The Hardest Fall
Bloomberg Businessweek|December 16, 2019
IT TOOK CARLOS GHOSN 20 YEARS TO REACH THE APEX OF GLOBAL BUSINESS—AND JUST A FEW MONTHS TO LOSE EVERYTHING
Matthew Campbell, Kae Inoue, And Ania Nussbaum

AFTER TWO DECADES SPENT LOGGING MORE AIR MILES than virtually any other corporate leader, these days Carlos Ghosn rarely leaves a small slice of central Tokyo. The longtime head of Nissan Motor Co. and Renault SA lives alone in a modest house near the ex-pat hub of Roppongi, getting around by taxi and on foot. Although he still keeps a detailed calendar, his days have never been less full, leaving plenty of time for strolls and bike rides through the city’s winding streets.

Ghosn’s routine might seem lonely, but he’s rarely alone. Unmarked sedans tail him wherever he goes, close enough to make their presence obvious. If he enters a park or a restaurant, men in dark clothes get out of the cars and follow him on foot. A video camera is trained on his front door, allowing the Tokyo prosecutor’s office to keep tabs on who comes to see him. At the end of each month, he’s required to provide a list of everyone he’s met with, whether in a restaurant, at home, or at his lawyer’s office.

Ghosn makes the short trip to see his legal team a few times a week to consult with them and respond to emails. According to the terms of his release from jail earlier this year, he isn’t allowed to use a computer anywhere else, and he can carry only a flip phone. Nor has he been permitted to spend more than one night away from his house without a judge’s permission or, apart from a single one-hour videoconference in November, to see or communicate with his wife, Carole.

These conditions will persist well into 2020 when Ghosn begins the first of two trials for what prosecutors and his former colleagues at Nissan call a pervasive pattern of financial misconduct and raiding of corporate resources for personal gain. He denies wrongdoing, saying he’s the victim of a plot by Nissan executives and Japanese government officials to prevent further integration with Renault. A guilty verdict, in either case, could put the 65-year-old in a Japanese prison through the 2020s.

A little more than a year ago, it was unthinkable that Ghosn might fall so far. As chairman of the Renault-Nissan-Mitsubishi alliance, which produces more than 10 million vehicles a year, he was as elite an executive as it’s possible to be. Over the years he constructed a formidable personal brand, presenting himself as a sort of auto industry Jack Welch who, after saving one of Japan’s best-known companies and revitalizing a storied French counterpart, was poised to lead the world’s transition to electric mobility. He met regularly with world leaders, was celebrated at business schools on four continents, and received at least three paychecks, which totaled almost $17 million in 2017. At the ultimate gathering of the globalized economy’s champions, the annual World Economic Forum in Davos, Switzerland, no one seemed more at home.

But since Ghosn was arrested in November 2018, his power has proven remarkably ephemeral. Despite his vast Rolodex, almost no major business or political figure has spoken out on his behalf. The government of France, one of three countries where he holds citizenship, has essentially washed its hands of him. Renault’s leaders have appeared indifferent to his fate, while executives at Nissan have worked to put him in jail.

It’s practically unprecedented, in this era of winner-take-all capitalism, for someone who’s reached the top to fall so precipitously. The last time a chief executive of comparable stature went to prison was during the wave of white-collar prosecutions that followed the collapse of Enron, back when George W. Bush was in the White House. Ghosn’s downfall could indicate that this immunity is wearing off and that the forces of populism and nationalism are coming for globalizers like him. But such sweeping trends don’t fully account for his predicament. Rather, he is a deeply individual story, of a man who clawed his way from obscurity to the pinnacle of global business before crashing down.

More than two dozen people spoke with Bloomberg Businessweek about Ghosn’s career and the events that ended it. Many asked not to be identified so they could speak more freely. They painted a picture of a gifted but bloodless manager who accumulated remarkably few true friends as he built a corporate empire against formidable odds. For his subordinates, insecurity was a daily reality: One after another, potential successors found their progress stymied or their paths to power abruptly cut off. Ghosn, meanwhile, inexorably gained responsibilities, titles, and pay, whatever the results. At the time of his arrest, he was chairman, CEO, or both at three major public companies. And he was planning to put himself at the center of an even more powerful entity that could control them all.

Ghosn’s trials will be a challenge far greater than any he faced in the business world. He’s preparing to defend more than just his freedom. He’s also seeking to prove that, in almost 20 years at the top, his privileges were the well-deserved rewards of a visionary who’d repeatedly done what no one else could. That he really was who he portrayed himself to be: the indispensable man.

GHOSN SPENT MUCH OF HIS CAREER AS AN OUTSIDER. HE was born in Porto Velho, Brazil, a mining hub deep in the Amazon, to a Lebanese family. They eventually returned to Beirut, and as Ghosn neared university age his Francophile mother urged him to continue his studies in Paris. A hardworking student with a sharp mind for math, he was accepted in the mid-1970s to the École Polytechnique, the capital’s storied engineering school. Polytechniciens, as graduates are known, are some of the most coveted hires in France, and Ghosn went on to senior positions at tiremaker Michelin and, eventually, Renault.

While his credentials were impeccable, he never really fit in with the Parisian business elite. He became a French citizen only in 1998, and he and his then-wife, Rita, who’s also Lebanese, rarely attended the dinner parties and galas to which they were frequently invited. For fun, they played bridge. His boss at Renault, a patrician Frenchman named Louis Schweitzer, sponsored him to become a member of Le Siècle, an exclusive club of politicians and business people, but he almost never attended its meetings. Nor did Ghosn have much of a track record in corporate grand strategy. His specialty was operations, the nitty-gritty of factory floor efficiencies.

