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Carlos Ghosn ongoing saga

3 Things to Know About Carlos Ghosn’s Scandal

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Carlos Ghosn, once seen as the ultimate successful CEO in the car manufacturing industry, is now facing jail time. The Brazilian French-speaking car expert has become a legend in the nineties, when he successfully managed the merge between Renault and Nissan.

From having an inspiring leadership to being accused of corruption in several countries, the fall of Ghosn reveals the risks of giving a lot of influence to a single individual.

In the meantime, shareholders as well as employees fear for their future, as many companies are hosted under the umbrella of Ghosn. From Mitsubishi in Japan, to Renault in France, workers and worried Ghosn’s trial might affect the whole company’s situation. Here is what happened and what to expect in the few upcoming weeks.

Chapter I: Ghosn’s wedding

Those who remember Carlos Ghosn’s wedding might have seen the first clues of a conundrum. Back in October 2016, the then-CEO of Renault-Nissan decided to rent the Grand Trianon in Versailles Castle for his wife’s birthday.

As Versailles Castle is partially owned by the government, Ghosn pulled some strings to make his wife’s dream happened.

According to France 24, “the chateau had waived the usual 50,000 euro ($56,000) rental fee for the October 2016 party under a sponsorship fee signed with Renault a few months earlier. The waived bill could amount to the misuse of company resources, as well as tax evasion, if the benefit-in-kind was not declared to French authorities.”.

For experts, the most outrageous statement was when Ghosn’s lawyer stated that Ghosn thought the rental of Versailles “was for free” and that he had “no idea” about the scheme behind closed doors.

Today, prosecutors open an inquiry about this specific event. However, this is only an episode that marked the beginning of other scandals… As the scandal that hit Ghosn in Tokyo, last November 19th, seems to have caught the attention of international media.

Chapter II: Ghosn in Tokyo

Carlos Ghosn has always enjoyed putting himself on the foreground of his own success. Inspired by the storytelling strategy of Steve Jobs, Elon Musk or even Bill Gates, Ghosn has put the companies’ milestone to his own credit.

This way, Carlos Ghosn caught the spotlights by his grandeur and his charisma, far from the usual C-Suite traditional shareholders press conference.

But last November, as the Japan Times reported, he faced charges of “under-reporting his salary by about $82 million over nearly a decade — charges he has called “meritless.”

Japanese media started reporting this, while Ghosn was immediately ousted from being the CEO of Nissan, a century-old car manufacturer that has made Japan’s manufacturing pride for decades.

As reputation is key in the Japanese culture, the news was considered a national shame.

Overnight, Carlos Ghosn was sacked from his role of CEO and was sent to jail for a hundred days. He was released last week on a $9 million bail.

While his lawyers advised him to remain low-key until his sentence would pronounced, Ghosn had another strategy in mind. Not only his decision of not staying in the dark might affect his sentence, but experts are concerned that it might severely hinder the three-way alliance’s capital.

Read our story: “Car Markers Fear Decade of Growth at Risk From Brexit”

Chapter III: Ghosn’s uncertain future

Monday marked a new crucial chapter in Ghosn’s scandal saga. The former CEO, who is still a board member of both Renault and Mitsubishi, asked to join the conference via a call.

According to the Japan Times, “Ghosn was sacked as chairman of Nissan, Renault and Mitsubishi, and resigned as chief executive of Renault. However, he remains on the boards of all three, given a shareholder vote is required to remove a board member.”

However, a court of Tokyo decided to deny Ghosn’s request to participate to any of these call. The main reason expressed by the court was that this decision was taken to prevent Ghosn from facing a dramatic moment with his former employees and colleagues.

But behind closed doors, it appears that the companies are worried about their reputation and how accepting him to jump into the calls could have even worsened their reputation.

The decision of the court seemed to have been favorable to the manufacturers, as Nissan and Renault’s shares underwent a bump at the markets with +2% on average, while Mitsubishi remained at +0%.

In the meantime, employees are concerned that sales might stall globally, which cause massive lay-offs. In the few upcoming days, the Japanese authorities are expected to make a new statement about Ghosn’s situation. At the moment, he could face 20 years of prison.

 

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.