Michel Villette, professor of sociology at AgroParisTech, reminisces on the recent downfall of Carlos Ghosn, Chairman and CEO of Renault-Nissan.
During his long career, Carlos Ghosn, engineer, made his way up through the ranks of the tyre manufacturing company Michelin and then the car manufacturer Renault to become executive director. He then became the lynchpin of the Renault‑Nissan‑Mitsubishi Alliance, which, under his leadership, has become the largest car manufacturing company in the world. That exceptional achievement has made him the alter ego of the greatest businessmen on the planet. He could, justifiably, consider that he has done as much as, or even more than, Bernard Arnault, François Pinault, Vincent Bolloré or Serge Dassault – only, they are some of the wealthiest men on the planet, and he is not.
Adding up Carlos Ghosn’s yearly salaries and stock options from Renault and Nissan, the journalists working for the French magazine Marianne estimated his personal wealth at about 130 million euros. That is not yet enough for him to rank among the 500 largest fortunes in France and it is very far from the billions needed to have one of the 500 largest fortunes in the world. According to the ranking published by Forbes magazine, Bernard Arnault is worth 72 billion dollars, François Pinault 27 billion and Serge Dassault 22.6 billion.
That is, without a doubt, Carlos Ghosn’s problem: he is the CEO of one of the largest companies in the world, but not one of the great capitalists of the planet. Even though he admitted to cheating Japan’s tax authority, thus doubling his income, he is still far from the elusive pot of gold!
From idolised saviour to fraudster
When you are an executive director, you can be dismissed at any time. We may remember, for instance, that the actual creator of the LVMH group was not Bernard Arnault, but a now forgotten executive director called Alain Chevalier. The visionary and strategist, a born creator, did not own the capital of the company he headed. He was dismissed out of hand. The same thing is now happening to Carlos Ghosn in Japan, where he was imprisoned on Monday 19 November on suspicion of misappropriating corporate assets and committing tax fraud. Overnight, he was thrown not only from the company, but straight into jail.
In only a few hours, Carlos Ghosn went from idolised saviour to fraudster. To understand such a drastic development, it should be remembered that he is, first and foremost, a ‘cost killer’. He is one of the foot soldiers of capitalism tasked with menial labour; one of the employers who sacrificed employees for the sake of profitability and growth. This is a job that is morally questionable and questioned. Whether such business people succeed or fail, it is difficult to justify their work. Society is wary of them, unsure whether to reward them or punish them for their actions.
It seems that Carlos Ghosn is one of those directors who sincerely believe their own speeches on deserving managers. It is conceivable that he deemed he was entitled to a financial reward that measured up to his industrial achievements. When he realised he would never be given the millions he thought he deserved, he may have been tempted to take them himself. Recent temptations to build himself his own personal fortune are thus to blame for weakening his position, undermining the myth of the charismatic boss and precipitating his downfall.
In Portrait de l’homme d’affaires en prédateur (“Portrait of businessmen as predators” – editor La Découverte), a study carried out on a sample of 32 businessmen-become-billionaires published in 2007, we concluded that the businessmen undertook predatory actions in the first part of their careers, when they acquired property rights. The second part was then dedicated to the consolidation and legitimisation of the position thus acquired. Carlos Ghosn seems to have tried the opposite: first, legitimising his position as a brilliant CEO and then, amassing a personal fortune at the end of his career. That strategy for amassing wealth implies loyal, grateful partners, which is rare in the business world…
Carlos Ghosn, like many other executive directors before him, will never belong to the very select club of true capitalists and their heirs; those whose fortunes amount to billions and whom no one can supplant as long as they own enough of their companies to retain control.