A decade into Ghosn’s tenure, Nissan starts missing his goals for growth, profits, and electric vehicle sales. Then a devastating earthquake and tsunami in Japan and a self-made crisis at Renault in France test his leadership. Who is holding Ghosn accountable?
In part three of a special, four-part series, host Curt Nickisch explores the cracks that appear in Ghosn’s track record. Did his aggressive performance targets harm Nissan in the long run? Was Ghosn stretched too thin, running two global companies eight time zones apart? Was anyone pushing back on his decisions? And after two decades leading the Japanese and French automakers, what was Ghosn’s succession plan?
NOTE: If you haven’t listened to the first or second episodes yet, we recommend you start there. The series begins with episode 800 of the HBR IdeaCast podcast.
These episodes ask how Carlos Ghosn went from being one of the world’s most admired CEOs to a fugitive from justice. What went right — and wrong — during Ghosn’s time leading Nissan and Renault? And what can we learn from it?
This special series is inspired and informed by the new book Collision Course: Carlos Ghosn and the Culture Wars that Upended an Auto Empire.
This episode was produced by Anne Saini. Contributing reporting from Tokyo by Collision Course coauthors Hans Greimel and William Sposato.
Editing by Scott Berinato, Maureen Hoch, and Adi Ignatius. Sound engineering by Tim Skoog. The team includes Sally Ashworth, Adam Buchholz, Rob Eckhardt, Ramsey Khabbaz, Scott LaPierre, Christine Liu, Melinda Merino, and Karen Player.
[SOUND OF MAY 2011 CARLOS GHOSN VISIT TO NISSAN’S IWAKI FACTORY IN JAPAN]
CURT NICKISCH: On a spring day in 2011, Carlos Ghosn put on a white hardhat with Nissan in red letters. He was at the company factory at Iwaki in Japan.
SOUND OF CARLOS GHOSN AT THE IWAKI FACTORY IN 2011: OK, let’s go.
CURT NICKISCH: And he pushed a button to start up a machine that makes engines for luxury sedans.
SOUND OF CARLOS GHOSN AT THE IWAKI FACTORY IN 2011: Five seconds. Good. It’s working now?
SOUND OF WOMAN AT THE IWAKI FACTORY IN 2011: OK, yeah, it’s started.
CURT NICKISCH: In his years of running car companies and tire companies, Ghosn has walked many a factory floor. But this tour was different. Iwaki is in the Fukushima Prefecture of Japan. It’s about 50 kilometers from the Fukushima Daiichi nuclear power plant. And two months earlier, on March 11, 2011, the same earthquake and tsunami that caused a nuclear crisis at that plant damaged this facility in Iwaki as well. Ghosn had visited this Nissan plant on March 30th, nearly three weeks after the disaster. Now he was back again in May.
SOUND OF CARLOS GHOSN AT THE IWAKI FACTORY IN 2011: I think the first time I came here, there were barely anybody in the plant. As you remember, there were a lot of fear about the radiation coming out of the Fukushima plant. I mean, the ground was completely torn. We had pipes hanging from the roof. Shatters everywhere. There was no light. There was no water. There was no fuel. I am today standing in the plant, as you know, the light is back. There’s no problem of water. They are at 100 percent capacity restored.
CURT NICKISCH: After the tour, Ghosn presented a reconstruction award to the plant manager.
[SOUND OF MAY 2011 CARLOS GHOSN VISIT TO NISSAN’S IWAKI FACTORY IN JAPAN]
CURT NICKISCH: And he told the line workers that they are a model of Japanese resilience.
SOUND OF CARLOS GHOSN AT THE IWAKI FACTORY IN 2011: Iwaki plant became Nissan symbol of swift recovery, resolute approach in front of adversity. And I would say, in a certain way, became a little bit a symbol of Japan, how Japan has reacted.
CURT NICKISCH: You would think that after bringing a Nissan out of a crisis once before, leading a rescue that restored a bit of the national psyche, that Carlos Ghosn was just the leader to handle another severe crisis. According to his chief planning officer, you’d be wrong. Andy Palmer says it was a breaking point.
