Fugitive Carlos Ghosn prepares to speak
It is the business story that has everything, including corruption allegations against one of the world’s leading corporate figures, imprisonment, a flight from justice, and next up, a public plea of innocence. Carlos Ghosn is about to give his side of the story. The former boss of Renault is preparing to speak in his native Lebanon in a bid to clear his name. He is due to address reporters tomorrow afternoon.
The thriller opened on 19 November 2018 at Tokyo’s Haneda Airport. Ghosn was arrested shortly after his private jet landed. Ghosn was then Chairman and CEO of the Renault–Nissan–Mitsubishi Alliance. Having come to Nissan when it partnered with Renault in 1999 and helped save it from bankruptcy he had gone on to become its CEO, CEO of Renault, chairman of Mitsubishi. He was a business giant.
Nevertheless, on 22 December Hiroto Saikawa, CEO of Nissan and former protégé of Ghosn, publicly announced Ghosn had been dismissed from the company board. He said an internal enquiry had found Ghosn had underreported his income and had used company assets for personal ends including paying for houses in Rio de Janeiro, Beirut, Paris and Amsterdam. When Ghosn appeared in court a year ago on the 8th January 2019 to plead not guilty to the allegations now being formally brought against him he was handcuffed and had a rope around his waist.
Under practices referred to as “hostage justice” Ghosn spent 108 days in solitary confinement in an unheated cell. Japan’s judicial system allows up to 23 days detention without charge and lets detention be extended if new charges are brought. The detained have no right to a lawyer and are interrogated for hours at a time. The aim is to extract a confession, seen as ironclad proof in the Japanese criminal justice system where the conviction rate stands at over 99%. Ghosn refused to confess even as charges piled and his detention lengthened.
On 6 March 2019 Ghosn was released on bail of almost $9 million – but was rearrested on the 4th of April on new charges of financial misconduct. The day before Ghosn had announced he planned to hold a press conference where he would reveal the true facts of what his defence claimed was a malicious conspiracy against him. Ghosn was again granted bail on the 25th of April, at some $4.5 million, but subject to an aggressive house arrest. He was forbidden from even speaking to his wife Carole on the grounds he might have her tamper with evidence. He was finally allowed a one-hour call with her on Christmas Eve in the presence of his lawyers.
Yearning for his wife and perhaps driven over the edge by suggestions that his trial scheduled for September 2020 might be delayed until April 2021 Ghosn escaped on the the 29th of December. A 15 strong escape team, including the ex-Green Beret and ex-con Michael L. Taylor, had put together a plan. Lightly surveilled by the authorities, and no longer followed by private security hired by Nissan, Ghosn simply walked out of the house – his face covered by a surgical mask of the sort commonly worn in Japan. He then caught the bullet train to Osaka and at Osaka Kansai airport was smuggled through customs in a large black music box with holes drilled in the bottom for air. From there he was flown by private jet to Turkey, and then on to Lebanon.
If you think this sounds like something from a film you are not the only one. Friends of Ghosn have claimed he had told them prior to his escape he was keen to promote a film dramatising his experience with the Japanese courts system, and coyly stated the ending would be a surprise. In December Ghosn even pitched his idea to a Hollywood producer who came to his house.
Ghosn seems determined to tell this story on his own terms. On 31 December Ghosn proclaimed he would “no longer be held hostage by a rigged Japanese justice system where guilt is presumed, discrimination is rampant, and basic human rights are denied […] I have not fled justice – I have escaped injustice and political persecution. I can now finally communicate freely with the media, and look forward to starting next week.”
A press conference is scheduled tomorrow in which Ghosn is rumoured to be planning to present evidence that the charges against him are a stitch up – and to offer to face the charges against him in a trial held anywhere but Japan. Ghosn and his allies say that these charges were cooked up by Nissan executives and Japanese government officials. The conspiracy was to sink Ghosn’s plans to merge Renault and Nissan, and keep Japanese control over a flagship national company.
Ghosn might struggle to convince sceptics that everything is a fabrication. Outside Japan Renault, which was initially supportive of Ghosn, announced in June it had uncovered $11 million of dubious expenses linked to him – including a €635,000 party at the palace of Versailles which coincided with his wife’s 60th birthday. Ghosn could now face legal proceedings in France as well. In America the Securities and Exchange Commission found him guilty of under-declaring his income to the tune of $140 million. Ghosn settled this in September not admitting guilt but paying a fine of $1 million. He is now banned from holding a senior position in an American company for 10 years.
This does not mean Ghosn’s claims are utterly false either. Many have noted that in Japan many company executives who have been implicated in far worse scandals have faced few repercussions in the courts. Why Ghosn was targeted so relentlessly – and subjected to such harsh conditions – is a question that needs to be answered.
Japan Inc. – the cozy network of relationships between the government and big businesses in – has often resisted attempts by outsiders to penetrate it. For 19 years Ghosn had succeeded and even attracted admiration. Yet reports of growing grandiosity and unwillingness to hear criticism at a time when Nissan was losing ground doubtless stoked tensions. Furthermore, a merger which might have subsumed a Japanese firm into a French one – in which the French state holds a major share – might have been a bridge too far.
Indeed, at a time of heightening geopolitical tensions many countries seem to be increasingly looking at national economies not just as a public good but as strategic arsenals. There is a growing keenness to keep key companies under national control. Trump blocked the acquisition of Qualcomm by Singapore based Broadcom in an attempt to protect US primacy in the semi-conductor industry.
There are costs attached to this type of thinking. Prime Minister Abe’s hopes to reinvigorate Japan’s economy after decades of stagnation by opening up Japan to foreign business and investment will not be helped by the perception that in Japan even the mightiest are vulnerable to a judicial system that affords people few rights.
Meanwhile, Ghosn – and his wife who the Japanese courts charged with perjury today in an act that smacks of revenge over her rumoured role in her husband’s escape – probably feels safe in Lebanon. While Japan has issued an Interpol “red notice” for Ghosn this doesn’t require his arrest – and Lebanon has no extradition treaty with Japan.
Ghosn is also popular in Lebanon. While born in Brazil he is of Lebanese descent, went to school there, and is a citizen of Lebanon (as well as France and Brazil). This plus his ownership of several successful Lebanese businesses (including a vineyard whose wine I can personally attest to being delicious) have made him a national hero. Rumours have swirled that Ghosn’s arrival was smoothed by the Lebanese government and that he has met with President Michel Aoun.
More trouble may come. Ghosn now faces charges in Lebanon over visits he made to Israel on business – Lebanon prohibits its citizens from interacting with Israel. While Ghosn may evade this unevenly applied law it may dent his image. The ongoing Lebanese anti-corruption protests also mean some young Lebanese view Ghosn unsympathetically as another example of elite corruption. Should the current government fall to these protests and the ongoing financial crisis in the country Ghosn could find himself being used as a political bargaining chip.