A lesson in Nissan chairman Carlos Ghosn’s downfall, for Angela Merkel and other long-serving leaders: leave when you can
- Bill Emmott says German Chancellor Angela Merkel should learn from the Nissan executive’s mistake. Ghosn failed to leave when he could have last year, and now his legacy is going up in flames
Even business or political superstars risk disaster if they overestimate their power and outstay their welcome. That is what Merkel has done by remaining in office for 13 years, making her the longest-serving chancellor since Helmut Kohl held the post, from 1982 to 1998.
Within recent memory, Merkel was cast, rightly or wrongly, in heroic terms for her role in stabilising the euro single currency. But when she leaves office, probably in the next few months, she will become a much diminished, perhaps even humiliated, figure.
At least her fate looks to be better than that of Brazilian-Lebanese-French executive Ghosn, who was arrested after his corporate jet landed in Tokyo and who now faces accusations that he misappropriated company funds and paid himself millions of dollars in hidden compensation. Whatever facts eventually emerge, his career, which included running both Nissan and Renault as chief executive for 12 years, has come to an abrupt end.
Another lesson, however, is that auditing and other corporate governance safeguards remain weak at big Japanese firms. If Ghosn truly has been hiding his real income from Nissan’s published accounts, there must have been collaborators in the company’s finance department, and such practices ought to have been identified by auditors and investigated by independent directors. Such a sudden, belated disclosure of executive malpractice casts a dark shadow over the entire firm.
That shadow extends to the claim that corporate governance in Japan has been improving, following reforms encouraged by Prime Minister Shinzo Abe’s government. And yet that failure may be overlooked thanks to a further feature of this tale, evident when the man who had been Ghosn’s co-CEO, Hiroto Saikawa, brutally ejected him after his arrest: Japanese managers have reasserted their traditional solidarity at the firm in an effort to shift the balance of power in the Nissan-Renault-Mitsubishi alliance away from Renault and back towards Nissan.
The main moral of this tragic tale, however, does not stem from a struggle between Japanese and European businesses, much less from a pay squabble and dodgy corporate practices. It is that, unless you own a company, you had better not think you can stay at the top of it forever.
Ghosn had remained chairman of Nissan after he stood down as co-CEO last year, and he evidently believed that he could still call the shots. Managing your succession is a key task for any leader, one that must not be left until it is too late. He failed to do this, in part by failing to actually leave.
Ghosn, by contrast, can now affect his legacy only through what his lawyers can prove in whatever trial eventually takes place. If only he had bowed out a lot sooner, handing over the reins gracefully and completely, his story would have remained one of great achievement. And a lot less damage would have been done to the companies he once served so well.
Bill Emmott, a former editor-in-chief of The Economist, is the author of The Fate of the West. Copyright: Project Syndicate