ANDY PALMER: This gap, this cavern started to open. And it was a perception of a big gap between Ghosn and the way that he behaved, and the way that the rest of the company was behaving.
CURT NICKISCH: Rather than galvanizing the company, Palmer says the earthquake and tsunami is when Carlos Ghosn started losing the trust of his employees.
ANDY PALMER: There were always discussions about, “Why do we need the French? We’re profitable than Renault. Why do we have to be subservient? There is no commonality. Any savings are basically to the benefit of Renault. We have to buy their stupid diesel engines, and they charge us a lot for them.” And many, many, many of those things were just wrong. But those voices grew in the company. And that’s where the chasm, as I would call it, that enormous respect just waned away to a point of often no respect and quite often quite the opposite.
CURT NICKISCH: Ghosn had been hailed as a savior of the company. Why was there a backlash brewing against him? This is The Rise and Fall of Carlos Ghosn, a special series of the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch. Now, this is the third episode in a four-part series. If you have not listened to the first two yet, I recommend you go back and listen in order. Part One is Episode Number 800 of the HBR IdeaCast. In this episode, we’re going to learn more about Carlos Ghosn’s longer-term management of Nissan. When does his amazing track record start to erode? And what are the consequences of that? We want to know what turned one of the world’s most visionary CEOs into a fugitive?
CURT NICKISCH: In the last episode, we heard how Carlos Ghosn was out front in the auto industry, committing to electric vehicles.
HANS GREIMEL: Ghosn, in typical speedy fashion, was ahead of the curve. He wanted a revolutionary approach.
CURT NICKISCH: That’s Hans Greimel, the Asia editor for Automotive News, and a co-author of a new book on Ghosn called Collision Course.
HANS GEIMEL: Well, he was, at the time, in 2010 or when he was rolling out his EV [electric vehicle] strategy, he anticipated selling 1.5 million EVs globally, that’s between Renault and Nissan, by early 2017. And that, you know, that’s an amazing amount of vehicles for electric vehicles at the time.
CURT NICKISCH: Ghosn’s big strategic bet invested billions of dollars to create three global production centers for the LEAF, Nissan’s electric car – one in Europe, one in Japan, and one in the United States.
HANS GREIMEL: Well, they ended up barely selling 500,000 by 2017 cumulative. So they missed that goal by almost a million vehicles.
CURT NICKISCH: That’s a monstrous miss for someone like Carlos Ghosn. When he came to Japan in 1999, he changed the culture at Nissan to deliver on commitments. He even promised to quit if the revival plan fell short.
JOHN HARRIS: Performance targets were everything to Mr. Ghosn.
CURT NICKISCH: His speechwriter, John Harris, says Ghosn was the most disciplined executive he ever worked with. He remembers the only time he ever saw Ghosn come close to showing a flash of anger was for numbers that missed the target.
JOHN HARRIS: Back before he could do things like we’re doing now, video conferencing, before Zoom, they had a special room in Nissan’s headquarters with special video hookups.
CURT NICKISCH: Ghosn, his personal assistant, the head of PR [public relations], and Harris were all watching these video links, as company units around the world reported their results.
JOHN HARRIS: And it became obvious over the course of the two hours we were there that Nissan was not going to make its numbers for the year. He [Ghosn] wasn’t going to make the targets. And he turns to us, and he says, “This company is full of bullshitters.” And he said, “OK,” he turns to me, and he says, because I had to write the financial disclosure speech, he says, “OK, make it concise. Make it factual. But not too contrite.”
CURT NICKISCH: Nissan’s performance starts noticeably slipping around 2010/2011, according to a number of people we talked to. That’s a decade into Ghosn’s leadership of the company.
HIROTO SAIKAWA: The first ten years were so impressive, so remarkable. And of course, I learned a lot, and we achieved a lot.
CURT NICKISCH: That’s Hiroto Saikawa, who would succeed Ghosn as Nissan’s CEO years later.
HIROTO SAIKAWA: After the earthquake in Japan, it’s not so remarkable, compared to the first part. This is a kind of period of struggle. And that makes his leadership not as shiny.
