A year ago on a cloudy afternoon, Carlos Ghosn landed in Tokyo's Haneda airport. As chairman of the global carmaking alliance between Renault, Nissan and Mitsubishi, he was one of the industry's most feted leaders, a businessman with decades of dealmaking behind him, as well as one of the more improbable turnrounds in corporate history.
He was due to have dinner at a favourite sushi restaurant that evening with one of his daughters and to chair a board meeting the next day. But before he could leave the airport, he was arrested.
As a moment of public theatre, with prosecutors raiding the corporate jet on the runway, the arrest was eye-catching. For Japan's business community, and the country as a whole, it seemed unprecedented. But for a small group within Nissan, it was not a surprise.
It would later transpire that the arrest was the result of nearly a year of secret investigations within the company and a deal between whistleblowers and the authorities.
For close observers of Ghosn and his leadership, it was incredible that a man who had run his empire so minutely and for so long should have been blindsided by a plot this big. When he landed on November 19, he was, in his own words, completely "ambushed".
Arrested in the airport — rather than on the jet as was initially reported — the first call he made for legal help was, unwittingly, to one of the key figures behind his downfall.
For others, the incident was an inevitable breaking point. Tensions had surrounded Ghosn for some time. There was the clash with Renault's largest shareholder, the French government, over his increasingly astronomical pay. There was the absence of truly inspiring new cars in Nissan's pipeline and the resentment of dealers. There were the fundamental governance issues raised by one man overseeing three listed companies.
And then there was the overarching question of whether Ghosn could push Nissan and Renault into a full merger in time to strike a career-topping deal with Fiat Chrysler Automobiles (FCA): a race not only against competitors, but against the seismic disruption coming via electric vehicles, autonomous driving and ride sharing.
"He had turned into an emperor without clothes," says the chief executive of a large dealer for Nissan in Japan.
Ghosn was relentlessly driven by the search for scale — his desire to create an ever-bigger automotive empire — but that expansion made it progressively harder to balance the diverging needs of the companies he ran.
"He lost sight of the business," says one person close to Nissan's board. "He tried to make the alliance bigger and bigger to overcome Toyota and Volkswagen. That was his ambition, but it was too much to pursue for a leader."
Today, a year after his arrest and almost two decades after taking control of Nissan, Ghosn is confined to Tokyo under the terms of a $13.5m bail agreement. His corporate legacy is unravelling. Last month, FCA agreed a deal with Peugeot that killed all hope of a tie-up with Renault-Nissan. A scathing governance probe by Nissan has condemned the "personality cult" and opaque, unquestioned authority of the Ghosn era.
No start date has been set for the trial, which could ultimately cost him many more years of freedom. He can see his children but not his second wife Carole. When he leaves his flat, he is tailed by three agencies: the police, prosecutors and a private detective believed to be hired by the very company he once saved from bankruptcy.
He has slowly regained some weight, say his family, after 129 days in a bleak Tokyo detention centre, but his reputation has been savaged; his lavish corporate perks laid bare. Even the designer suits he wore have come under scrutiny.
The question of what triggered Ghosn's downfall from corporate messiah to a man facing criminal charges of financial misconduct remains in dispute. His camp blame a "poisoned" plot that saw him fall victim to a government and corporate conspiracy against him and his plans to merge Nissan and Renault.
Yet the charges against him are weighty: he is accused of falsifying financial statements by understating his pay by more than $80m and misusing company assets for his own gain — all of which he denies.
Company documents and extensive interviews with current and former executives of Nissan and Renault, government officials, financial advisers and confidants form a picture of a business leader whose long years at the top had made it difficult to tell where his dreams for his companies ended and his personal ambitions began.
His story is also that of a man who, for nearly 20 years, tested the question of whether an outsider could ever really become part of corporate Japan. Within the country, Ghosn was one of the few foreign CEOs singled out for real praise. In the early 2000s, as Japan struggled with stagnation, whole sections of Tokyo bookshops were devoted to the magic bullets he was supposedly firing at its languishing business culture.
For Nissan, he was a messianic figure. This view changed over time: for some he became a tyrant, to others a man driven by greed and to still others a leader who allowed the paragon of Franco-Japanese co-operation to become fatally unbalanced in favour of France.
