Long and winding road for fugitive Carlos Ghosn
He’s the world’s most famous international fugitive, the man who after 130 days in a Japanese prison spectacularly escaped late last year in a music box on a private jet, the man who used to run not one but two Fortune 500 companies — at the same time.
In an exclusive interview from Beirut for Sky News and The Weekend Australian, Ghosn, the former president of the Renault Nissan Mitsubishi Alliance, hits back at the Japanese prosecutor’s claims of financial misconduct involving more than $US100m ($137m), charges he denies, accusing his accusers of a conspiracy not just to get rid of him at Nissan, but to smear him so severely that he could never return to corporate life. And behind this conspiracy? Japan Inc.’s imperative to re-Japanise its auto industry.
On the afternoon of November 19, 2018, two years almost to the day, Carlos Ghosn was arrested after landing at Japan’s Haneda airport and taken to prison. He recalls a number of people all dressed in black. At 10pm, Ghosn’s hand-picked chief executive of Nissan, Hiroto Saikawa, called a televised press conference to announce that Ghosn has been arrested and would be removed at an upcoming meeting.
“I understood immediately that this was a trap,” says Carlos Ghosn. “This was a machination that had been prepared patiently, not only by some executives in Nissan but also by the prosecutor — and without any doubt, some members of the Japanese government.”
Ghosn’s great escape is a devastating loss of face for Japan. His new book “Time for the Truth” (released so far in French, with an English translation planned) is a page turner, a story that draws in French President Emanuel Macron and even touches Japanese Prime Minister Yoshihide Suga – two current leaders of the G7. Disturbingly, it opens the kimono on the so-called “hostage justice” system in Japan in a way that might put a chill through any globetrotting businessman.
What makes all this the best yarn since Atlas Shrugged is that until his arrest, Carlos Ghosn walked on water in global business circles. Born to Lebanese migrants in Brazil, fluent in four languages, he rose through the ranks of tyre maker Michelin in France and then drove a remarkable turnaround at Renault. In 1999, Renault rescued Nissan from the brink of bankruptcy by taking a 43 per cent stake. Nissan took 15 per cent in Renault. Ghosn moved to Japan and not only revived the Japanese carmaker but created the Renault-Nissan-Mitsubishi Alliance, the largest car manufacturer in the world with 10 million cars sold in 2017. He was chair and chief executive of Renault and Nissan and chairman of Mitsubishi.
The Ghosn method, his management philosophy, was celebrated by business schools. Davos loved him. By 2018, it was peak globalisation and peak Ghosn. His arrest shocked the world.
“I love Japan,” he says. “I love Japanese people, I spent 17 years there, but when you try to look into the hostage justice system which they have then you see the dark side of the country.”
Ghosn describes the “frozen hell of Kosuge”, a prison housing 2500 inmates. No one speaks English and there is but one translator. Showers are twice a week in winter. Over 130 days, Ghosn says he was kept alone, with a half-hour of exercise a day, and interrogated for four to five hours a day: “interrogation by the prosecutor without the presence of a lawyer”.
“You are put in a cell, barely heated, you sleep on a tatami, you have light day and night, they just don’t stop the light. There is always a good reason for everything in order to make you weak and willing to confess, to try to get out of the situation in which you are.”
Awaiting trial on bail in 2019, Ghosn was rearrested — in total four times.
He claims the collusion was clear from the start: the story of his arrest on the plane was faked — he was arrested in the terminal; before the press conference Saikawa had held an executive meeting where he had said he didn’t know what was going on. “A few hours later, he goes on TV and launches accusations, a lot of them not the object of charges brought against me — obviously a campaign to try to assassinate my character and reduce my standing in Japan.”
The charges against Ghosn grew while he was in prison, after the company seized documents and computers from offices and residences around the world. Ghosn denies all charges. Of the three main ones, the first — that he underreported the compensation he would make after retirement (think non-compete money and consultancy fees) — he says is frivolous, designed to jail him while the prosecutor looked for more. “How can you be responsible for declaring a compensation which was not decided and not paid?” he asks. “You had no guarantee you were going to receive anything because we were talking about amounts to be paid after retirement.”
