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The Canberra Times
The Canberra Times
National
Peter Brewer

How a high-flying auto executive thought outside the box to evade justice

Carlos Ghosn after he was granted bail on charges of financial misconduct, Tokyo, March 6, 2019. Picture: Getty Images

There have been many brazen escapes in recent history but the extraordinary 2015 tunnel breakout of drug kingpin 'Chapo' Guzman from Mexico's high-security Altiplano prison is right up among the most well-planned, bizarre and extraordinary.

Guzman's enormous cocaine-fed wealth funded a mile-long escape tunnel, 10 metres down, that took at least a dozen men 10 months to dig, hauling out about 3000 tonnes of earth and rock.

Late one night, the tunnel rats tapped out the last half-metre of earth from under the shower cubicle of Guzman's cell, allowing the drug lord to clamber down a ladder, jump into a customised railcar constructed on the tunnel floor, and disappear.

And yet as astonishing as that getaway was, for sheer audacity there's very little in recent times to rival the international escape of car company czar Carlos Ghosn from right under the noses of Japanese authorities.

Ghosn's ghost-like getaway bookended a global tale of hubris run amok, massive corporate slush funds, and cultural dissonance, interlaced with red herrings like the distorted nature of the Japanese criminal justice system.

It's also the attention-grabbing tale of how the world's most high-profile auto industry executive - running two Fortune 500 companies simultaneously - fell so far and so quickly that he was forced to squeeze himself into a box and be smuggled as cargo out of Japan in an elaborate plot to evade the ever-tightening noose of the Tokyo prosecutors.

The Ghosn story, and his corporate rise to kingpin of (temporarily) the world's largest car company, is retold in detail in Collision Course (Harvard Business Review Press).

The book is written by veteran US car industry journalists Hans Greimel and William Sposato who followed the story from its start to its now-stalemate status. Ghosn still remains holed up in Lebanon, a once high-flying bird now trapped in a gilded cage, unable to leave for fear of extradition from a third-party country.

Ghosn is a Brazilian-born Lebanese businessman whose career began as a humble plant manager at French car giant Michelin. After becoming the head of divisional R&D, he was hand-picked by the company to head across to Rio de Janeiro to sort out the company's troubled South American operations.

The box, right, used to smuggle Ghosn out of Japan. Picture: Getty Images

After turning that division around inside two years, the Ghosn flame of ambition was well alight. He was shifted across to the US to head up Michelin there, then was lured across to French car maker Renault for an inexorable climb up through the corporate ranks.

The Ghosn tour de force gathered steamroller-like momentum when the car maker injected cash and took a controlling stake in deeply troubled Japanese car giant Nissan, which in 1999 had racked up debts of more than $20 billion.

The appropriate subtitle to the Greimel-Sposato account is "Carlos Ghosn and the Culture Wars that Upended an Auto Empire". When he marched boldly into the newly minted conglomerate known as the Renault Nissan Alliance in 2000, Ghosn was treated with suspicion and trepidation by the Japanese.

During Japan's stellar car industry growth through the 70s, 80s, and early 90s, employment with a major car maker assured a job for life, including company health care, child care, education, training and often an apartment.

But without sentiment nor hesitation, Ghosn wielded the axe. Brutally.

Five factories were shuttered, seniority-based promotion went and the practice of buying parts via a web of cosy "favoured" business relationships was abruptly dumped.

Ghosn, dubbed "Le Cost Cutter", didn't win too many friends at Nissan. But he nonetheless dragged it from the brink of bankruptcy and set in train an ambitious growth phase. By 2002, the debt was gone and the Nissan Revival Plan was on a roll.

By 2005, he was head of both Nissan and Renault, flitting across time zones in the corporate jet and lauded as one of the brightest-shining lights in the global business world. He had a winery in France and a huge luxury yacht with seven bathrooms.

Against all odds, he had managed to master what the authors described as a "fragile equilibrium" between two massive yet culturally disparate companies.

We know now, of course, how this all ends. While Ghosn soared, from his lofty perch he couldn't see those below him at Nissan plotting his downfall.

Money was his unravelling. Not greed as such, but simply Ghosn's bid to be appropriately compensated for all that he had achieved. And that issue became a blind spot in his rear vision mirror.

In 2010, Nissan reported Ghosn as being paid US$9.6 million in cash and share rights, the highest of any listed Japanese company. But by global standards, he was in the auto spares bargain bin.

Ford's boss Jim Hackett was paid double that and GM head honcho Mary Barra even more.

Ghosn received an additional US$1.2 million from Renault, together with some lucrative side-earners, and a further $2 million when Mitsubishi later joined the Alliance.

But in late 2018, "seemingly out of nowhere" the book's authors say, Japanese prosecutors were given credible information that Ghosn was "secretly squirrelling away huge sums to be paid after retirement in a deferred compensation scheme". The concealed amount was put at US$80 million.

Ghosn denied it but by then the trigger had been pulled on a massive secret investigation.

Before the axe fell, Ghosn told how he had been head-hunted by General Motors for double his Nissan pay but didn't go.

"I made a mistake," he said. "I should have accepted the offer."

What he did admit, however, was using Nissan as a source of temporary collateral. Millions in Saudi-sourced cash suddenly appeared in what was known as the "CEO Reserve" fund.

He was arrested in Japan as he stepped off his Gulfstream G650 corporate jet at Tokyo's Haneda Airport. And his first mistake was a phone call from jail to call Nissan government relations senior executive Hitoshi Kawaguchi.

What he couldn't know is that same executive had been secretly cooperating with investigators for months.

A lengthy series of incarcerations was followed by a successful bail application. That's all Ghosn needed to plan his customised luggage getaway, hidden in an audio equipment box.

Paying the price for engineering the daring escape are father and son Michael and Peter Taylor. They are due to be sentenced in Japan, as is one of Ghosn's closest confidantes at Nissan, Greg Kelly.

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