The press conference at which Nissan’s chief executive Hiroto Saikawa announced the arrest of its French chairman Carlos Ghosn was extraordinary in many ways. One of the most extraordinary was to hear Mr Saikawa, a 13-year veteran of the Nissan board of directors, outline an enormous scandal of governance as if it had nothing much to do with the company at all.
Prosecutors arrested Mr Ghosn on suspicion of understating his pay in financial statements. Ten days on, he remains at the Tokyo Detention Centre, the exact allegations against him still unknown. Even if no charges are brought, however, this case was clearly a huge failure of corporate safeguards and internal control. Every Nissan board member bears some responsibility. There are lessons here for others.
One reason the allegations were so shocking is Mr Ghosn’s aura as a moderniser of hidebound corporate Japan. In his famous turnround at Nissan from 1999 to 2005, Mr Ghosn introduced promotion by merit, dismantled the keiretsu structure of cross-shareholdings with suppliers, and made English the official language. While many other Japanese companies seemed lost in their past glories, Nissan stood out.