SOUND OF CARLOS GHOSN’S SPEECH AT NISSAN’S ORDINARY GENERAL MEETING OF SHAREHOLDERS ON JUNE 29, 2011: Reviewing Nissan’s business performance in fiscal year 2010, I am pleased to report that it was a record year for Nissan in terms of sales and growth.
CURT NICKISCH: At the annual Nissan shareholder’s meeting in 2011, Carlos Ghosn detailed a new long-term plan with clear and zealous performance targets.
SOUND OF CARLOS GHOSN’S SPEECH AT NISSAN’S ORDINARY GENERAL MEETING OF SHAREHOLDERS ON JUNE 29, 2011: This new midterm plan is a wide-ranging, demanding plan, offensive plan for fiscal years 2011 to 2016 that will accelerate Nissan’s growth. The name of our new plan is Nissan Power 88. We aim to achieve a global market share of eight percent, and we will increase our corporate operating profit margin to a sustainable eight percent.
CURT NICKISCH: These are significant numbers. Eight percent global market share would make Nissan number one in the world. Hans Greimel says this was vintage Carlos Ghosn.
HANS GREIMEL: Power 88 was really a kind of a pole vault jump for Nissan that was going to kind of leapfrog to the top of the pack in the global auto industry.
CURT NICKISCH: And at the time, those huge volume and profitability goals did not seem impossible, considering what Nissan had already accomplished under Ghosn. But Hitotsubashi University professor Masako Egawa says Ghosn should have paid more attention to the law of diminishing returns.
MASAKO EGAWA: The possibility of being able to squeeze costs became smaller and smaller.
CURT NICKISCH: Professor Egawa says that when Ghosn first turned Nissan around, there was a lot of low-hanging fruit. Remember her Harvard Business School case study? Nissan employees called the cost cuts they had to suggest obvious in hindsight. Well, she says it was getting harder for “Le Cost Killer” to find additional savings to help drive that eight percent profitability goal.
MASAKO EGAWA: Ghosn had a very aggressive plan. You know, if [a] normal executive was in that situation, he may try to compromise to a more reasonable, maybe smaller growth. But Carlos Ghosn is a very aggressive achieving person, so he kept on going. And that made it difficult to deliver on his commitment.
CURT NICKISCH: Those aggressive goals may actually have made things worse, says Hans Greimel.
HANS GREIMEL: Nissan simply overstretched itself. Not only Nissan, but Renault. They were chasing volumes that they could not keep up with. They were over-investing in factories to produce volumes – volumes that they could never really sell. And in order to push that metal, as we say in the industry, they had to lure buyers with discounts, incentives, basically cheapen their product.
CURT NICKISCH: And once you’ve done that, you’ve kind of lowered your ceiling. It was hard for Nissan to raise its prices after that.
HANS GREIMEL: And that, in the long run, undermines the profitability of the brand, and that’s what came back to bite Nissan.
CURT NICKISCH: Former Renault CEO and chair, Louis Schweitzer, gives another example of Ghosn’s track record as a strategist.
LOUIS SCHWEITZER: He got very excited about electric vehicles, which clearly are the future. But in strategy, timing is essential. And there his timing was wrong. And he got carried away.
CURT NICKISCH: The challenge, Schweitzer says, is that Ghosn needed to manage Nissan differently in the long run.
LOUIS SCHWEITZER: I mean, if you manage people for ten years, you do not manage them in the same way as during a time of crisis, as in the case of a turnaround. And secondly, in [the] long term, what is important, I would say is the ability to look back, look to the future, listen, think. And there I believe the quality which made him such an exceptional turnaround man, in a way impeded his ability to be a long-term strategist.
CURT NICKISCH: Now, to be fair, long-term strategy is extremely hard for any global auto company CEO. Very few nail it on the head. I mean, the choices for your organization are endless. Do you expand into trucks? Or should you sell off adjacent businesses? Do you enter new markets? When and where? How much should you invest in China? You’ve also got government and environmental regulations. Steel and aluminum prices are bouncing around. There are complex supply chains and disruptive technologies to manage, like autonomous driving. Do you partner, or do you develop in-house? When do you team up with competitors? When do you take them head-on? Strategy runs the gamut. Carlos Ghosn had to answer all those questions for Nissan. He also had to answer all those questions for Renault.
