As the Tokyo-based Asia Editor for Automotive News from 1995-2007, I covered Carlos Ghosn's remarkable turnaround of Nissan Motor Co. I met the man numerous times and remained an interested observer of Ghosn and Nissan in the years since.
I don't have any insider knowledge of the financial misconduct allegations against Ghosn unveiled on Monday. Nonetheless, I think the following three points are worth remembering as the story unfolds.
1. Taxes.
For a little less than a decade, the expat community in Japan has been rife with reports that the cash-strapped Japanese government was going after foreigners it suspected had underpaid their taxes. Accountants warned their clients of tax-law changes designed to close loopholes that expats had (legally) been taking advantage of.
Note, though, that the accusations against Ghosn are not being portrayed as tax evasion, the charge that eventually brought down Al Capone. Rather, the government alleges that Ghosn, 64, under-reported his income in official stock market filings, diverted corporate investment funds for personal use and misused company expenses.
The first charge -- misstating facts to securities officials -- might be construed as Ghosn pulling an Elon Musk. But the numbers alleged, and the other charges, go far beyond misleading investors as to production volumes.
Neither the companies involved nor the government has offered details. But according to an Automotive News article, the Jiji news agency said Ghosn under-reported nearly 10 billion yen ($88.7 million) in compensation as nearly 5 billion yen. The Kyodo news agency said it took place over five years, from 2011 to the present.
2. Corporate and national politics
Commentators are quickly portraying this as a palace coup. Could be.
Anyone who has spoken with Japanese executives at Nissan, or who remembers the "free at last"-style comments by Mazda's employees when Ford sold its stake and left the building, knows that many Nissan staffers have chaffed at their seemingly subordinate role to the less-profitable Renault.
On the other hand, some observers are making much of the fact that Nissan CEO Hiroto Saikawa, during a Monday evening press conference, basically trashed Ghosn's legacy and offered no signs of considering his former boss innocent until proven guilty.
I think that's going too far. Japan's powerful Finance Ministry has gone after Ghosn, and any prudent Japanese CEO is going to think thrice before crossing that government body.
Does Saikawa want a new equilibrium in the Renault-Nissan part of the alliance? Of course. But that's not the same as saying Saikawa thinks Ghosn is pond scum and should rot in a Japanese prison for decades.
3. Greed
Much also is being made about how much higher Ghosn's compensation was than that of other Japanese auto CEOs. True. But take the figures on the others' compensation with a hefty wad of salt.
There's a strong Japanese corporate mythology about how its executives are paid less than their Western counterparts. Ask one of those executives how much he's paid, and yes, he'll tell you a figure that is well below what an American in a comparable position is paid.
But don't stop there.
Ask him if that figure includes his semi-annual bonuses, and he'll usually say no, that's just straight salary. Yeah, well, those bonuses are typically the equivalent of two to four months' pay in the summer and three to six months' pay in the winter. And that's still not counting such perks as the company-supplied chauffeur-driven car, access to the company's ski lodge and so on. Yes, Japanese executives generally are paid less than their foreign counterparts, but the gap isn't nearly as large as they want to claim.
Even so, I can't help thinking of this as possibly another case of CEO greed, similar to what we saw with Ford's Alan Mulally. Both men rescued companies on the brink and earned handsome bonuses for doing so. Then they stayed on, running their companies during more normal times -- and the bonuses kept coming. They kept being paid as turnaround artists even after they became essentially caretakers.
Let's say Ghosn did under-report 10 million yen as 5 million yen. Isn't it worth asking: why wasn't he just making and reporting 5 million yen?
James B. Treece was Automotive News' Tokyo-based Asia Editor from 1995 to 2007.
You can reach James B. Treece at autonews@crain.com