Nissan Chairman Carlos Ghosn Arrested Over Financial Misconduct Charges
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Authority brings power along with responsible. However, some forego the latter in the spur of their desires. The statement stands true in case of Carlos Ghosn, the man who was among the most idolized personalities in the auto global only a few days back but today holds a tainted reputation. The famous turnover man got arrested on Monday over suspected financial violations in Japan.
Rise into a Cost Killer
Japan is a very closed-off, traditional market of conventional business figures who hardly allow an outsider to set his footing in their territory. Despite the challenge, the Brazilian-born Ghosn not only entered the space but also earned himself the title of an auto titan in the country and outside. Often addressed as a workaholic professional, the 64-year-old is known for working long hours.
The relentless auto executive proved his mettle during the early days of his career. His first job was with tyre maker Michelin where he turned their South American operations profitable within a year into work. He later went on to showcase his resourcefulness for the company by turning around its North American operations. However, that was a mere stepping stone in his life before becoming the ultimate cost killer.
1996 was an unforgettable year of his life as it marked his entry into Renault’s premises along with the beginning of the automaker’s turnaround story. His radical restructuring had brought the company back to profitability by the 1990s and earned him the nickname "Le Cost Killer". As Renault took over a 43.4 per cent stake of debt-laden Nissan in 1999, Ghosn recreated his magic.
Nissan Revival Plan
Been asked to head the automaker with $20 billion of debt and only three of 46 models generating profits, speculations of his failure were rife but dismissed them all within a year. His ‘Nissan Revival Plan’ included a series of unexpected decisions including cutting many jobs, shutting down plants, auctioning off assets, dismantling of Nissan's keiretsu system and changing the official language to English.
Nonetheless, his plan worked out perfectly and in comparison to previous year’s consolidated net loss of $6.46 billion, Nissan ended up earning a consolidated net profit of $2.7 billion. The automaker progressed to become one of the industry's most profitable companies within three years, making Ghosn a popular figure in the Japanese system.
2 decades after joining the company, Ghosn had climbed up high on the ladder, enjoying the position of CEO and chairman for both Nissan and Renault when Mitsubishi joined the alliance in 2016. Ghosn played an instrumental role in the alliance which created the world’s top-selling passenger car manufacturer through linked shareholdings.
Under his leadership, Ghosn combined 470,000 employees selling 10.6 million vehicles from 122 factories around the globe last year.
The Unexpected Fall
As they say, nothing stays forever. Same goes for happy days. At Nissan’s annual in 2016, the French state joined 54 per cent of voters refusing to authorize a 7.25-million-euro pay package for Ghosn’s position at the company.
While the vote was overruled by Renault's board, Ghosn accepted a pay cut as France's then finance minister, Emmanuel Macron threatened to step in with a new compensation law. Ever since then, his compensation was under scrutiny by the authorities. A few months, a whistle-blower reportedly gave authorities information on his underreported compensation, which led to an internal probe.
Ghosn has been charged with using company assets for his own personal use and reporting a lower income to Japanese financial authorities for several years. Along with Ghosn, Nissan board director Greg Kelly was also accused of misconduct and wrongdoing. In a hastily convened late-night press conference in Yokohama near Tokyo, Nissan CEO Hiroto Saikawa expressed his despair over the development.
While Nissan is cooperating with Japanese prosecutors in its investigation into Ghosn, there are reports suggesting that the board is planning to sack him. Meanwhile, Renault has named its chief operating officer, Thierry Bolloré as the Interim Chief Executive due to Ghosn’s ‘temporary’ absence. Following an emergency board meeting, Renault has confirmed that Ghosn will stay as its chairman and CEO.