"In his mind, he's still a CEO," said a person close to Ghosn, "but he's not the CEO of a multibillion-dollar global company, he's the CEO of this group of lawyers and others all trying to clear his name."
Three years before his arrest, an immaculately suited Ghosn had walked on to a stage at Nissan's headquarters in Yokohama. In 16 years as the first non-Japanese head of the company, he had wrenched the business from the edge of collapse to the forefront of the global auto industry.
He had successfully steered Nissan's fiendishly nuanced and politically charged alliance with Renault into a relationship capable of bearing fruit.
On this particular day, he was announcing Nissan's purchase of a 34 per cent stake in Mitsubishi Motors — an apparent masterstroke of dealmaking that brought one of Japan's most renowned corporate names into his empire at a deep discount.
Even by the standards of someone fond of proclaiming "win-win" situations, it was a magisterial moment. "Today, our global alliance has reached an inflection point," he declared. The deal he had negotiated took three second-tier carmakers — Nissan, Renault and Mitsubishi — into the elite club producing 10 million vehicles a year, in an industry selling 92 million vehicles overall. The only other members were his bitter rivals Volkswagen and Toyota.
But behind the scenes, in a series of secret meetings in anonymous hotel rooms, Ghosn had something even more ambitious in mind: a deal with Fiat Chrysler. The proposed agreement would have created the legacy he dreamt of — an industry behemoth.
It would also have set out the route that would allow him, then 62, to ascend to the status of "chairman emeritus" — a semi-retirement role overseeing the huge new alliance and guaranteeing him homes around the world, a lump sum of $40m and a performance-linked annual salary of $6m.
Ghosn's obsession with scale was as great as rival carmakers had long suspected. In 2018, the alliance beat Toyota and sold almost as many vehicles as Volkswagen. At the end of each year, every vehicle that could possibly be included in the count was added to boost the total. "He never said it, but he wanted to be the biggest in the world," says one former aide.
A deal with FCA, say people close to Ghosn at the time, would also have brought the satisfaction that he had been right to ignore the advice he had given himself when talking to investors in the early 2000s: that every CEO should step down within five years.
Ghosn had always been ambitious. Born in Porto Velho, Brazil, to a family of Lebanese immigrants, he was educated in Lebanon from the age of six before studying engineering in Paris at the prestigious École Polytechnique.
He landed his first job at Michelin and was poached by Renault in 1996, where he became known as Le cost killer for a radical restructuring that transformed the French carmaker. His objectives at Renault were clear from the start. "For the first time, I was signing on to a company where my prospects were unlimited and my path lay open before me," he wrote in his autobiography.
In 1999, Renault rescued Nissan from near-bankruptcy in a deal that ultimately left it with a 43 per cent voting stake in the debt-laden Japanese carmaker. It was a historic transaction struck at a dismal economic time for Japan.
Ghosn, then a vice-president at the French company, was sent to Tokyo. Many Nissan employees, who were losing faith in their own management team, were mesmerised by his charisma.
In an oral history of the Renault-Nissan alliance compiled by Keio University, Toshiyuki Shiga, who later became chief operating officer, recalled hearing Ghosn speak during a visit in 1998 before the deal was struck: "The power of his presentation was amazing. I thought Nissan would not be able to change without someone like him."
The now famous "Nissan revival plan", released just four months after Ghosn was named the group's chief operating officer in June 1999, was widely acclaimed for its success in transforming a troubled company into a profitable carmaker within a year.
The steps he took broke almost every taboo in Japan at the time: the closure of five plants, a cut of 21,000 jobs and a tearing down of ties to the keiretsu, the business groups who underpinned Japan's postwar economic growth.
"A lot of suppliers disappeared, including many of my friends. But the parts makers that survived are now very competitive," says Akihiko Shido, who became chief executive of Yorozu, a key automotive parts supplier for Nissan, just six months after Ghosn arrived in Japan.
"I had complex feelings at the time but what Ghosn achieved was extraordinary," he says, adding that the allegations of financial misconduct have not changed his assessment.
