The saga of Carlos Ghosn has garnered international headlines. Over the course of a single day in November 2018, Ghosn went from jet-setting auto executive to inmate at a Japanese detention center. Prior to his arrest, Ghosn was one of the most admired and respected business executives in the world. Courted by both GM and Ford during the financial crisis, he was seen as the would-be savior of the American auto industry. Ghosn declined those opportunities to remain at the head of Renault-Nissan-Mitsubishi, one of the largest auto alliances in the world. His arrest was a remarkable fall-from-grace story that transfixed the general public in France and Japan and followers of the business press around the world.
The story became even more scintillating in December 2019 when Ghosn boldly escaped from Japan by stowing away in an audio equipment box on a private plane. It was all so dramatic that many journalists have commented on the story's potential as a Hollywood movie. However, I suspect Hollywood would have a problem portraying the character of Carlos Ghosn. Is he a victim or a villain? A hero or an antihero? Did he escape injustice or flee justice? Those, and many others, are the questions that Hans Greimel and William Sposato tackle in Collision Course: Carlos Ghosn and the Culture Wars That Upended an Auto Empire.
Under the tutelage of long-time Renault CEO Louis Schweitzer, Ghosn emerged as the head of the Renault-Nissan “Alliance” in 1999. Nissan, a Japanese corporate icon, was on the verge of collapse. Years of mismanagement and a Japanese cultural philosophy that favored lifetime employment over sound business decisions and profits had left the company bloated and nearly insolvent. Ghosn took an iconoclastic approach to the company and insisted on massive layoffs and other Western-style management decisions that, while it violated every Japanese management taboo, saved the company. By 2002, Nissan was profitable and selling cars at a record pace. Accomplishing such a turnaround in such a short period of time elevated Ghosn to the status of national hero in Japan.
In fact, Ghosn’s revival of Nissan was so remarkable that it was soon contributing the lion’s share of sales volume and profitability to the Renault-Nissan Alliance. This created a great deal of tension with both Nissan management and the Japanese government because Renault has a controlling interest in Nissan. While businesses operate as private entities in Japan just as they do in the U.S. and most Western countries, the Japanese government takes a much more hands-on approach to their best known corporations, especially their iconic car companies. The idea of one of their best-known companies being controlled by a French conglomerate and, by extension, the French government even as Nissan was driving both sales volume and profit for the combined entities was a source of frustration for Nissan corporate executives and Japanese government officials.
As the CEO for both companies, it was Ghosn’s job to manage the tension between the two companies and the two governments, but palace intrigue was inevitable and never ending. Tensions erupted over the French government’s meddling into the business operations of Nissan by, for example, pulling production of a popular Nissan model from India, where the vehicle was sold and marketed, to an economically depressed region of France. These maneuvers served the interest of France much more than the interest of Nissan shareholders, but they also dealt a serious blow to the pride and morale of Nissan’s executives and the government officials who felt it was their duty to protect a national treasure.
However, perhaps a bigger problem for Ghosn was that he yearned for the type of pay that was typical in places like the U.S. while working for companies located in two countries that placed a high priority on egalitarian pay: France and Japan. Executives in both countries are expected to settle for pay that is a fraction of the pay received by U.S. executives. However, in Japan, as in the U.S., companies are free to pay their executives whatever they wish so long as the pay and benefits are disclosed to shareholders. Initially, this wasn’t a problem for Ghosn because the disclosure rules only required disclosure of total executive pay, but a rule change several years ago required the company to disclose the individual pay for each executive.
How Ghosn and Nissan dealt with this disclosure requirement is the crux of the case against Ghosn and the reason he wound up in a Japanese detention center facing criminal charges. According to Japanese prosecutors, Ghosn deliberately hid millions of dollars in deferred compensation as a means of circumventing disclosure requirements. According to Ghosn and his attorneys, Nissan used the Japanese criminal justice system to remove him as head of Nissan because they feared he would attempt to force the company into an irreversible merger with Renault.
The answer to this question is complicated, and, spoiler alert, the authors do not offer a definitive answer. This isn’t a shortcoming of the book. There simply isn’t a definitive answer to the question. It seems clear that Ghosn did, in fact, make some efforts to hide deferred compensation. It also seems likely that he at least occasionally used corporate funds to pay private expenses. The more relevant question is whether this rises to the level of criminal conduct or if it was merely a tool Nissan, in collusion with Japanese government officials, used to remove Ghosn as Nissan CEO.
Both parties have much to answer for. Ghosn has failed to satisfactorily explain many of his convoluted compensation schemes. Nissan has failed to explain why the only parties accused of criminal behavior were Ghosn and Greg Kelly, the manager of the CEO office. Managing this scheme required the efforts of a number of Nissan employees and executives, but, inexplicably, the Japanese participants in this “conspiracy” weren’t prosecuted.
The authors are to be commended for their even-handed efforts to tell this story. They lay out the facts and leave it up to the reader to draw his own conclusion. My only criticism of the book is that it is much longer than it needs to be. I don’t understand the business of publishing, but I assume 150-page books aren’t as marketable as 300-page books, which is the only reasonable explanation for the length of this book. For example, while some insight into the Japanese financial crisis of 1990 was helpful, the authors' discussion of this topic is much too long, and, for reasons that aren’t entirely clear, they return to it over and over again. This material seems like filler material, and it adds little to the story. However, if you are looking for a comprehensive, unbiased account of the Carlos Ghosn saga, I recommend this book.