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.
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Four charts on the crisis involving Nissan’s CEO, Carlos Ghosn
His arrest on suspicion of financial malfeasance marked the beginning of the story, which culminated in his dismissal from his position as chairman of Japanese automaker Nissan.
The controversy has cast doubt on the Alliance’s future as a leading global automaker that includes Renault, Nissan, and Mitsubishi.
Additionally, it has shown cracks in the extremely close bond between Nissan and Renault.
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.
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.
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Carlos Ghosn was a high-flying business captain and a superhero in the C-suite who assisted faltering automakers in France and Japan. Because of this, it was shocking when he was arrested on November 19, 2018, while serving as chairman of Nissan Motor Co. and CEO of Renault SA, in Tokyo on suspicion of financial malfeasance. Before being released on bail, Ghosn spent two extended periods behind bars. Throughout this time, he maintained his innocence and claimed the odds were against him. Then, in the latter half of 2019, Ghosn escaped Japan and sought refuge in Lebanon. Nissan has struggled to get past the crisis as a result of the aftermath, particularly after it was discovered that officials opposed to tighter integration with Renault had begun working to topple Ghosn almost a year before to his arrest.
Ghosn, 67, was charged with underreporting income and bonuses of nearly $80 million from Nissan’s fiscal years 2010 to 2014. (Ghosn’s remuneration had already come under fire in Japan, where discussing executive salaries is contentious.) In addition, he was charged with three counts of breach of trust, two of which claimed that he had transferred $5 million from Nissan into accounts under his control in 2017 and 2018 in order to buy a yacht and finance a technological investment firm founded by his son Anthony. The maximum sentence for the charges was ten years in prison. Having entered a not guilty plea, Ghosn’s trial was set to start in the first half of 2020.
Carlos Ghosn, the CEO of Nissan, was detained on suspicion of “significant” financial malfeasance.
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Carlos Ghosn, the chairman of Nissan and one of the most prominent executives in the auto industry, was detained in Japan after an internal probe uncovered “serious acts of misconduct” committed by him and another top executive over a long period of time.
The shocking news sent stocks of Nissan (NSANY) and Renault (RNSDF), where Ghosn also serves as chairman, plummeting, shattering a potent worldwide alliance.
One out of every nine automobiles sold worldwide is produced by Nissan, Renault, and Japan’s Mitsubishi Motors (MMTOF), which together make up the largest global automaking alliance. More than 470,000 individuals are employed by the three corporations in close to 200 nations.
Nissan said in a statement that it had been looking into Ghosn, a 40-year auto industry veteran, and another board member for months as a result of a tip.
At a press conference in Tokyo late on Monday, Nissan CEO Hiroto Saikawa stated, “These two individuals were arrested this evening, from what I gather.”
Ghosn, 64, and the other board member, Greg Kelly, were both detained on suspicion of making false statements in order to violate financial rules, according to Japanese authorities. The two men are accused of working together, according to the statement from the prosecution, to conceal Ghosn’s income for a five-year period ending in March 2015, to the tune of around 5 billion yen ($44 million).
Carlos Ghosn earlier this month visited a Renault factory in France. He is in charge of a partnership between the French manufacturer and Nissan and Mitsubishi Motors in Japan.
For submitting a fake financial statement, the maximum penalty in Japan is up to 10 years in prison and a fine of up to 10 million yen ($89,000).
Nissan claimed that its internal probe turned up “many more substantial acts of malfeasance,” including the use of corporate resources for personal gain.
At a meeting on Thursday, Nissan’s board of directors will be presented with a proposal by CEO Saikawa to “promptly dismiss Ghosn from his positions as chairman and representative director,” the firm stated. Additionally, he’ll try to get Kelly kicked from the board.
Three people were imprisoned for assisting the former CEO of Nissan in traveling from Japan to Lebanon, according to Carlos Ghosn
Ghosn, who is a citizen of France, Lebanon, and Brazil, is still at large and is still in Beirut.
ANKARA — In relation to their role in transporting former Nissan Motor Co. Ltd. Chairman Carlos Ghosn out of Japan during his escape to Lebanon little over a year ago, a Turkish court found an official of Turkish jet business MNG and two pilots guilty of smuggling migrants.
Despite the fact that they had already been held for several months, their attorney said they were not expecting to do any prison time until the court sentenced them to four years and two months in prison.
Charges against one flight attendant were dismissed, and two additional pilots and flight attendants were found not guilty.
Ghosn, who was once a shining star in the global auto industry, was detained in Japan in the latter part of 2018 and charged with underreporting his pay and using company cash for personal expenses; he has since denied the allegations.
When he fled to Beirut, his childhood home, in December 2019, the former head of the alliance of Renault, Nissan Motor Co., and Mitsubishi Motors Corp. had been under house arrest in Japan while awaiting trial.
Ghosn, a dual citizen of France, Lebanon, and Brazil, is still at large and is presently in Beirut, where he previously declared his intention to start a university business school. Japan and Lebanon do not share an extradition agreement.
Early in January 2020, Turkish authorities seized four pilots and an executive from Turkish private aircraft business MNG Jet, who had been accused of transporting migrants.
Erem Yucel, the attorney for one of the pilots found guilty, informed reporters that they would appeal the decision.
Pilot Noyan Pasin, who was convicted, said that neither employees nor officials in Turkey or Japan had seen any problems with the trip, therefore it was unfair to single out the pilots.
He told reporters, “We were condemned because we weren’t suspicious, even though we were expected to be suspicious.”
What happened to the CEO of Nissan?
In December 2019, Carlos Ghosn, the former chairman of the Nissan-Renault-Mitsubishi Alliance, traveled from Japan to Lebanon after being placed under house arrest there while awaiting prosecution for financial crimes. A few months later, there were rumors that the alliance’s companies may split apart, but this hasn’t actually happened yet. Ghosn, though, criticized Nissan for how it has changed since he left the carmaker in a recent interview.
In an exclusive interview with FOX Business, the 67-year-old Brazilian said, “Nissan returned back to what it was in 1999, sadly, after 19 years of labor, as a boring and mediocre vehicle manufacturer, which is going to be battling to try to find its place in the car industry.” “We were developing a system where this company would be a part of something entirely new with a lot of technical innovation,” the author said.
Ghosn just published a book named “Broken Alliances” in which he describes what precisely transpired in court, of course from his own perspective, to express his point of view in the 2019–2020 drama. He also has a hypothesis explaining why everything went wrong, and it is connected to the claim that the Japanese government was not really pleased with the international automotive alliance he established.
On Wednesday’s episode of Mornings with Maria, the former CEO said, “The Japanese government and several Japanese executives worried that this balance existing between the French and the Japanese in this partnership would not be honored.” The French government was operating in a way that would give them a far larger voice in this partnership.
Will things return to normal after the trial? Probably not, and Ghosn thinks there are no winners in this situation. “Japan’s reputation suffered. French defeat Nissan, Renault, Mitsubishi, and the shareholders all suffered losses.”