How Did Carlos Ghosn Escape From Japan?

Carlos Ghosn Escape from Japan: Carlos Ghosn, the former Nissan chairman may not have been a household name before, but 2020 could be his year. In a case of the truth being stranger than fiction, Ghosn “escaped” Japan in a series of daring feats to find his way to Lebanon and reunite with his wife. While news about Ghosn’s escape is still breaking, this fascinating story deserves a closer look. If you are late to party, let’s catch you up.

Here is what you need to know. Please note: all monetary amounts are listed in US dollars.

Who is Carlos Ghosn?

Carlos Ghosn (his last name rhymes with “phone”) is a 64-year-old multimillionaire who has passports from Brazil, France, and Lebanon. His net worth is estimated to be $120 million.

You may have heard of Carlos Ghosn as the head of Renault or the CEO of Nissan, but his story is far-reaching. Ghosn attained such “hero status” in business that there is a manga comic book that tells his life story, lunch boxes with his face on them (bento boxes in Japan), and postage stamps that feature him (Lebanon).

Ghosn joined Michelin after graduating from École Polytechnique in Paris. He spent 18 years there before Renault poached him in 1996. There, Ghosn earned the moniker, “Le Cost Killer” for his intense restructuring program.

After Renault bought 43.4% of Nissan in 1999, he brought his skills to the Japanese automaker. Ghosn brought Nissan to profitability in less than a year. In fact, many people credit him with the revitalization of the brand. His conduct during this time earned him a new nickname – Icebreaker – because he was able to break the ice between Japanese business conventions.

Eventually, Ghosn brought together Nissan and Renault into a partnership then convinced Mitsubishi to join in the fun. The three companies shared components and enjoyed cost-saving synergies. They ultimately became connected through various shareholders but did not merge.

Effectively, they formed an alliance that made the threesome the second largest carmaker in the world, with Ghosn at the helm. In 2018, more than 10 percent of the vehicles sold in the world came from a company in this alliance.

However, not everyone was happy with these moves. Ghosn was ousted and arrested.

Why Did Nissan Fire Ghosn?

Ghosn claims that Nissan executives were behind his undoing. He says that they were worried about the direction in which the company was headed under his direction, unfairly called him a dictator, and said he backstabbed colleagues.

“This is a conspiracy. This is not about specific events, or greed or dictatorship. This is about a plot. This is about conspiracy. This is about backstabbing.

There was fear that the next step of the alliance in terms of convergence and in terms of moving towards a merger, would in a certain way threaten some people or eventually threaten the autonomy of Nissan.

I have been the fiercest defender of the autonomy of Nissan and I made it clear that whatever steps are taken in the future that the autonomy would continue.” – Carlos Ghosn

According to Nissan, a whistleblower alerted the company to Ghosn’s financial misconduct. Together, they uncovered proof of wrongdoing. Ghosn was fired after he was arrested for that alleged misconduct.

What was Ghosn Being Charged With, Officially?

Ghosn was arrested by Tokyo police in November 2018 for under-reporting his salary. It is asserted that he only claimed about half what we made for a period of five years. Ghosn was officially indicted one month later then re-arrested. Tokyo claimed that he underreported his salary for three years not previously included in the original indictment.

Days after that, on December 21, 2018, Ghosn faced new charges – that he moved $16.6 million in personal losses to Nissan. Ghosn pled not guilty to those charges and was released on bail that March.

At this point, he had spent 108 days in jail. The bail was set at $13.8 million (or 1.5 billion yen). He was deemed a flight risk. Tokyo prosecutors confiscated all three of his passports, he was under surveillance, and his use of technology (phone and computers specifically) was restricted

In April 2019, Ghosn was arrested again. Tokyo prosecutors charged him with benefiting himself at the expense of Nissan. The claim is that he took $5 million from Nissan for his personal use, which they say he used to buy a yacht.

“The first message is that I’m innocent. I am innocent of all the charges that have been brought against me. I am also innocent of all the accusations that came around these charges – that are all biased, taken out of context, and twisted to paint a personage of greed and a personage of dictatorship.” – Carlos Ghosn, in a video message from April 2019

Ghosn claims he spent weeks in solitary confinement after his arrest and that his interrogation lasted for 130 days. If convicted for the charges against him, Ghosn would be sentenced to 15 years.

Why Did He Want to Leave Japan?

This level of questioning may seem unusual to someone from the United States, but Japan has its own way of doing things. For better or worse, its judicial system presumes that a defendant is guilty. The onus is on the charged to prove his innocence. Long detentions are common, but Japan does have a 99 percent conviction rate.

“I love Japan and I love Nissan. Nobody spends 20 years in a country, nobody spends 20 years in the leadership of a company without love and without attachment, and without engagement.” – Carlos Ghosn

Ghosn explained why he wanted to leave Japan in a statement that explained he would, “no longer be held hostage by a rigged Japanese justice system where guilt is presumed, discrimination is rampant, and basic human rights are denied.

Ghosn explained he had “not fled justice — I have escaped injustice and political persecution.” Also, some sources close to Ghosn said that there were several delays to his trial, and he was prohibited from speaking with his wife.

When I’ve seen that I couldn’t see Carole, and I didn’t have any horizon to see my wife and have a normal life, I said, ‘What’s left? What’s left? I have to leave; I have nothing here. – Carlos Ghosn

What Do the Prosecutors Say?