Even his fiercest critics acknowledge Ghosn's ability to deliver results, with his razor-sharp focus on performance and numerical targets. "The initial V-shaped recovery was not achieved because he was a foreigner, but it was because he was Carlos Ghosn," says Yutaka Suzuki, a former Nissan executive tipped to become the Japanese group's CEO before Ghosn took the top job in 2000.
"It was perfectly natural for him to seek proper compensation when he was sent to Nissan, but he seems to have crossed the line with the various problems that have emerged since then."
The Ghosn of the late 1990s — with his factory jacket, ill-fitting suits and geeky glasses — was a different type of leader to the one of recent years. People who worked with him describe a boss who talked to staff, suppliers, dealers and factories, and whose management style was open and transparent.
Although the father of four would respond to texts from his family within the hour, his nickname was "Seven-Eleven", with workdays that he said "began at dawn and ended long after sunset".
Ghosn's drive inspired those around him. "He had a technique in those days of almost making you feel you could do the impossible," recalls a former Nissan executive. In turn, he demanded his staff be as flexible, and globally footloose, as him. In one instance, a Europe-based director was told he was moving to Japan the following week.
He rarely lost his temper. "Ghosn doesn't like conflicts. He didn't want to force people to do things," says one person who worked alongside him. If he was disappointed in the performance of an underling, he would give them a chance to explain why and to come up with a plan to fix it. "He was an excellent listener," the person adds.
But a critical turning point arrived in 2005. Ghosn was appointed Renault's CEO, putting him at the helm of two companies and creating the concentration of power that Nissan executives would later claim led to glaring lapses in governance standards.
Ghosn's new, and entirely unique, managerial challenge was to maintain the most fragile of balances: between a French company in thrall to the large stake held by the state and a Japanese company that had taken a decisive lead as the stronger industrial partner.
His increased responsibilities in Paris — and the political complexities the role involved — meant he spent less time in Japan, particularly with the lower reaches of the company.
"Carlos Ghosn was, from 1999 to about 2005, a much more collaborative boss, constantly visiting the gemba — the factory floors — talking to the employees," says Patrick Pélata, a former chief operating officer at Renault, who left the company in 2012 and is now an automotive consultant. "But he hugely changed as a boss over the years . . . He became more autocratic and told people he did not want to see problems."
People familiar with Ghosn's thinking insist he was not overwhelmed by the four roles he eventually played: chairman of Nissan and Mitsubishi, CEO of Renault and head of the alliance. They add that his change in management style was driven by necessity and time constraints rather than a fundamental shift in management philosophy or approach.
His increasing responsibilities meant Ghosn stopped attending annual meetings with key Nissan dealers, who grew frustrated. The company's position in Japan fell from number two behind Toyota to number five. In spring 2016, dealers demanded "Q&A time" with Ghosn to grill him on Nissan's flagging performance.
"Before, there was a sense that he would listen to our voices on the ground and manage the company together, but that feeling of unity was lost," says the head of a large dealer for Nissan in Japan.
At the same time, Ghosn was coming to the apex of his powers as a global CEO overseeing $200bn a year in revenue. He had begun to refer to himself as the "re-founder" of Nissan.
As the company's financial position became healthier, his colleagues observed that he was increasingly preoccupied with his own reputation. His suits became sharper — a new Louis Vuitton number was ordered for every motor show. "The PR function was essentially there to serve his public image, way beyond what it was supposed to," says one former employee.
Jean-Marc Daniel, an economist and university friend of Ghosn, says that even as the former Nissan boss gained confidence as a manager, he constantly battled a sense of exclusion and a need to belong both in France and Japan.
"He was always just outside the real circle," Daniel says. "He felt he had to protect himself, gather wealth, become more authoritative, but that in turn isolated him more."
The globetrotting CEO loved nothing more than holding press conferences alongside heads of state. His grasp of at least five languages and melting-pot upbringing gave him a cultural dexterity that allowed him to blend into any setting, whether American car plants or Middle Eastern palaces.
"To some extent, he was everybody and nobody in a national sense. He played on that, because of his upbringing," says one former director who often travelled with him.
His visits abroad became like those of a head of state. Personal assistants with headsets would jump out of vehicles ahead of him, alerting others that "the president is arriving". A team on the ground would spend weeks planning his schedule.