CHARLIE ROSE ON THE CHARLIE ROSE SHOW IN 2014: Do you have a secret to jet lag?
CARLOS GHOSN ON THE CHARLIE ROSE SHOW IN 2014: No. Unfortunately, there is no secret. The only secret —
CURT NICKISCH: On an appearance with Charlie Rose with the U.S. broadcaster PBS, Ghosn shared a picture of his life via the Nissan company jet.
CARLOS GHOSN ON THE CHARLIE ROSE SHOW IN 2014: Because you know, when you’re traveling the whole time, because I’m every month in Paris and in Tokyo, people don’t care if you are jet-lagged or if you are coming out of a plane. They see the CEO, and they just want him to be fresh and ready to make decisions, etc.
CHARLIE ROSE ON THE CHARLIE ROSE SHOW IN 2014: And they want his ear, so they want their time with him.
CARLOS GHOSN ON THE CHARLIE ROSE SHOW IN 2014: Exactly. And it has to be quality time. So you will just need a lot of self-discipline and organization.
CHARLIE ROSE ON THE CHARLIE ROSE SHOW IN 2014: You plan ahead by 15 months.
CARLOS GHOSN ON THE CHARLIE ROSE SHOW IN 2014: Yeah, I have a schedule which is practically defined for the whole year of 2015.
CURT NICKISCH: That’s a tangible thing that starts to change. Ghosn spends fewer and fewer days in Tokyo. He’s almost living on a plane. Those Nissan executives who find Ghosn inspirational, they just don’t get the same one-on-one time with him anymore. I mean, his schedule is booked 15 months out. And there’s something else that happens around this time that will prove to be important later. Japan passes a law in 2010 requiring companies to disclose compensation above 100 million yen, roughly $1 million. Professor Egawa says, suddenly people were looking at Nissan’s performance and looking at Ghosn’s pay.
MASAKO EGAWA: The problem was that Nissan’s performance after around 2011 wasn’t stellar. And in a way, the level of compensation was getting out of hand compared to how the company was doing, I think.
CURT NICKISCH: Yeah, it was the wrong time to ask for a raise.
MASAKO EGAWA: That’s correct.
CURT NICKISCH: Still, Ghosn was paid in more than one currency. And I don’t just mean in euros, as the CEO of Renault. But in other currencies that don’t show up on paper as salary.
RÉGIS ARNAUD: Japanese company are famous for not paying well their executives, but what people usually don’t see is that they cost a lot to the company.
CURT NICKISCH: Régis Arnaud is the Japan correspondent for the French newspaper, Le Figaro. And he says, Japanese companies traditionally cover a lot of living expenses, homes, restaurant bills, maybe the education of the kids, a company car, and yeah, the company plane. He says, Carlos Ghosn used this system extensively.
RÉGIS ARNAUD: I mean, his house in Paris, in Paris, was paid by Nissan. His house in Lebanon, the rent was paid by Nissan. In Brazil, it was paid by Nissan. So he really stretched it to the limit. In Japanese company, you should look at what the executive costs, not what you pay him. And Carlos Ghosn was kind of playing on both sides of this. He was getting quite high salary by [the] Japanese standard. There were years he was the highest-paid executive in Japan. And at the same time, a lot of his lifestyle was taken care of by Nissan.
CURT NICKISCH: That did not go unnoticed. Chief Planning Officer Andy Palmer says he heard Nissan employees questioning Ghosn’s use of company resources.
ANDY PALMER: Using your jet to go to New York when we didn’t have anything really in New York, or the parties at the Versailles Palace, which no employees were invited to.
CURT NICKISCH: And then came Fukushima, the earthquake and tsunami and nuclear incident in early 2011. Two factories were damaged, and nearly 20,000 people died in Japan, including family members of Nissan employees.