After Renault acquired a third of Nissan’s shares in 1999, it dispatched Ghosn to Tokyo, where he would serve as the Japanese company’s chief operating officer. At first, it looked like a suicide mission. With more than $35 billion in debt, Nissan had been within days of bankruptcy when it agreed to Renault’s rescue plan. It was regarded by many industry experts as unfixable.

What happened next became a staple of business school case studies. Nissan was at the time producing more than 40 models, few of them of much interest to consumers and was maintaining a vast, inefficient supplier network. Ghosn slashed costs, introduced fresh designs, and overhauled manufacturing processes, shocking workers accustomed to indifferent management by visiting assembly lines to verify that his decisions were being implemented. Nissan went from near-death to profitability faster than virtually anyone thought possible, and in each of Ghosn’s first four full years at the company—he became CEO in 2001—it posted record sales.

Nicknamed 7-11 for his reputed hours, he prided himself on putting in more time than anyone around him, studying the company’s operations in such detail that he could recall even obscure production metrics off the top of his head. Nothing was too small to escape his notice. On one occasion, he argued for removing a vehicle’s back-seat cigarette lighter, saving about a dollar on each assembly.

Gradually he became less hands-on, particularly after 2005, when he was named CEO of Renault as well. The appointment drew skepticism, and not only because Ghosn would get two salaries. Schweitzer, who’d initiated the Renault-Nissan partnership, never envisioned the same person holding both roles. “It’s not manageable to handle two very different companies 10,000 kilometers away,” he says. “You’d fly all the time at the expense of time spent in the field.” Another of Ghosn’s senior colleagues, the longtime Renault executive Patrick Pélata, also disagreed with the decision; he and Ghosn later had a heated discussion over whether it was possible to do both jobs effectively, according to a person familiar with the exchange. (A spokeswoman for Ghosn said no such discussion took place, calling the account “categorically untrue.”)

Ghosn began dividing his time among Tokyo, Paris, and the companies’ sprawling global operations, with every moment scheduled by a corps of assistants. He formed few close relationships. Even colleagues he’d known for years addressed him as “Mr. Ghosn” and avoided discussing anything but business. An executive who worked alongside Ghosn for more than a decade says there was no such thing as an informal catch-up. For every face-to-face meeting, the executive was expected to prepare a presentation or report and to follow a detailed agenda.

In the place where Ghosn spent as much time as any other, the cabin of his corporate jet, he was usually alone, with only the crew permitted to accompany him. If someone asked why they received a variation of the same answer. The plane was Ghosn’s private space—not just a means of transport, but a home.

GHOSN WAS ALSO AT HOME AT THE ANNUAL DAVOS forum in the Swiss Alps, where politicians, bankers, and CEOs gather each January to network and cut deals. A regular by the early 2000s, he later joined its governing board, one of the most prestigious cliques in global business.

As the forum became more central to Ghosn’s image, some colleagues fretted that he was relying too much on conversations there to generate strategic ideas. One of the most dramatic examples occurred in 2007 when he took a meeting with Shai Agassi, an Israeli software executive attempting to reinvent himself as an electric-vehicle entrepreneur. Chaperoned by former Prime Minister Shimon Peres, Agassi was pitching an embryonic plan to wire Israel for mass EV adoption. His startup, Better Place, wanted to use an unproven technology that, instead of forcing drivers to wait while their battery recharged, would use robotic arms to bolt in a fresh one. The company would prove the concept at home, then take it global.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM BLOOMBERG BUSINESSWEEKView All

De-radicalizing the Extremists

Parents for Peace enlists ex-believers to help families win back loved ones drawn to Islamism, QAnon, and other ideologies. Demand has never been higher

10+ mins read
Bloomberg Businessweek
October 18 - 25, 2021

Europe's Energy Crisis Is Coming for The Rest of Us

Millions of people around the globe will feel the impact of soaring natural gas prices this winter

5 mins read
Bloomberg Businessweek
October 04, 2021

Big Sky's Moment of Glory

The most rugged resort in Montana gets speedy lifts, luxury hotels, and fine dining to match its extreme slopes

6 mins read
Bloomberg Businessweek
October 18 - 25, 2021

Black Hairstyles Need Protection

In most U.S. states, employers and schools are allowed to discriminate against box braids, locs, and other traditional styles. A coalition of activists and legislators has started to change that.

10+ mins read
Bloomberg Businessweek
October 18 - 25, 2021

High Stakes On the Lake

Justin Bibb wants to be Cleveland’s next mayor. If he beats Kevin Kelley, he’ll inherit serious problems—and a windfall to fix them

5 mins read
Bloomberg Businessweek
October 18 - 25, 2021

Can twitter get us to be nice?

Social networks are all designed to make people angry and keep them coming back for more. Now, one of the worst offenders is trying to be less of a hellscape

10+ mins read
Bloomberg Businessweek
October 18 - 25, 2021

Let's Make Covid Testing Part of Our Morning Routine

A Harvard immunologist champions low-cost, at-home rapid tests to beat the pandemic

6 mins read
Bloomberg Businessweek
October 18 - 25, 2021

Homeopath, heal thyself

Natalie Grams believed—really believed—in the healing power of homeopathy. Then a health crisis of her own forced the German physician to question her faith

10+ mins read
Bloomberg Businessweek
October 18 - 25, 2021

Stuck on the Sidelines of The U.S. Job Market

Conversations with some of the 5 million out-of-work Americans shed light on why so many jobs are going begging

8 mins read
Bloomberg Businessweek
October 18 - 25, 2021

The Hunt for the Most Lucrative Patients

Privately run Medicare Advantage programs get paid more when members look sicker—even if they don’t receive more care

6 mins read
Bloomberg Businessweek
October 18 - 25, 2021