26, 2018, the executive board of Mitsubishi Motors made a similar decision. At first, Renault and the French government stood by him and assumed he was innocent until proven guilty. Ghosn was forced to step down as chairman and CEO of Renault on January 24, 2019, when they ultimately decided that the situation was intolerable. Ghosn was re-arrested in Tokyo on April 4, 2019, while he was still free on bail that had been granted in early March, on fresh charges of stealing money from Nissan. Nissan shareholders decided to remove Ghosn from the board of directors on April 8th. On April 25, he was once more given a bail release. Renault discovered 11 million euros in dubious expenditures by him in June, which prompted a French probe and raids.
On December 30, 2019, Ghosn violated the terms of his release by taking a private jet from Japan to Lebanon through Turkey, with the assistance of an American private security contractor who was concealed inside a musical instrument box. Interpol sent a red alert to Lebanon on January 2, 2020, requesting the arrest of Ghosn. Since his escape, he has been the topic of numerous interviews with the media, books, a European TV series, and a BBC documentary called Storyville.
In This Article...
Why the hell is Carlos Ghosn having this situation?
He was a hero in the corporate world and in control of Nissan, Renault, and Mitsubishi. He is currently wanted on a global level. This is how it all happened.
Carlos Ghosn resigned from his position as CEO of Nissan in the spring of 2017, but since then, he has continued to make headlines due to a weird array of legal issues that now include multiple countries. He is currently at the center of a scandal that resulted in his arrest, termination as CEO, and subsequent position as an international fugitive following an alleged escape that seems like it belongs in a movie. He was accused of financial malfeasance while serving as Nissan’s chairman and CEO.
Let’s take a look back at the main moments in the developing story of Carlos Ghosn to explain how all of this came to be.
Fugitive from the Company: Carlos Ghosn
Carlos Ghosn was detained in Japan in 2018. He served as the CEO of Nissan in Japan and Renault in France, two automobile manufacturers. Executives at Nissan claimed that Ghosn had broken Japanese law by failing to report his profits while also receiving two salaries.
Ghosn makes his getaway prior to the start of his trial. He gets past security by hiding in a box of musical instruments and is taken on a private flight to Lebanon, which has no extradition agreement with Japan. We follow Carlos Ghosn’s remarkable ascent and fall in this episode and get statements from the wanted man.
The four-part HBR IdeaCast series “The Rise and Fall of Carlos Ghosn” can be listened to here. There is a lot more to this story, including race car driving executives, a boardroom takeover, and a spy scandal.
The reporting on this incident is taken from Hans Greimel and William Sposato’s latest book, “Collision Course: Carlos Ghosn and the Culture Wars That Upended an Auto Empire,” which was released by Harvard Business Review Press.
How Carlos Ghosn Became A Corporate Superstar Before Getting Away
In Japan, Carlos Ghosn made his debut as a daring young auto executive. He rose to the position of CEO of two automakers and became a corporate legend. Now he is on the run. Carlos Ghosn speaks to us about his ascent and decline.
HOST AILSA CHANG
BYLINE: CURT NICKISCH Everything began in 2018, when Carlos Ghosn was detained by Japanese authorities and accused of concealing his compensation and squandering corporate funds. Ghosn was accustomed to traveling the world in a private plane and lodging in luxurious mansions while working as the CEO of Nissan. He was currently imprisoned in a cell.
NICKISCH: Yann Rousseau of the French business publication Les Echos paid Ghosn a visit while he was incarcerated in Tokyo.
ROUSSEAU: He was that way because of his grayer and messier hair. He was still quite classy, though.
Ghosn was likely the best-known CEO in Japan, according to NICKISCH. He was so effective in turning around Nissan’s financial situation that he accepted a second position as CEO of French automaker Renault. Both employers paid him highly because they didn’t want to lose him. Rousseau, though, claims that Ghosn’s hefty salary was unpopular in France.
It’s a scandal for the French, says Roussel. The workers, the unions, and the politicians in France are all grumbling. It’s excessive.
NICKISCH: Ghosn’s salary in Japan may have contributed to his downfall. There, executives typically don’t receive huge compensation packages. Former ambassador Sadaaki Numata is shown here.
SADAAKI NUMATA: It has been reported that in Japanese culture, a protruding nail is immediately driven in. Someone does stand out if they have too much money.
