Tuesday, December 04, 2018

The on-going Nissan-Ghosn struggle

Ghosn’s legal woes highlight governance failings in Japan

"How do you do this without other people being complicit?"

Good question. The thing is, as with all corporate reports issued by major corporations, the report itself is a collective work, taking months to put together, and being approved by the Board of Directors before it is released. You would think that those on the Board would have noticed if there was anything unusual. Given the high salary they were paying Ghosn, you would think they would have noticed if that was under reported. And it is not just one report; it has been on-going for a while. Unless the entire board is a rubber stamp that approves anything put before it, it just doesn't make sense that no one pointed this out before, until now, when Ghosn is starting to work on a merger between Renault and Nissan.

"Japanese prosecutors say Ghosn and another Nissan executive, Greg Kelly, an American suspected of collaborating with him, were arrested because they are considered flight risks."

Bravo. And how is a foreigner as famous as Ghosn going to ever leave Japan without anyone noticing? Also, Kelly isn't really your Japanese ojisan who can easily mix into the crowd and leave the country. This just sounds more like Tokyo investigators trying to gain some media attention by arresting a prominent person. Well, this could backfire since it will draw unnecessary comparison to similar cases in the past, where most (Japanese) bosses were not thrown into detention. And those people can easily disappear; they are your Japanese ojisan.

Nissan reporting this major malpractice only now undermines Nissan as a company. If they can't even sort out their own house, how can we be sure they are doing the necessary to ensure that the cars they produce meet the safety standards required by law? Financial governance and safety governance are the same thing; it is a reflection of the management's commitment to adhering to the laws and regulations in place. The Board should be fired if they cannot uphold governance and maintain proper oversight over all activities within the company.

Ghosn's treatment, being thrown into detention, highlights the discrimination of the legal system in Japan, which treats foreigners harsher compare to Japanese counterparts. It undermines Japan's right to criticise other countries on human rights if they can't even sort that one out within Japan itself. North Korea detains foreigners. China detain foreigners. Japan can criticise them all Japan wants, but now Japan is going to earn itself a place close to North Korea and China for detaining foreigners without trial.

It looks good on TV, looks cool to have men in black suits carrying boxes of documents out of one's house or office, as if investigators are doing their jobs. But if you don't treat them equally, that cool image will always be tainted with one of bias.

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