Nissan is witnessing a fallout following the aftermath of the Ghosn scandal and is still scrambling to recover. Annual operating sales are at a decade-long low and consumers continue to lose confidence in the automaker as further issues unravel. Ghosn’s successor, Hiroto Saikawa has yet to announce a plan on how to turn things around and seems to be in over his head. The partnership with Renault will continue on, but only because of the nature of their symbiotic relationship. Trust between the two entities is at an all-time low, while tensions are at an all-time high.
Ghosn was released on bail earlier last month, following his re-arrest on fresh claims of financial misconduct. He is currently awaiting trial, under intense scrutiny, and is closely monitored.
People have been asking me for my thoughts on this issue, so here are my responses to some of the questions I’ve been asked:
What was up with the re-arrest?
He threatened to go public with a press conference, which would have been absolutely explosive. This demonstrably damages Japan’s brand but we haven’t even seen the full impact yet; it is going to get heavy regardless of the outcome. Everybody is now put on notice that, as the CEO of a foreign or Japanese company here, you are still at the mercy of your employees and your executive team.
Do you think Ghosn is really innocent of all charges as he claims?
The charges are pretty severe and the Public Prosecutors Office is not known to create charges without ample evidence. My gut feeling is that there is, in reality, something to the charges. And, the longer this goes, the deeper they dig, the nastier and more shocking these revelations will come… and that is by design. That is the design of the Japanese prosecutorial approach.
How do you think this case will conclude?
Given his stature, he should be released and allowed to leave Japan. This is going to take on a political air, as well. He will be given a slap on the wrist (as it is usually done to Japanese executives who are caught doing things far worse). But there is also the possibility that, just to make their case less assailable, the Public Prosecutor’s Office will continue to apply maximum pressure to keep him detained. To damage him, to break him, to punish him or anybody that comes close to what Carlos Ghosn allegedly has done, is a less likelihood.
This will last for about 3 years, and is not likely to impact the Tokyo Olympics.
Japan is a difficult and contentious place if you want to run a business, even if you’re Japanese, but even more so for foreigners.
Part of the question hopes that perhaps the Japanese Public Prosecutor’s office will give the foreigners a break, a softer treatment. This hope bristles most Japanese. For too long, foreigners have gotten away with too many things. They can live here and run a business without mastering the language (which secretly hurts their sensibilities), but more importantly foreigners always get away with what the Japanese are never allowed–expectations of cultural nuances and the way to conduct oneself in a business setting. Japan was isolated for so many hundreds of years, so foreigners play a noticeable contributory role in the economy. In spite of that, they sway how things are done in culture, business, accounting standards, norms and rules and the Japanese want to draw a line. They want foreigners to leave them alone because it is their country, their justice system. “Who the hell are you to determine how we treat our criminals?”
The amount of damage that has been heaped on Carlos Ghosn can never be compensated. He has already been irreparably damaged, and we haven’t even gotten to trial. Fair trial? It is unlikely that Japan would come near western democracies’ standards of a fair trial. The public prosecutor’s office and the judges are basically in one camp vs. the defendant and his lawyers: it is not a fair fight, in my view.
If you were in Ghosn’s shoes, what would you do (before getting arrested)?
The most surprising thing about the Ghosn situation is that he was completely divorced from his management team in Japan. Normally, you are going to have networks of people who have infiltrated into marketing, human resources, legal, these are people that you have hired, groomed, who feel a personal and physical bond to you as the person who has helped them create their career. And as a result of that, people in this country love to spend all their lives at the same job, they love to fantasize about their workplace, so normally a Japanese person in the situation of Ghosn would have fingers deep into individuals within his organization. This coup d’état was pulled off by his adversaries having those fingers… but not Ghosn.
What advice do you have for expats working in Tokyo/Japan?
One of the problems for many expats in the higher-up positions is that inevitably there is going to be a Japanese individual who wants what you have. Deservedly or not, they are just going to be jealous, the difference between what you receive as a foreigner and them, because you bring in technology or a competitive advantage or a network of people in the headquarters, they want what you have. It is a double-edged sword, in this country you must delegate, you need to rely on people, but loyalties are somewhat fickle and people can turn on a dime. Everybody that comes into Japan says “the Japanese people are so nice, I love it. Everybody is so kind, if you lose your wallet they return your wallet”. That is true, but beneath that veneer is human nature: people are jealous, suspicious, they want security, they want to be able to control things, they want more than they deserve. So, for some, an expat is considered “easy pickins”: they’re not really one of us−they are here short term.
Am I more at risk now as a foreign executive?
Foreign executives were always at risk, but it was never a big issue. Carlos Ghosn has made it a public story and now people are finding out about previous people who have quietly disappeared. The risk is so huge and real that Japan-bound CEO’s can be forgiven for being cautious.
There is still much more about this story that will be uncovered in the coming months, but this is my analysis of the situation based on the information I’ve gathered so far.
If you sense that you are being unfairly targeted in your organization, feel free to reach out to discuss how you can best protect yourself. Even if it is just a gut feeling, it is better to be prepared than be caught off guard. In my experience, that nagging gut feeling you get is almost always accurate.