Once, a speaking engagement was cancelled because the venue, which was under construction, did not have a formal address, meaning aides were unable to plan to the minute the time it would take to reach the next engagement.
Few inside Nissan publicly criticised Ghosn for fear of retaliation in "a corporate culture in which no one can make any objections or say 'no'", according to the group's governance probe.
"Part of the problem stemmed [from] Nissan executives who let their guard down and were afraid to speak up against Ghosn," says Suzuki. "That resulted in an environment of complacency where Ghosn felt he could get away with anything."
In autumn 2016, Ghosn pulled strings to secure the Palais de Versailles as a venue for a lavish party in honour of his second wife Carole. The party would become one focus of broader 2019 investigations ordered by both Nissan and Renault into whether the carmakers ended up paying for services, properties and other expenses that appeared to solely benefit Ghosn and his family.
That included nearly $20m spent on company-owned houses for Ghosn in Beirut, Rio de Janeiro and Paris through Nissan's non-consolidated subsidiaries. It was these properties that triggered a secret investigation by a small group of executives in early 2018, just as Ghosn was declaring his desire to make the alliance between Nissan and Renault "irreversible".
Ghosn's representatives say all the expenses were authorised and tied to legitimate business purposes, and that his family believed the residences were corporate housing whose purchases were approved by Nissan.
Within two years of bringing Mitsubishi into the alliance, Ghosn had become one of the industry's best-paid executives. In 2017-18, he earned a combined pay package of $17m — compensation he privately felt was more than justified after he rejected an offer to run rival General Motors that might have doubled his pay. The only other Japanese CEO of a listed company who earned more that year was Kazuo Hirai, Sony's former boss, who earned $25m.
Asked by the FT just months ahead of his arrest whether it had ever occurred to him that he was paid too much, Ghosn laughed: "You won't have any CEO say, 'I'm overly compensated.' It's not up to me, the board is sovereign on this."
His former colleague at Renault who worked with him for nearly a decade added: "The one thing that has never changed is his relationship with money. He always thought it was a measure of success."
Ghosn's compensation — and the tens of millions of dollars more he was supposed to receive after retirement — is now at the heart of the allegations that led to his downfall.
He has been charged with four counts: two accuse him of failing to report more than $80m in deferred compensation that he was set to receive over eight years up to March 2018. His lawyers say Nissan never committed to pay the money and that he never received any unreported compensation.
In September this year, Ghosn agreed to pay $1m to settle fraud charges with the US Securities and Exchange Commission over allegations he hid more than $140m of his pay package at Nissan. Although Ghosn neither admits nor denies any of the charges made by the SEC, "the settlement with SEC does weaken Ghosn's claims that he was framed", Yasuyuki Takai, a former prosecutor and now a defence lawyer, previously told the FT.
Another breach of trust charge involves a private asset management company created to handle Ghosn's yen-based Nissan salary. Prosecutors allege that, at the height of the 2008 financial crisis, this company attempted to address unrealised losses from a derivatives transaction totalling Y1.85bn ($16.7m) by transferring them to Nissan.
Ghosn is also alleged to have transferred, via a series of payments across four years, $14.7m from a Nissan subsidiary account to one held by a Saudi friend's company. Ghosn's lawyers say the currency swap transactions imposed no financial loss on Nissan, and payments were made for "legitimate and vitally important business services" for the group.
The potentially most damaging allegation landed in April when prosecutors accused Ghosn of diverting $5m from Nissan to benefit companies with ties to him and his family. While they did not name the businesses involved, an internal investigation found that about $35m in payments were made to Suhail Bahwan Automobiles (SBA), an Omani distributor with ties to a friend of Ghosn, between 2011 and 2018.
Some of this money is alleged to have been either invested in a company partly owned by Ghosn's son or used to purchase a luxury yacht by a company owned by his wife, according to people with knowledge of the investigation.
Ghosn has maintained that the payments to SBA were "legitimate sales and marketing bonus and incentive payments" that were fully vetted and approved by several senior Nissan executives.
He also denied that the money was transferred for the benefit of himself or family members. But legal experts expect the trial to raise questions over why a man who was managing the world's most complex car business needed several companies based in Lebanon.
