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Tuesday, February 25, 2020

How Carlos Ghosn saved Renault from Bankruptcy but is now an International Fugitive

Carlos Ghosn,  born on 9 March 1954 is a Brazilian-born French businessman of Lebanese. Ghosn has served as the CEO of Michelin North America, chairman and CEO of Renault, chairman of AvtoVAZ, chairman and CEO of Nissan, and chairman of Mitsubishi Motors. Ghosn was also chairman and CEO of the Renault–Nissan–Mitsubishi Alliance, a strategic partnership among those automotive manufacturers through a complex cross-shareholding agreement. The venture has held an approximately 10% market share since 2010, and as of 2017 was reckoned to be the largest automobile group worldwide.

In 1996, Renault’s CEO Louis Schweitzer hired Ghosn as his deputy and charged him with the task of turning the company around from near bankruptcy. Ghosn elaborated a plan to cut costs for the period 1998–2000, reducing the workforce, revising production processes, standardising vehicle parts and pushing the launch of new models. The company also undertook organisational changes, introducing a lean production system with delegate responsibilities inspired by Japanese systems (the “Renault Production Way”), reforming work methods and centralising research and development at its Technocentre to reduce vehicle conception costs while accelerating such conception. Ghosn became known as “Le Cost Killer”. In the early 2000s, for orchestrating one of the auto industry’s most aggressive downsizing campaigns and spearheading the turnaround of Nissan from its near bankruptcy in 1999, he earned the nickname “Mr. Fix It”.

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Following the Nissan financial turnaround, in 2002 Fortune awarded him Asia Businessman of the Year. In 2003 Fortune identified him as one of the 10 most powerful people in business outside the U.S., and its Asian edition voted him Man of the Year. Surveys jointly published by the Financial Times and PricewaterhouseCoopers named him the fourth most respected business leader in 2003, and the third most respected business leader in 2004 and in 2005. He quickly achieved celebrity status in Japan and in the business world, and his life has been chronicled in Japanese comics.

Ghosn stepped down as CEO of Nissan on 1 April 2017, while remaining chairman of the company. He was arrested at Haneda Airport on 19 November 2018, on allegations of under-reporting his earnings and misuse of company assets. On 22 November 2018, Nissan’s board made a unanimous decision to dismiss Ghosn as Nissan’s chairman. It was followed by Mitsubishi Motors’ board on 26 November 2018. Renault and the French government continued to support him at first, presuming him innocent until proven guilty. However, they ultimately found the situation untenable and Ghosn was made to retire as chairman and CEO of Renault on 24 January 2019. While out on bail granted in early March, Ghosn was re-arrested in Tokyo on 4 April 2019 over new charges of misappropriations of Nissan funds. On 8 April 2019 Nissan shareholders voted to oust Ghosn from the company’s board. He was released again on bail on 25 April. In June Renault uncovered 11 million euros in questionable expenses by him, leading to a French investigation and raids. Ghosn later fled from Japan to Lebanon on 30 December, breaking his bail conditions. On 2 January 2020, Interpol issued a red notice to Lebanon seeking Ghosn’s arrest.

 

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