ANDY PALMER: I was in Japan that day, with Saikawa, actually, on the 23rd floor of the [Nissan] building, and it was one of two times in my life where I thought I was going to lose my life. It was very, very scary.
CURT NICKISCH: Where was Ghosn? He was not in Japan, which wasn’t unusual. Still.
ANDY PALMER: Ghosn didn’t come. Ghosn wouldn’t come. He claimed that his aircraft wasn’t allowed to land. It was wrong. I mean, other people were flying in and out. They were flying commercial. He could have flown commercial. If he had really wanted to get into the country, he could have made it, and everybody knew that. And he didn’t come for a number of weeks. And then when he came, it was as if he was the savior, and he had lots of PR around about how he’d solved issues. He didn’t.
[Editor’s note: In our interview with Carlos Ghosn, we asked him about this criticism from Palmer. Here’s an excerpt of that interview transcript:
CURT NICKISCH: Andy Palmer told us that it was a while before you came back to Japan after the Fukushima disaster. He cited that as an example of perhaps a perception that there was a lack of investment or not 100% focus on Nissan. What would you say to that?
CARLOS GHOSN: Well, when Fukushima happened, I was, I remember it was a day of an executive committee of Renault in France. I was in France. I wanted to come back to Japan, but I was told that the airports were closed and I could not attend. And that’s one, that’s the only reason for which I was not able to come back to Japan…
…I was probably the first one to come in Japan in my airplane when I was authorized to do it. And I was the first one to go in Fukushima, near Fukushima, in the Iwaki plant to establish it. And I committed that we would rebuild the plant. And this was totally covered by the Japanese press as an example of the leadership that the CEOs of companies should take into rebuilding Japan.]
CURT NICKISCH: Coming up after the break.
LOUIS SCHWEITZER: My first reaction was in French, of course: Quelle connerie! But you could translate it in, “How stupid!”
CURT NICKISCH: That’s when The Rise and Fall of Carlos Ghosn continues.
CURT NICKISCH: Probably the closest that Carlos Ghosn ever came to losing his job was in the first week after the earthquake and tsunami in Japan. But it wasn’t because of the crisis in Asia. It was a crisis in France. Three days after the earthquake, on March 14, 2011, Ghosn went on French television channel TF1 to try to save face.
CARLOS GHOSN SPEAKING IN FRENCH ON TF1 ON MARCH 14, 2011: Je me suis trompé, nous nous sommes trompés et d’après les conclusions —
CURT NICKISCH: “I was wrong. We were wrong,” he said. And he apologized to three senior executives of Renault by name and told them they could have their jobs back.
CARLOS GHOSN SPEAKING IN FRENCH ON TF1 ON MARCH 14, 2011: C’est présenter mes excuses personnelles, et au nom de Renault, à Michel Balthazard, à Matthieu Tenenbaum, et à Bertrand Rochette et ainsi qu’à—
CURT NICKISCH: Why was Ghosn apologizing to three employees of Renault in primetime in France, while eight time zones away Nissan factories were facing an emergency? Well, a month and a half before this TV appearance, Ghosn was sitting in the same seat in the same TV studio, accusing those same three executives of spying for China. In that interview, he spoke of the certainty that the three were selling manufacturing secrets of the electric car. Turns out they were not industrial spies. It was just a scam by low-level security employees at Renault to extort money. French politicians criticized Ghosn for rushing to judgment and called on him to resign. And watching from the sidelines, Louis Schweitzer had to agree.
LOUIS SCHWEITZER: OK. Now, from the start, this was completely senseless because in the car companies there are no secrets. I mean, you know, you try to hide your future models, but it’s not worth more than a few thousand euros.
CURT NICKISCH: To Schweitzer, this whole spy story just never added up. And he says Ghosn made it worse by accusing the executives on television. We heard how in the past Ghosn would go off script with reporters, but this was way more serious. You have to be 100 percent sure of the facts.
LOUIS SCHWEITZER: One of the strengths of Ghosn, when he was turning the company around, was that he was clinging to the figures, to the facts, etc.