Prosecutors issued a statement following Ghosn’s escape: “Defendant Ghosn has fled from Japan by acting in a way that could constitute a crime in itself. His statements during his press conference today failed to justify his acts. Defendant Ghosn has only himself to blame for being arrested and detained.”

They explained that the investigation into Ghosn’s alleged misconduct followed Japanese law and that they had sufficient evidence to convict the businessman. Prosecutors also claim that they had grounds to restrict Ghosn from speaking with his wife.

How Did Carlos Ghosn Escape from Japan?

Okay, so the question on everyone’s mind – how did the man escape?

CNN calls it “the escape of the decade.” Some media outlets claim that Ghosn paid a Gregorian music ensemble to play at his private residence.

After the show, he hid in one of the musical instrument cases to leave his home without detection. Other outlets report that he used a fake passport or left in a disguise.

As far as the latter, Ghosn has used disguises before. While he was not successful, he left prison dressed as a maintenance worker after posting bail.

Here is what we DO know.

·       One the day of his escape, Ghosn leaves his house at 2:30 pm.

·       He walks into the Grand Hyatt where he met two men.

·       The three men arrived at the Shinagawa railroad station just after 4:30 pm.

·       They took a bullet train to Osaka – over 300 miles away.

·       Around 8pm, the trip waked into a hotel nearby the Kansai International Airport – the Oriental Suites Airport Osaka Rinku Hotel.

·       Approximately two hours later, two of the men left the hotel. It is a 5 minute-drive to the airport.

·       Ghosn was not seen to be with the men, but they were carrying two large boxes – luggage so oversized that it would not fit in airport scanners.

·       The WSJ says Ghosn “was then smuggled inside a large black box, generally used for concert equipment, with breathing holes drilled in the bottom, into a waiting private jet.

·       Together, the men and the boxes boarded the Bombardier Global Express to Istanbul.

·       According to Bloomberg, Ghosn flew with a former Green Beret, Michael L. Taylor,  who had experience rescuing hostages.

·       Once in Istanbul, Ghosn boarded a private plane to Beirut, Lebanon.

·       Ghosn is a citizen of Lebanon and the country does not have an extradition treaty with Japan.

·       When he arrived, Ghosn reportedly had a French passport and a Lebanese ID, so his entry was legal.

The France foreign minister, Jean-Yves Le Drian, has denied this, saying that Ghosn did not use French documents. Bruno Le Maire, the French finance minister, said that they are prepared to open investigations into $11 million in questionable expenses incurred at Renault headquarters when Ghosn was in charge. New charges could be pending.

I didn’t escape because I was guilty. I escaped because I had zero chance of a fair trial. I would be ready to stand trial anywhere where I think I can have a fair trial…

I don’t feel like I’m in a situation where I can’t do anything. I can. And I want to clear my name. I am going to find a way to make the truth come out – Carlos Ghosn

The WSJ reports that Ghosn had a crew of roughly a dozen people who scoped out the best was to “rescue” the businessman. Together, they visited 10 airports in Japan and took dozens of trips to the country to determine the weakest links and the best opportunities for Ghosn to leave undetected.

Right now, Ghosn is stuck in Lebanon. Interpol has issued a Red Notice for the businessman saying that he is “Wanted by Japan,” but Red Notice is NOT an arrest warrant.

It is an international notice that someone is wanted by a government. The Japan Times reports “there was a procedural flaw with the [Interpol] notice and given that no formal request for the investigation has arrived the prosecutors will not be able to interrogate Ghosn.”

However, the site notes that “Lebanese prosecutors will not stop Japanese authorities from joining in their investigation of Ghosn… adding Japan has not requested such cooperation nor the handover of Ghosn by Beirut.”

It is virtual checkmate.

Why Should You Care About Any of This?

Investors need to know what is happening with this case because it could have important ramifications. For one, there is the fate of Nissan to consider. The carmaker spent over $200 million to investigate Ghosn. According to Ghosn, this is more than the income Tokyo prosecutors accused him of failing to report.

How rational is it…to spend $200 million. You’re going to destroy your company. You’re going to destroy your rep. You’re going to destroy your image. You’re going to divert the attention of all your top management. – Carlos Ghosn

Ghosn’s removal from the head of the Nissan, Mitsubishi, and Renault alliance has taken its toll on those companies. Nissan’s market cap is down over $10 billion since Ghosn’s arrest – that’s a loss of roughly $40 million per day. Ghosn recently spoke on this subject at length:

You know who’s wrong and who’s right? Look at the results. That’s the only way to know who’s right and who’s wrong in a business.

When I look at what happened for the last 14 months, with everything that happened, I’m not reassured about the future of the alliance.

I think, yes, the alliance can succeed without me. But the alliance needs to follow some rules. The alliance is not going to work with consensus [between the three companies.] And for the moment, they all think that consensus decision making is one way to make the alliance live. That’s wrong.

Also, there could be ramifications for Japan and the companies that do business there. Ghosn’s claims about the justice system in Japan and allegations against Nissan could scare off foreign interest in the country AS WELL AS make Japan and the companies based there less willing to deal with foreigners.

That said, the story of Carlos Ghosn is still unfolding. Stay tuned.

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.