The second charge is that Ghosn tried to get Nissan to pay for his foreign exchange losses after the financial crisis. “What they call the losses incurred by Nissan. They admitted themselves that there was not one penny paid by Nissan. We are talking about temporary accounting losses. This was a foreign exchange guarantee given by the company for an executive receiving his compensation in yen.”
The third allegation is that Ghosn took millions from fees paid to a Nissan dealer in Oman for his own private use, including for a yacht. Ghosn counters that he has all the evidence to prove otherwise. “They have opened all my bank accounts, all the bank accounts of the dealer, they never proved any transfer of money which substantiates their accusation, but the most staggering part is the fact that they continue to work with this dealer. If you think there is something really fishy in the relationship with this dealer, do you maintain trading, selling cars?”
So if there’s a conspiracy, then why? And who is behind it all?
To Ghosn, this is about economic warfare between France and Japan, and in its current iteration, Japan Inc. taking back control, back to the philosophy of Old Nissan before Ghosn arrived in 1999. “Why did they do it? It is because they just wanted to distance from Renault. They did not want further convergence at the level of the Alliance, and they did not want interference from the French state into operations which are Nissan operations. That’s the bottom line.”
In his book, Ghosn builds the case that resentment at Nissan about the Alliance structure had been growing as the carmaker had made inroads into emerging markets and became the biggest provider of profits. The Alliance was fragile. It relied on Ghosn’s vision that it was neutral, there to deliver synergies.
Yet that fragile balance had already been knocked by France in what Ghosn calls the “Macron Manoeuvre”. In 2015, while Emanuel Macron was industry and economy minister, the French government, angered by plant closures, decided to double its voting rights in Renault. Nissan, with a 15 per cent stake in Renault, had no voting rights. “I knew that the relationship was turning sour between the French government and the Japanese government on this issue,” says Ghosn, “because of the successful attempt of the French government to double their voting rights even though they were opposing any voting right from Nissan — which is something that triggered, in my opinion, the whole operation.”
In the months leading up to his November 2018 arrest, Carlos Ghosn was pushing the other way: not only working to make the Alliance irreversible (a mandate from Renault) but also pursuing an even broader Alliance to bring in Fiat Chrysler and deliver a new level of well-managed scale with further gains. For Ghosn, globalisation is something rational, while nationalism is something emotional. And that, he believes, was unacceptable for Japan Inc.
“At a certain time, one side of the Japanese officials in connection with the executives of Nissan said ‘OK, enough is enough’. We want to establish our autonomy and we are going to rebalance the relationship inside the Alliance. The first step for this is to get rid of the bearer of French influence in Nissan. And it was me. They said, ‘we need to get rid of him, and we need to destroy his reputation’ — because you can’t get rid of somebody who has been seen for 18 years in Japan as an example of good management, an example of successful globalisation, an example of collaboration between different companies. You need to destroy all of this.”
Unfortunately, when he was arrested, Carlos Ghosn became hostage to the Macron Manoeuvre. To pacify the Japanese, France had agreed that Renault would have no say on the Nissan board, despite its large stakeholding. Renault, and indeed much of the world, walked back from Carlos Ghosn.
President Macron did appeal to former prime minister Shinzo Abe about Ghosn’s treatment in prison. More interesting is the position of the current Prime Minister, Yoshihide Suga, whom Scott Morrison courted last week. In Ghosn’s book, Suga is linked to one of three main players in the conspiracy to bring him down: Nissan’s head of public affairs, Hitoshi Kawaguchi. It is claimed that Suga, as chief cabinet secretary, and Kawaguchi had a close relationship. According to the same source at Nissan, the common view is that Suga is covering the back of Kawaguchi.
“I don’t have any evidence to substantiate that,” admits Ghosn, who from 2016 nominated then Nissan chief executive Saikawa to take the lead in the government relationship. He stresses, though, that top-level meetings with the government were monthly. “Nothing happens in Japan without the nod from the Japanese government.”
Critics of Ghosn see the defence in his book, co-authored by his biographer Philippe Ries, as little more than what his lawyers have thus far laid out. Money was certainly spent, a lavish party in the Palace of Versailles for his wife’s 50th often cited, but also Nissan’s funding of the Ghosn’s various residences. Ghosn argues that for corporate entertainment in places like Brazil, it is far more practical to have a residence than an apartment given the complex security demands.