CURT NICKISCH: To Schweitzer, this was no longer the super-rational, disciplined executive that he had mentored, and he was very worried. So that’s why he went to Renault’s board and tried to have Ghosn removed.
LOUIS SCHWEITZER: Well, it was a fairly limited effort. I went to some board members and told them, I felt it had proved that– I mean, let’s say things simply. The spy case meant he had lost touch with reality.
CURT NICKISCH: So you saw this happening, and you tried to influence the board. That was unsuccessful.
LOUIS SCHWEITZER: And not because of Renault, but because of the idea that if we changed Ghosn, we would lose Nissan, which was, I believe was not true, but that was the strongest argument. I mean, in France, it was, without Ghosn, we lose Nissan.
CURT NICKISCH: It bears repeating. Renault owned 44 percent of Nissan. Ghosn was the devil Renault knew. If Ghosn was removed, Renault would get the devil it didn’t know, probably a Japanese CEO of Nissan, maybe one who would break up the alliance between the two companies. That Ghosn’s very public lapse of judgment happened a good five years after Louis Schweitzer left Renault wasn’t a surprise to Le Figaro Japan correspondent Régis Arnaud.
RÉGIS ARNAUD: The only person Carlos Ghosn was afraid of was Louis Schweitzer basically. He would not cut [off] Louis Schweitzer in the middle of a sentence. He would just listen because he knows what he owes to Louis Schweitzer, and he understands that Louis Schweitzer has a very wide view that Carlos Ghosn doesn’t have. So when Louis Schweitzer goes away from business, Carlos Ghosn loses the only counter-power, the only opposing voice that was still around him.
CURT NICKISCH: Schweitzer wasn’t the only long-time colleague that Ghosn had lost. In the decade after the Nissan revival, many of the key team members in that turnaround had moved on as well, says Yann Rousseau. He’s the Tokyo bureau chief for the French business daily, Les Echos.
YANN ROUSSEAU: When Ghosn comes to Japan, Ghosn has a team of musketeers who come with him, and they also can talk with Ghosn very frankly. Some of them will, you know in French, we have a different level of talk. You can [SPEAKING IN FRENCH] tutoyer. So you can say, we use a certain type of “you” that is very familiar. And at the time a few guys in this team talked like that to Ghosn, very directly. And this turns after 2008/2009, they all turn to very formal exchange. So slowly by slowly, you have no more people who can talk, nobody at Renault, nobody at Nissan dared to talk frankly to Carlos Ghosn or criticize him or go against one of his decisions.
CURT NICKISCH: That jives with what Nissan executive team member Andy Palmer told us.
ANDY PALMER: You could hint. You could try and point him in a certain direction. But was somebody ready to have that straightforward, honest discussion? I doubt it. I don’t think so.
CURT NICKISCH: Did you try?
ANDY PALMER: I didn’t. I didn’t.
CURT NICKISCH: Now, in corporations today, there is another group of people who can look over the CEO’s shoulder and say, “Hmm, you might want to rethink that decision.” And that’s the company’s board. Ghosn had two of them. Right? The Renault board and the one at Nissan.
KEIKO OHARA: I think the board wasn’t functioning in the way it should have been.
CURT NICKISCH: That’s Keiko Ohara. She’s a corporate lawyer in Tokyo.
KEIKO OHARA: Japan, I think, is not that great about checks and balances. I think the system is built to kind of trust in the human nature – they’re fundamentally good people, so they have good intentions.
CURT NICKISCH: And that’s actually not unfounded. Ohara says that many corporate scandals in Japan don’t come from individuals trying to enrich themselves. Instead, it’s much more common for people to get caught cooking the books trying to make the company look better. In 2015, though, Japan passed a new corporate governance measure to give boards more oversight. The new rules required more outside directors – that’s people who don’t work for the company. This would make Japanese company boards more in line with boards of Western companies. Here’s Professor Masako Egawa.
MASAKO EGAWA: So I was very surprised when I happened to take a look at Nissan’s board composition, and I was very surprised that, in 2015, Nissan didn’t have any independent directors. The company had only two outside directors, but those are executives from Renault. So they are not independent.
