A recently published book explores the multiple factors at play in the downfall of one of the auto industry’s celebrated executives, Carlos Ghosn.

The story of Carlos Ghosn’s time as the head of the Renault-Nissan Alliance, while leading both companies – and his sudden and dramatic fall – is well worth the depth that 327 pages allows. It is an epic tale.

I met Carlos Ghosn a few times in the course of my work and he always impressed. The accomplished international company executive, he gave what seemed to be careful and thought-through answers to questions (in impeccable English, not his first language, but one of four he speaks). There was a refreshing clarity about Ghosn. He did answer the question and he did it economically, no waffle. Press conferences were handled with consummate ease, Ghosn apparently having the knack of understanding what they want and giving it to them (which also applies to his first press outing after the audacious ‘escape to Beirut’). Chair a Davos platform in between Tokyo and Paris shuttling? No problem. Jet-lag didn’t seem to apply. Even his unfeasibly black head of hair seemed other worldly.

I recall a press day early at the Paris Motor Show many years ago (in the early 2010s, ‘peak Ghosn’). The German model Claudia Schiffer was having a guided tour and there was quite an accompanying bundle of minders, media people and photographers. Just around the corner, there was an even bigger bundle and hubbub. Who could this A-lister celeb be – maybe a film or rock star? No, a big group of people were running to keep up with Carlos Ghosn.

The fact that Carlos Ghosn achieved so much in his career makes the sudden and dramatic fall all the more fascinating. He was the architect and leader of an industry leading alliance that grew out of the bail-out of Nissan, when it was on its knees, in the late 1990s. It was going to be a tough corporate recovery with jobs lost, but ‘le cost killer’ had saved an iconic Japanese company and there was much gratitude in Japan. He was eventually helped by a rising tide of sales around the world that got factories working and employing more again. The tens of thousands of jobs initially lost and a new power balance that left Renault (and Paris) with a big stake in Nissan seemed of little consequence in a make or break story of survival. Ghosn was revered in Japan (there was even a Ghosn-themed Manga comic series). But the bright Ghosn light was to be subject to fade over a number of years.

The authors of this book – Hans Greimel and William Sposato – forensically describe and examine the multiple factors at work that brought about Ghosn’s downward spiral. It was, in many ways, inexplicable to outsiders who saw a high-powered executive whose talents were sought by Ford and General Motors. He seemed to walk on water, so was it a case of hubris, fraud and financial impropriety?

This book lifts the lid on the internal politics, the clash of corporate cultures, different judicial systems and the processes at work in CEO remuneration – itself a controversial area subject to different cultural traditions. In short, there were factors at work that built a collision course and explain how Ghosn found himself to be in a cold Tokyo detention cell. Moreover, we get a sense of why he would have felt breaking bail in an escape plan worthy of a Hollywood movie was a more attractive option than sticking around to face justice Japan-style.

The account in the book is thorough and balanced. There are interviews with key actors on all sides of this marathon tale. Understanding the perspectives and the whole picture, as much as reading a book like this get you insights into things that otherwise you might not appreciate, left me thinking that it’s really not black and white, innocent or guilty. It’s much more nuanced, with circumstances and events shaping subsequent events and opinions. At the time when Carlos Ghosn put the emphasis on scale and volume at all costs (‘Power 88’), few would have argued with him. Other industry heavy hitters – notably the late Sergio Marchionne – said much the same things. It is with the benefit of hindsight that we can see that in Nissan’s case it sowed the seeds of falling profits and problems, in particular, in North America.

Similarly, the basic premise of the Alliance – shared procurement and engineering, but with company independence protected – worked well to start, with huge low-hanging cost savings. It was an industry case study, lauded as best practice in action. But there were diminishing returns in these two companies getting closer. The problems come down the line when the pressures build for more cost efficiencies, yet more integration and there is friction. The M-word (merger) gets thrown into the mix as fraught questions are asked and there are no easy answers – just speculation and rumour. What would Ghosn’s lasting legacy be? Who would be his successor? How much friction can be managed? How much is he really being paid? Carlos Ghosn did his best, but the frictions and internal politics became toxic and his position was seriously undermined.

On the question of CEO remuneration, who hasn’t at times wondered how it’s worked out – the big salary and the share options, the unseen extras, the ‘perks’? How do you value an executive like Carlos Ghosn and how does the remuneration process work to ensure appropriate transparency? Was a line crossed? As you might expect, that’s a very complex question to answer and might get different answers in New York, London, Paris or Tokyo.

What next? Carlos Ghosn is effectively stranded in exile in Beirut. It’s not a bad life, perhaps, but it’s not how he would have wanted his exit from Renault-Nissan to play out. He clearly cares about his reputation and I would venture to suggest we haven’t heard the last from him.

Greg Kelly, described by some as the forgotten man in all of this, the legal brain and technocrat who followed his boss’s wishes (and set up remuneration structures for Ghosn that subsequently came into question), is still in Japan on bail and facing a possible jail term. Renault and Nissan (and Mitsubishi) will have to carefully negotiate their future paths. Completely undoing the Alliance is in no-one’s interest but it’s safe to assume getting any closer is well and truly off the agenda.

For anyone wanting to understand a little bit more of the ins and outs of the ‘Carlos Ghosn saga’, what was going on behind the scenes, the sources of ill-will and building tensions, Collision Course is an essential starting point.

This article was first published on Just Auto.

Collision Course is available on Amazon.

David Leggett
David Leggett
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