NICKISCH: A new law requiring the disclosure of executive pay is introduced in Japan in 2010. Carlos Ghosn earned $10 million at Nissan that year, it turns out. The top automaker in Japan, Toyota, didn’t even pay its CEO $1 million. Ghosn has thus been defending his compensation to press and Nissan shareholders for years. The arrest of Carlos Ghosn follows in 2018. Japanese prosecutors portray Ghosn as a rapacious executive who planned to pay himself millions of dollars secretly. However, the case is never tried. Ghosn runs away. He sneaks onto a private jet in a music equipment box and takes off for Lebanon, where the Japanese government is powerless to stop him. When we spoke with him, he bragged about it.
It was successful because it was incredibly daring, says Carlos Ghosn. That you would dare to do something like this would not have been suspected.
NICKISCH: According to Ghosn, who maintains his innocence, he left Japan because he believed he wouldn’t receive a fair trial. He acknowledges that as CEO, he violated Japanese customs but not laws, and that he deserved big remuneration since he produced outcomes.
GHOSN: There is a demand for CEOs. What the market is willing to pay for CEOs also constitutes what is fair. Therefore, I agree far more with American compensatory theory than I do with Japanese or French philosophy.
CHANG: The host of the “HBR IdeaCast” podcast, Curt Nickisch, collaborated with Planet Money to produce this piece.
Tohro Saikawa
Saikawa, a lifelong Nissan employee, rose through the ranks before being named CEO in 2017. Following Ghosn’s arrest, Nissan and its executives came under fire for alleged financial mismanagement, especially in relation to Ghosn’s pay. Saikawa acknowledged collecting $440,000 in excess pay in September 2019 and attributed it to an accounting error. A few days later, he announced his resignation.
Ghosn: Nissan sought “autonomy,” but is now struggling as a “boring, mediocre” automobile manufacturer
Carlos Ghosn, a former chairman of Nissan, claims that Nissan misses out on technological innovation because it is unwilling to form partnerships.
Carlos Ghosn, a former car executive who is now on the run, criticized Nissan and revealed why the Japanese government did not like the global auto alliance he formed.
Ghosn said on Wednesday that Nissan “came back to what it was in 1999, sadly, after 19 years of labor, as a boring and mediocre automotive manufacturer, which is going to be battling to try to find its place in the car industry.”
He continued, “We were developing a structure where this company would be a part of something radically new with a great deal of technological innovation.
In his latest book, “Broken Alliances,” former executive Carlos Ghosn describes his attempts to bring the three automakers together so that readers would “hear the story told by me” and “understand what occurred.”
“The French government was operating in a way to have a much higher share in their say of this alliance,” Ghosn said, adding that “the Japanese government and certain Japanese businesspeople thought that this balance existing between the French and the Japanese in this alliance would not be honored.”
Ghosn was initially detained in 2018 for allegedly underreporting his income and falsifying securities reports.
Greg Kelly, a former executive vice president from the United States who worked for Nissan, is also on trial for failing to disclose all of Ghosn’s remuneration. He and Ghosn have both strongly maintained their innocence.
Nissan scandal: Carlos Ghosn is the primary offender, says a Tokyo court
After learning about the Nissan incident, Carlos Ghosn went from being a well-known leader in the automotive industry to becoming a wanted man.
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The Tokyo District Court has ruled that the principal offender in the controversy involving the Japanese automaker is fugitive former Nissan Motor chairman Carlos Ghosn. The court has attributed the high-profile scandal that shook the global car industry to Ghosn’s greed and the automaker’s poor governance. Ghosn has been charged with omitting his profits from important stock market disclosures. He was charged with underreporting Carlos Ghosn’s compensation by over $79 million in the financial reports between the fiscal years 2010 and 2017, along with former Nissan executive Greg Kelly. According to Nikkei, Nissan has been penalized 200 million yen by the court for the fraud.
After learning about the Nissan incident, Carlos Ghosn went from being a well-known leader in the automotive industry to becoming a wanted man. The crisis was also heightened when Ghosn left Japan in 2019 following his arrest alongside Kelly in November 2018. In December 2019, Ghosn managed to leave Japan while under house arrest and enter Lebanon. But he keeps insisting that he did nothing wrong.