Former chairman and CEO of Renault-Nissan Carlos Ghosn. Nissan board members have sacked Ghosn in a spectacular fall from grace. Photo: AFP/Manjunath Kiran
Lawyers for former CEO of Renault-Nissan Carlos Ghosn have agreed to a $1m fine in a settlement deal with the US Securities Commission. Nissan will pay a fine of $15m. Photo: AFP/ Manjunath Kiran

Japanese citizens can breathe easier now that Carlos Ghosn will spend an extra 10 days in jail as prosecutors have extended his detention. Ghosn, the chairman of Nissan, was arrested on November 19th, shortly after arriving at Tokyo’s Haneda airport on a private jet.

He has been charged with under-reporting his income.

Robert Whiting, who has written extensively about the front and back sides of Japan commented: “If every Japanese business leader who avoided taxes was thrown in jail like Ghosn was there would be no one to run Japan’s companies.”

One must also believe Ghosn did his own taxes and prepared Nissan’s corporate filings. This conjures up images of Ghosn the night before tax filing day with a calculator, #2 pencils and a copy of the Japanese tax code – trying to figure out how to jimmy the authorities and save himself some money.

He wouldn’t be the first really successful guy to do something really stupid, but even still.

A familiar tune

Indeed, this is something of a ‘head-scratcher.’ While one must wait to see how things play out, something seems familiar here – maybe even a whiff of the xenophobia existing in the upper rungs of Japanese society.

Le affair Ghosn brings to mind the repeated ritual humiliations of Western CITIBANK executives in the 2000s – as CEO Charles Prince and other senior executives were summoned to Tokyo more than once to bow and apologize in front of the assembled press – while having business suspended and being lectured about the need for foreigners to follow the rules in Japan.

CITIBANK was perhaps not run by the smartest people and there was a basis for the charges – particularly lax money laundering controls, but CITIBANK were amateurs compared to what nearly every other Japanese financial institution was doing – including one prominent bank believed to be the veritable arm of the Yamaguchi-gumi – Japan’s largest criminal gang.

As one observer noted, CITIBANK’s real problem was being “too successful.”

The 2011 Olympus scandal also springs to mind. The company’s newly appointed president, an Englishman named Michael Woodford, was tipped off about serious financial wrongdoing involving well over a billion dollars. Woodford went public – and also left Japan immediately.

The initial response from Olympus’s top executives and even some of the Japanese press was that the “foreigner doesn’t understand Japan,” he “is paranoid” and the like. Olympus also attempted to smear and intimidate him.

After a week or two, some of the truth came out – vindicating Woodford – although the government suppressed clear evidence of underworld involvement with Olympus. Indeed, some observers noted that Woodford was wise to leave Japan when he did.

Brash, high-profile foreigners

Ghosn’s travails also resemble the treatment of another brash, high profile foreigner – Bobby Valentine, the former manager of the Lotte Marines baseball team. Once the Lotte management turned against him he was on the receiving end of a fierce intimidation campaign and accused of all manner of wrongdoing – including allowing players to practice in shorts, a most un-Japanese thing – to force him out of his contract.

And there’s more. In the mid-2000s, US activist hedge fund Steel Partners made a run for the company producing the popular Bull Dog brand pork cutlet sauce, and was also interested in the even more famous Kikkoman soy sauce company.

This provoked ruling class ire – echoed in the media and the political world. A friend, an otherwise sensible member of Japan’s aristocracy, was likewise outraged at the prospects of foreigners taking over these ‘Japanese’ companies. Steel Partners had more of the law on its side, but still lost – the court ruled that Steel Partners was an ‘abusive acquirer.’

Even US military commanders in Japan can perhaps sympathize with Ghosn. Whenever an accident or incident happens involving US forces, the Japanese government approach is more often than not an attempt to publicly humiliate the US military leadership – and even the US ambassador on occasion – demanding they shape up and understand Japanese sensitivities.

The government even recently demanded that Japanese nationals be allowed to oversee US aircraft maintenance procedures.

As for charging Ghosn with misusing corporate assets: This is possible and Ghosn would not be the first high flying executive to run afoul of the goddess Nemesis. But Ghosn no doubt had plenty of enemies inside Nissan.

And Nissan CEO Hiroto Sakiwa’s comments at the post-arrest press conference were a little too tidy, expressing his intense anger while damning Ghosn as the taint that needed to be expunged from Nissan. Given that Saikawa was Ghosn’s long time protégé and chosen successor, a trial lawyer would love to ask: “So Mr Saikawa … Were you complicit? Or merely incompetent?”

Ghosn may not be the most lovable fellow on earth, but one is left feeling they are watching a classic case of ijime, or bullying, against an ‘outsider’ that is a staple of Japanese life from elementary school onward.

A modern Al Capone

Ghosn may turn out to be a modern version of the famous gangster Al Capone. But one doubts that. Arresting Ghosn and his associate on arrival in Tokyo had to be worth the risk given the foreign policy ramifications – and had to be decided at a high level in the government.

One explanation circulating for Ghosn’s arrest and dismissal from Nissan is an effort – with some degree of official backing – to prevent a flagship Japanese company from being merged into Renault – a French company – a plan that Ghosn reportedly favored. Stranger things have happened.

But if Japan Inc intended to collar Ghosn on arrival – with Asahi newspaper reporters at hand – and then toss him into Japan’s version of Abu Graib prison, it should have had its story straight beforehand.

Otherwise, Japanese officialdom’s tone-deaf treatment of Ghosn seems like something that would happen if his jet landed in Beijing or Pyongyang. Not Tokyo.

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