CURT NICKISCH: And the idea behind having outsiders on the board is that they can question what’s happening. Hiroto Saikawa was in some of those Nissan board meetings.
HIROTO SAIKAWA: At that time the board [meetings] was very concise and short because, in many cases, most of the people are sitting in the executive committee of Nissan, so they knew how things are going. And they just have to decide what we have to decide as a board.
CURT NICKISCH: How concise? How short? The minutes of these board meetings are not public, but board members have reported that they averaged less than 30 minutes. Tokyo-based journalist Hans Greimel says Nissan’s board has been criticized for rubber stamping Ghosn’s decisions. However,
HANS GREIMEL: The flip side would be that, you know, in Japan, a typical way of having these meetings is not to have the meetings to debate the facts, but really just to decide on policy and direction. There’s a term in Japanese called nemawashi, which means kind of stirring the roots. And that refers to doing all the background negotiation and discussion and getting everybody aligned outside of the meeting.
CURT NICKISCH: Even so, there are signs that the board was not exercising enough oversight. Journalist Yann Rousseau gives one example. He says, Ghosn had invested Japanese yen in a currency swap with a Tokyo bank, and that became a problem at one point during the financial crisis.
YANN ROUSSEAU: And the bank’s calling him and saying, “Mr. Ghosn, we have an issue with your position because the collateral you gave us are not enough now to cover your potential loss.” So he’s panicking. He has to find a way. He doesn’t have the assets himself to protect those collateral. So he has to find a lot of money very fast.
CURT NICKISCH: Rousseau says that Ghosn went to the Nissan board to get the company to back his personal investment.
YANN ROUSSEAU: Which is a very strange move. But the way he does it, he got the board to meet for a few minutes. He says, “Oh, some our staff, some of our foreign staff, might suffer from the currency collapsing and everything. So Nissan could sometime, in certain occasion, under certain circumstances, help those foreign executives who work at our company.” The board will vote for that within two minutes.
CURT NICKISCH: Within a few weeks, company auditors speak up, and Nissan stops backing Carlos Ghosn’s personal investments. But for many, this is a sign that the board is not paying enough attention. And Hans Greimel says there’s another indication that the board was giving Ghosn too much leeway.
HANS GREIMEL: At Nissan, it seems by all appearances that he was basically in charge of his own pay.
CURT NICKISCH: He says, Japanese prosecutors have presented evidence: compensation discussions with Ghosn’s handwriting on them.
HANS GREIMEL: We see documents where Ghosn is discussing his post-retirement packages, and he goes through and just crosses out numbers and jacks them up by millions of dollars, or exes out percentages and simply boosts the percentage of his payout.
CURT NICKISCH: Pretty hands-on. Right? Taking a marker to the numbers.
HANS GREIMEL: Right, literally taking a marker to the numbers, crossing them out with his handwriting, and writing in the new number on top of it. And usually, that new number is up, not down.
CURT NICKISCH: Now, there might be good reasons why Nissan’s board wanted to keep Carlos Ghosn on and keep paying him well. Greimel says that Nissan saw him as a protector of the company’s independence in the alliance with Renault – especially after 2018, when Renault renewed Ghosn’s contract for another four years with a mandate to make the alliance “irreversible.” Greimel says that Ghosn was playing both sides.
HANS GREIMEL: I mean, he was the link, the common denominator for both companies for nearly 20 years. And in that sense, he positioned himself and became indispensable as the glue that held them together.
WILLIAM SPOSATO: There is a clear potential conflict of interest because you could take actions that would benefit one of the companies at the expense of the other.
CURT NICKISCH: That’s William Sposato, who wrote the new book on Ghosn, with Greimel, called Collision Course. He says as Renault pushed to merge the companies more than they were already, hard decisions had to be made.
WILLIAM SPOSATO: Where do you build cars? Who gets the money for the investment? And this is probably where the French government also came in. They wanted as many cars as possible made in France. They wanted to help their workers. But at the end of the day, a legal expert pointed out, that it’s not a conflict of interest if both parties agree that it’s not a conflict. And in this case, both sets of boards said, “Yes, we’re happy with the idea that our CEO, or chairman later, is running these two companies, and we see our interests as aligned.”
