Carlos Ghosn was too big not to fail in Japan
The fallen top executive committed a cardinal, culturally unacceptable sin: hubris
Carlos Ghosn, the French-Lebanese-Brazilian former CEO of the Nissan and Renault motor companies, spent millions of dollars to avoid being tried in Japan for financial malfeasance. He jumped bail by paying a crack team of security experts to smuggle him out of the country in a private jet.
Ghosn justified his escape from Japanese justice by depicting himself as the victim of “naked bias”. The Japanese legal system is “rigged”, he has said, and as a foreigner he was subjected to “double standards”. His Japanese colleagues at Nissan had colluded with the prosecutors to oust him, he says, because they were afraid that Renault, a French company, would swallow up its Japanese counterpart. He likened his arrest to the sneak attack on Pearl Harbor.
These are serious, grandiose claims. It is not often that a single man, even if he is one of the world’s most powerful tycoons, likens himself to a country provoked into war.
The Japanese justice system is flawed, to be sure, but the Ghosn saga stands for more than an illustration of its failings. The rare appointment of a foreign CEO at the head of a venerable Japanese company had seemed like a sign that things were changing in Japan. In fact, Ghosn was as much a victim of his own arrogance as of his failure to realise how little Japan had changed.
Ghosn was applauded by the Japanese, and by foreigners, who were hoping that Japan would become a more open, cosmopolitan society. The vindictiveness of Japan’s prosecutorial system and the conservatism of Japanese corporate culture will do much to slow that process down.
Japanese prosecutors place too much store in getting confessions. Their power to jail someone for extended periods without charge increases the chance that confessions are neither voluntary nor accurate. The conviction rate hovers at 99 per cent, too high not to be fishy, especially considering that convictions are often based on confessions. Ghosn, who was used to being treated with exaggerated deference, was shocked to be locked up, interrogated for long hours and deprived of contact with his family. As he put it, “I was brutally taken from my world as I knew it.” Indeed.
Did he come in for particularly severe treatment because he was a foreigner in Japan? To some extent, perhaps. There were corporate tensions between Nissan and Renault, and by extension perhaps between Japan and France. Ghosn had rivals inside Nissan who might well have wanted to bring him down. But there are reasons to doubt Ghosn’s contention that Japanese xenophobia was the main reason for his fall from grace. There may be a more plausible explanation.
Ghosn was a highly unusual CEO in Japan. Brought in to save Nissan from going under in 1999, he succeeded beyond expectation. Nissan’s turnaround made him a celebrity, lionised wherever he went. He even reached mythical status as a heroic figure in a Japanese manga, titled “The True Life of Carlos Ghosn.” The problem was that he began to behave like a comic-strip superhero. And that, in Japan, is unforgivable.
Japanese like power to be disguised
The Japanese like power to be disguised, hidden behind a thick veneer of modest manners, consultation with colleagues, opaque chains of command and diffuse centres of responsibility. It is often very hard to know who is really in charge in Japanese companies, or in government. Even under Japan’s quasi-fascist militarism in the 1940s, there was no leader who behaved like a dictator — not even Prime Minister Hideki Tojo, whom Americans liked to depict, quite falsely, as a Japanese Hitler, and certainly not Emperor Hirohito.
Powerful figures in corporate Japan or in politics may on occasion engage in worse corruption than the crimes Ghosn is accused of — discreetly behind closed doors. Lucrative positions and other financial rewards are exchanged for political favours, but such transactions are handled quietly between faceless men in dark suits, out of the public gaze.
Ghosn made the big mistake of being openly, flamboyantly, swaggeringly greedy, jetting around in private planes to grand homes all over the world and renting the Palace of Versailles for his wedding party. He also challenged Japanese corporate culture at Nissan by replacing the traditional system of privileging seniority with a more meritocratic one, where high achievement — including his own — would be richly rewarded with bonuses. Ghosn was far better paid than Japanese corporate bosses, and this alone marked him as an outsider.
Traditionally, in cases of corporate misbehaviour, Japanese executives will claim that they acted for the good of the company. Ghosn was accused by his former colleagues of lining his own pockets, which left him with few defenders.
I can recall at least two precedents that might put Ghosn’s downfall in perspective. One was the rise and fall of an unusually colourful Japanese businessman, Hiromasa Ezoe. An energetic figure from a modest social background, Ezoe started with an advertising company and jobs-information magazine in the 1960s. It grew into a business empire called Recruit. But despite his new wealth, Ezoe could never penetrate the intricate old-boys’ network of Japanese business and political elites. So he tried to bribe his way in, by offering politicians, government officials and executives all manner of sweet deals that were not exactly above board.
The Recruit scandal broke in 1989. Stories about Ezoe’s shady behaviour started appearing in the press. The public prosecutors decided to act with customary zeal. Ezoe was arrested. Prime Minister Noboru Takeshita and members of the cabinet who had benefited from Ezoe’s largesse were brought down with him. The problem was not so much the corruption itself, which was hardly unprecedented, but the fact that an outsider had attempted to crack the establishment by throwing around too much money, too brazenly. Ezoe had become too big for his boots.
Then there was the case of Kakuei Tanaka, another go-getter social outsider, who made his fortune in real estate in the murky postwar years when black marketeers and gangsters thrived. Tanaka rose quickly to the top of the ruling conservative Liberal Democratic Party and became prime minister in 1972. His path was greased by grand construction projects, driven less by necessity than by political expedience, and financial bribes. Like Ezoe, he tried to buy the establishment with openly flaunted wealth.
Kaku-Fuku War
His rival in the party was his precise opposite: the smooth, wily, well-connected former bureaucrat Takeo Fukuda. In any event, Fukuda won the so-called Kaku-Fuku War. Tanaka’s downfall was sparked by allegations of shady land deals, some of them made in the name of his mistress, a former geisha. He had to resign.
Tanaka might well have been guilty as charged, as was Ezoe — and possibly as is Ghosn, although in the absence of a trial we might never know. But the main reason for Tanaka’s disgrace was political. The party establishment around Fukuda had been waiting for an opportunity to take him down. Tanaka had rocked too many boats, and he had spent too much money.
As a foreigner, Ghosn is even more of an outsider than Ezoe or Tanaka. But his sins are comparable to theirs: the hubris of money, made and spent ostentatiously, and challenging the way things are done. Traditionally, in cases of corporate misbehaviour, Japanese executives will claim that they acted for the good of the company. Ghosn was accused by his former colleagues of lining his own pockets, which left him with few defenders.
His fall will have serious consequences. Ghosn was applauded by the Japanese, and by foreigners, who were hoping that Japan would become a more open, cosmopolitan society. The vindictiveness of Japan’s prosecutorial system and the conservatism of Japanese corporate culture — and Ghosn’s extraordinary escape from justice — will do much to slow that process down.
— Ian Buruma is a noted editor. Much of his writing is focused on the culture of Asia, particularly that of China and 20th-century Japan.