How Japan has been arresting Western auto execs

Carlos Ghosn

Wherever possible, for obvious reasons, the auto industry works hard to stay out of a nation’s politics. But sometimes politics invades the auto industry, as in the case of former Renault-Nissan boss Carlos Ghosn. The 65-year-old Brazilian-born executive of Lebanese descent was arrested last November by Japanese police on charges of bilking the company out of millions through a retirement scam and a kickback scheme involving a Mideast Nissan distributor. Ghosn denies everything.

The case echoes the 2015 arrest of former Toyota communications chief Julie Hamp, another gaijin, or foreigner, elevated to a high position within a flagship pillar of Japan’s industrial economy. She was caught allegedly mailing herself doses of oxycodone to treat a bum knee. It’s a tightly controlled painkiller in Japan that is perfectly legal in the States with a prescription. After spending 20 days in the Tokyo hoosegow, Hamp was released, but her career at Toyota was over.

The Ghosn and Hamp cases seem to indicate that Westerners working in the executive suites of high-profile Japanese companies have targets on their backs. Nobody has produced any irrefutable evidence yet, but a lot of smoke seems to indicate that Ghosn and Hamp are victims of the embers of nationalism smoldering under current prime minister Shinzō Abe, who has pushed a sort of “Make Japan Great Again” agenda involving overhauling the economy and boosting the nation’s self-defense forces.

In Hamp’s situation, there were already rumblings on the Japanese right that Toyota chairman Akio Toyoda let too many foreigners into the inner sanctum of Japan’s most prominent company. It seems that a foreigner who was also a female was a bridge too far for some in Japan’s traditionally patriarchal society.

Ghosn may be more a victim of what the Japanese see as his own hubris. In 1999, Ghosn engineered the merger of Renault and Nissan as the Japanese automaker teetered on the verge of bankruptcy. At the time, Robert Lutz, later GM’s vice chairman, likened a buyout of ailing Nissan to taking $6 billion in gold bullion and sinking it in the ocean. However, both companies benefited from the merger, as Nissan got capital and Renault got access to platforms and technology as well as the highly profitable North American market.

Yet the Japanese apparently chafed under Ghosn’s empirical one-man control. They felt Nissan was being used as a profit plantation, its U.S. operations saddled with unreasonable volume targets and its dealers flogged mercilessly to move the metal. Meanwhile, instead of being invested in Nissan—note that the current GT-R is 12 years old and counting—those hard-won profits were being siphoned away to bolster Renault, which left the U.S. in 1987 and today operates as a quasi-governmental French jobs program selling mainly to the world’s low-margin markets.

Correspondence between Nissan execs and Japan’s ministry for trade and industry indicates that the coup against Ghosn hatched when the French government, already Renault’s largest shareholder, pushed for more control of the Renault-Nissan Alliance (renamed the Renault-Nissan-Mitsubishi Alliance in 2017 after it acquired a controlling stake in Mitsubishi). Shockingly, nobody at Nissan wanted to work Japanese-style 16-hour days for the glory of la République française. Ghosn’s former number one lieutenant, Hiroto Saikawa, seemed to let it all out when he told a Japanese news magazine this past March, “I seriously question if Mr. Ghosn has had any respect for Japanese people and Japanese society at all.”

Perhaps not, but as Jeffrey Sonnenfeld, an associate dean at the Yale School of Management, noted in a recent editorial, leaders of the Tokyo Electric Power Company have so far avoided jail time for the horrendous mismanagement of the Fukushima nuclear disaster, as have execs at Japanese supplier Takata following a global recall of its exploding airbags. Lives were lost and billions were spent to clean up those messes, yet it’s Carlos Ghosn who is paraded in front of the cameras in shackles.

Japan’s new rising sun seems to be creating a few dark shadows.

[This article originally ran in Hagerty magazine, the exclusive publication of the Hagerty Drivers Club. For the full, in-the-flesh experience of our world-class magazine—as well other great benefits like roadside assistance and automotive discounts—join HDC today.]