CURT NICKISCH: And Carlos Ghosn wasn’t just running two companies anymore. In 2016, Nissan bought a large stake in Mitsubishi. The Renault-Nissan Alliance became the Renault-Nissan-Mitsubishi Alliance. Carlos Ghosn became the chair of Mitsubishi. Now, he was the main line of communication between three companies, with no retirement date set.
YUUICHIRO NAKAJIMA: One did notice that he was in position, had been in position, for a long, long time.
CURT NICKISCH: Yuuichiro Nakajima was all too disappointed by this. He’s the merger and acquisitions expert we heard from in the first episode, who was so excited when Carlos Ghosn came on the scene in 1999 and woke Nissan from its slumber. Nakajima was hoping for more foreign executives to come to Japan and shake things up. But instead of more Carlos Ghosns, he just got a lot of Carlos Ghosn.
YUUICHIRO NAKAJIMA: It was 18, 19 years, and one does now wonder whether he was just going to carry on as a sort of a king without heir.
CURT NICKISCH: That king’s reign ended on the 19th of November 2018. Carlos Ghosn was detained at Tokyo’s Haneda Airport after arriving on the Nissan company jet. And that very same day, the French embassy in Tokyo held a party celebrating the French-Japanese friendship. The guest of honor, none other than Louis Schweitzer, who had flown in from Paris for the ceremony. It’s there that the news of Ghosn’s arrest starts trickling in – allegedly for hiding his pay.
LOUIS SCHWEITZER: My first reaction was in French, of course: “Quelle connerie!” But you could translate it in: “How stupid!”
CURT NICKISCH: As the party goes on, the news gets worse. Also in attendance at the French embassy were journalists Régis Arnaud and Yann Rousseau.
RÉGIS ARNAUD: And as the party goes on, journalists and other people receive a press release saying that Carlos Ghosn has been arrested and basically that it’s good news for Nissan. And we realized that there is a real civil war within Nissan at that very moment.
CURT NICKISCH: Because if Nissan is putting out a press release right after Ghosn is arrested, spinning it as good news, then it’s clear that people at Nissan knew it was going to happen. Rousseau turns to Arnaud and says, “Let’s go show this press release to Schweitzer.”
YANN ROUSSEAU: He was standing up in the middle of the living room in the embassy. Everybody was waiting for the kanpai, you know, it’s the toast that everybody has in Japan at the end of a speech. So everybody has his glass of champagne in the hand. So we went to see Schweitzer, and he read on my smartphone the first press release that was sent out by Nissan that night. So he’s reading it slowly, taking off his glasses, go closer. And we asked him, “So is it a big news? Is it bad?” He says, “It’s much worse than that. If it’s true, it’s a catastrophe.”
CURT NICKISCH: Coming up in the next episode.
CARLOS GHOSN: My name is Carlos Ghosn. I used to lead the largest automotive group in the world, made by Nissan, Renault, and Mitsubishi.
CURT NICKISCH: We ask Carlos Ghosn to understand why things ended the way they did. That’s on the final episode of The Rise and Fall of Carlos Ghosn, a special series of the HBR IdeaCast from Harvard Business Review.
CURT NICKISCH: This episode was produced by Anne Saini. Contributing reporting from Tokyo from Hans Greimel and William Sposato. Their new book is Collision Course: Carlos Ghosn and the Culture Wars that Upended an Auto Empire. Our editors are Scott Berinato, Maureen Hoch, and Adi Ignatius. Sound engineering by Tim Skoog. Our team includes Sally Ashworth, Adam Buchholz, Rob Eckhardt, Ramsey Khabbaz, Scott LaPierre, Christine Liu, Melinda Merino, and Karen Player. I’m Curt Nickisch. Please join us for the next episode of The Rise and Fall of Carlos Ghosn, a special series of the HBR IdeaCast from Harvard Business Review.