The case of former Nissan CEO Carlos Ghosn is a timely reminder for multinational corporations to ensure their senior executives are prepared for all scenarios when relocating to Asia. Sandra Lowe reports on what they should consider before sending their executives to the region.
In an increasingly globalized world, multinational corporations must face the reality that not all legal jurisdictions are the same, and across Asia there are many complex types of legislation at play, from shariah law in Malaysia and Saudi Arabia to lèse majesté laws in Thailand, or the rigid social and workplace etiquette in Japan.
The case involving former Nissan chairman and chief executive Carlos Ghosn in Japan is an example of just how a problematic situation can spiral. The 65-year-old Brazilian-born businessman of French and Lebanese nationality was regarded as a titan of the auto industry because of his success at reviving French automaker Renault, and then Japan’s Nissan. Ghosn had been tasked with guiding an alliance between the two companies, which later included another Japanese carmaker, Mitsubishi Motors.
Today, Ghosn faces financial misconduct charges, including under-reporting of his compensation package and aggravated breach of trust over allegedly failing to report around US$82 million in salary and temporarily transferring personal financial losses onto Nissan’s books during the financial crisis.
He was first arrested in November 2018 and held in custody while the courts repeatedly denied him bail. On 6 March 2019, he was granted a US$9 million bail, but the businessman subsequently fled Japan in December and landed in Beirut, Lebanon.
When politics demands, a CEO can become a convenient scapegoat, particularly in countries with a less than sturdy separation of powers. Tit-for-tat arrests are a common strategy in some Asian countries and the hapless executive may have done nothing to warrant arrest and detention.
Whether Ghosn is a conman or a scapegoat, his case provides an opportune time for multinationals to reassess and ensure they have taken the appropriate steps to protect and prepare their executives as much as possible for not only working in Japan, but elsewhere in Asia.
Stephanie Chiu, a senior associate at Freshfields Bruckhaus Deringer, regularly advises employers on compliance with employment issues. She says there are various strategies that MNCs can employ to prepare CEOs and senior executives before they live and work in Asian countries.
“A first point is to select the right people. Some senior executives will be better able to adapt to new working environments and cultures than others,” says Chiu. “One can expect MNCs to have policies in place and they will often try to operate global policies, which apply across jurisdictions, but there will inevitably be some country-specific differences (both from a cultural and practical perspective, and also from the perspective of legal risks and boundaries), so bespoke/one-to-one training is a valuable part of the preparation for a senior individual’s move.”