Were lines blurred? Most likely. And perhaps a man who became famous in France as “Le Cost Killer” could have been more conscious. After all, how comfortable would the French state (not a budget surplus since 1974) find the financialised capitalism that delivered Ghosn’s eye-watering pay cheque?
In Australia, some might call it “Le Tall Poppy” — take the Alliance’s private jet with tail plates of NI55AN. But perhaps too, the concept of a man with so much power beyond the nation state was too much for both France and Japan.
The biggest mistake of his life, according to the book, was to turn down an offer to run General Motors in 2009, at a rumoured $US54m ($74m) per year.
Friends of Ghosn’s say he was never part of the establishment. By his own admission he was not especially interested in politics — more talk than action — and never joined any of the official trips of the French president to which he was invited, or Japanese delegations.
Late December last year, just before New Year festivities, Carlos Ghosn left his house in Japan, where he was on bail awaiting trial. At a hotel, he met a former US special forces operative Michael Taylor. They took a bullet train to a Kansai International airport, where security was lax. In a band speaker box, Ghosn was smuggled out first to Turkey, then Lebanon.
It was a gigantic risk. Ghosn had celebrity status in Japan. He says the decision to escape was made out of despair. “My lawyers told me, ‘don’t expect a fair trial, this doesn’t exist here’. I’d seen the judge colluding with the prosecutor, who forbid me to talk to my wife, see my wife, talk to some of the children. I had absolutely no vision about when the trial would start, the fact that there would be two trials and they wanted to do one after the other. I saw myself in this process for more than five years just to get a trial and then after this, more than 10 years of prison. Even though I knew I was innocent, in Japan the statistics are brutal. In 99.4 per cent of the cases, the prosecutor prevails. This is the highest conviction rate in the world.”
During his imprisonment, billboards in Beirut splashed “We are all Carlos Ghosn” above a large mosaic portrait of the businessman. In June, Nissan’s attorney in Lebanon warned that Japan would veto IMF aid to Lebanon unless Ghosn was extradited. Nissan HQ hastily hosed the idea down.
Carlos Ghosn remains in Lebanon. In January, Interpol issued a red notice for his arrest. Still stuck in Japan is American Greg Kelly, Nissan’s former general counsel and a close associate of Ghosn. He was ordered by the company to fly into Japan from the US and arrested on the same day as Ghosn, also charged for not declaring compensation. In the US, Ghosn points to the settlement that both men have made over a similar allegation with the SEC: $US100,000 for Kelly and $US1m for Ghosn, with no admission of fault. In contrast, Kelly has now been held for two years in Japan and faces the prospect of 10 years in jail. On November 2019, Nissan CEO Saikawa admitted an overpayment of $652,000. He apologised to the board and paid it back. His punishment: resignation.
In the US, Michael Taylor and his son who helped in the escape have been arrested at the request of the Japanese and now face extradition to Japan. “It is difficult to understand that a US citizen can be extradited to Japan,” says Ghosn, “knowing that from one side you have the hostage justice system and from the other side you have a system which is trying to be as respectful as possible of human rights, so that’s why I’m a little bit shocked.”
For Carlos Ghosn, there is a miniseries in the making. What he is now waiting for is some of the actors in the scheme to start talking. “I think time will help mouths to open, because you know you’re never in government for a very long time. After a certain while you go to retirement and the temptation to say something interesting to the public will be very high.”
Just last week Nissan launched a civil lawsuit against Ghosn in Japan for over $US95m. In the month after his arrest the Nissan share price fell 10 per cent. He now bemoans the fate of the car companies he once ran through the Alliance. “It’s a kind of zombie,” he says. “It looks like a living organism but in fact nothing is happening, even though the people in charge are stating ‘everything is OK, we are working together’. You look at the pitiful results and the pitiful performance. Obviously Nissan now is much more autonomous compared to before because no decision is taken without a consensus, which as you know in business is something which doesn’t exist.
“At a certain point in time somebody needs to make a decision … You can’t make decisions on consensus.” Ayn Rand could not have said it better.
Watch the full Carlos Ghosn interview on Business Weekend on Sky News, 11am Sunday
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On Scott Morrison’s trip to Japan last week, it’s a safe bet that one name would not have come up. Carlos Ghosn.