At the Yokohama event in 2016, Ghosn anointed Hiroto Saikawa as co-CEO of Nissan. He believed he was installing a sidekick who would be loyal under any circumstances.
But by summer 2018, clear signs of discord were emerging. The group's performance was flagging, particularly in its core US market. A year after taking over from Ghosn, Saikawa tried to distance himself from the lofty expansion targets set by his boss.
The final break came as the pair clashed over the future of the alliance. From early 2018, Ghosn had pushed for deeper integration, under pressure from the French government. But Nissan executives, including Saikawa, repeatedly argued the Japanese company was not ready for a full merger, fearing a de facto French takeover, and instead sought to fix a structure where Nissan only held a non-voting 15 per cent stake in its French partner.
At the heart of those discussions was Hari Nada, Nissan's then head of legal and a lieutenant who had gained Ghosn's deep trust. But Nada had also formed a secret team to look into the chairman's financial dealings.
Willingly or not, he agreed to a plea bargain in summer 2018 with Tokyo prosecutors and provided pivotal information that helped them build a case against Ghosn.
Amid the initial furore around Ghosn's arrest, his allies suggested that its roots lay in some dark collusion between prosecutors, the Japanese government and Nissan — evoking a fear that the justice system was being weaponised to bring down a foreigner and solve a corporate problem. This impression was amplified by the harsh conditions imposed on Ghosn, from his long stretches in jail to the ban on contacting his wife.
People close to Saikawa said he did not know about the internal investigation into Ghosn until early October. His work with Nada was focused primarily on how to talk their boss out of what they feared would be an uneven merger.
In the weeks ahead of Ghosn's arrest, Nada suggested to several Nissan executives that they should enlist the support of Japan's Ministry of Economy, Trade and Industry (METI), which had earlier expressed concerns about the way Paris was handling talks.
Some Nissan executives believed Tokyo could be drawn into efforts to "neutralise" Ghosn. "It was useful for Nissan to invoke government support to legitimise what they were doing," says one person close to the Japanese government.
Ghosn's lawyers have alleged "unlawful collusion between the prosecutors, government officials at METI and executives at Nissan" to prevent Ghosn from "further integrating Nissan and Renault, which threatened the autonomy of one of Japan's industry flagships".
Nada could not be reached for comment for this article. METI officials said they never intervened in Renault-Nissan merger talks and denied any involvement in Ghosn's arrest. Nissan declined to comment on judicial proceedings.
The trial will resolve some, but by no means all, of these questions. As one person close to the prosecutors remarked to the FT, this is a truly exceptional case, created by the truly exceptional position that Ghosn had created for himself at the heart of corporate Japan.
one year after the airport arrest, a vacuum remains at the heart of Nissan. Saikawa, who oversaw a 30 per cent drop in Nissan's share price after Ghosn's departure, was ousted in mid-September following revelations he received excess payments. Rivalries long suppressed by Ghosn's hold over the company exploded, with the infighting mostly focused around Nissan's search for a new chief executive.
In his final year as CEO in 2016, Ghosn had presented an ambitious list of new projects that would define the "new Nissan". "He showed me the list and I thought he was joking," said Alfonso Albaisa, Nissan's design chief. "It was suddenly an eye-opener . . . We are basically doing the whole portfolio over."
As Nissan plans to launch eight new electric cars by 2022 and power its vehicles with its hands-off, semi-autonomous driving technology, neither Ghosn nor Saikawa will be there to show off the company's engineering prowess.
Perhaps worse is the knowledge that the deal with FCA that Ghosn wanted so much has now slipped through the alliance's fingers. "It was probably one of the best deals you could dream about," says one person close to Nissan's board. "Circumstances have decided otherwise."
To run a global carmaker in the early 21st century — amid threats from upstart electric car brands, competition from ride-sharing companies such as Uber, and deepening changes in consumer behaviour — requires ambition, vision and decisiveness.
These qualities made Ghosn a uniquely brilliant leader for many years. But over time, and taken to an extreme, they became liabilities rather than assets. Ultimately, they proved his downfall.
Written by: Leo Lewis and Kana Inagaki are FT Tokyo correspondents, David Keohane is an FT Paris correspondent and Peter Campbell is the FT's global motor industry correspondent.
© Financial Times 2019
