The board of directors of Japanese automaker Nissan Motor has voted last week to sack Chairman Carlos Ghosn (the surname is pronounced in Japan as Gon). The decision came as a surprise since Ghosn, until very recently, had been seen in Japan and overseas as one of the most successful CEO's in automobile industries around the world and enjoyed almost a cult-like following in many places. However, this could not deter Tokyo prosecutors to go after him as they claim Ghosn has falsified financial statements about his annual salaries, under-reporting his pay by about 5 billion yen for a period of five years since 2011. As a result, the globetrotting Nissan boss was taken into custody on Monday last week soon after his private jet landed in Tokyo's Haneda airport. He is now being held at a Tokyo detention center and being interrogated for not only under-reporting his personal income, but also for misusing Nissan assets for his personal benefit. This is the latest story of a spectacular fall of a super hero who had been worshipped in the corporate world for salvaging a sinking enterprise and turning it into a profitable one. But as all loudly proclaimed success stories have their hidden darker sides, the Nissan saga too is not free from that.

Ghosn, a Brazilian of Lebanese descent, was born in Brazil and moved to Lebanon in his childhood. According to family sources, he had shown extraordinary intelligence during his school days in Beirut and quickly picked up Arabic. He later went to a prestigious university in Paris and became fluent in French and English and also had taken up French citizenship. His career started at Michelin in France. Later he moved over to Renault where he flourished as a dashing executive not afraid of pushing forward with drastic reforms resulting in massive job cuts. As a result, the French labor unions and leftwing politicians started to see him with deep distrust and considered him as a symbol of capitalism's excesses; particularly its rich executive pay packages that come at the expense of widespread job losses and lay-offs.

The automobile industries of Japan started facing the impact of the collapse of bubble economy in early 1990s. Nissan Motor became one of the worst victims as share prices plunged and the company burdened with a huge workforce and assets with sinking market value. As situation worsened, the French automaker Renault came to rescue Nissan by purchasing a controlling stake in 1999 and Ghosn was seconded to Japanese automaker. In 2001 he became company's first foreign chief executive and held the post until last year when he was named Chairman of Nissan. As the CEO, he had undertaken a massive structural reform resulting in the layoff of more than 20,000 workers, closure of a number of Nissan plants and selling off the assets seen as liability for the automaker. The ultimate result was Nissan's turn around as a leading automaker of the world.

Since then Ghosn has been widely praised for his success in turning an ailing automobile company profitable again. He also strengthened further the Renault-Nissan alliance with a greater stake of the French side. Currently Renault owns 43.3 percent of Nissan, while Nissan owns 15 percent of Renault with no voting right in the partnership. Nissan has been holding 34-percent controlling stake in its smaller Japanese rival Mitsubishi since 2016 when Mitsubishi was facing as a serious crisis. Renault's control over Nissan, despite being a smaller shareholder of global automobile market, had been a point of discontent as the Japanese side was not always happy about it and when Ghosn tried to further consolidate the French control, the rift gradually widened. However, there had been a number of serious allegations against Ghosn that remained hidden as long as he was holding absolute control. Many of such allegations are of quite serious nature and they started resurfacing one after another since his arrest last week.

Ghosn has been arrested on suspicion of under-reporting his remuneration by about 5 billion yen or $44.2 million over a period of five-years. There have been different reactions over the arrest in Europe and in Japan. Whereas in France, business community and officials see in the arrest a deliberate attempt by the Japanese side to undermine Renault's supremacy in Renault-Nissan alliance, in Japan many believe that the steps taken by public prosecutors are not part of any conspiracy. As new stories of his wrongdoing are now regularly being fed to the media, many in Japan are also convinced that this had just been the tip of the iceberg that shows clearly the extent of his greed that knew no limit. It has been reported in the Japanese media that the ousted Nissan Chairman had negotiated a secret post-retirement deal that would give him 5 billion yen. The company has already accumulated the fund at a rate of 1 billion yen a year over five years, but did not disclose the amount despite the legal obligation to do so.

Nissan officials recently uncovered a string of expensive homes that were paid for by Nissan subsidiaries and used by Ghosn. In Tokyo he has an upend condominium in posh Minato ward. Nissan officials who are cooperating with the prosecutors say he used fund of automakers overseas subsidiaries to pay for expensive homes in Beirut and Rio de Janeiro. He and his family frequently use a three-storied home in Beirut which has been renovated recently using the fund from Nissan's subsidiaries abroad.

Japanese media also disclosed that Nissan Motor paid roughly $100,000 a year to the older sister of Carlos Ghosn based on a contract for advisory work that dates back to 2002. Inside sources of Nissan said that Chairman's sister received close to $1.7 million from the Japanese automaker, although she did nothing for the company. Nissan officials also believe the company regularly paid for his family's trips and dining.

Though Carlos Ghosn has denied the charges saying he had done nothing wrong, many in Japan no longer trust him and some Japanese commentators allege that in the course of his long dominance over Nissan, Ghosn has become a too greedy money-grabber with hardly any consideration for moral standing. This is probably a common phenomenon that goes with the culture of corporate governance where successful CEO's are given a free hand over everything they do. When profit making leading to a rise in share prices becomes the only and most important criteria for assessing the success and failure of top executives, other sides of company management are often overlooked, making it easier for top bosses to exploit the situation for personal benefit. This is probably what happened to Nissan. Shareholders were too happy with the inflated dividends and hardly had time or desire to look for what was going wrong, paving the way for the self-important executive to exploit the situation. Moreover, the Japanese media's frenzy over Carlos Ghosn's success in turning around Nissan too most likely contributed significantly in convincing him that he could follow his own rule and still remain immune.

(Tokyo, November 26, 2018)