Nissan's current chief slams its old one

TOKYO — Nissan CEO Makoto Uchida, the man now digging the carmaker out of its biggest-ever financial loss, blamed indicted former Chairman Carlos Ghosn for the company's sorry state and warned it will take time to rebuild a demoralized corporate culture riven by distrust in the top brass.

Testifying last week in Tokyo District Court, Uchida said Ghosn stayed in control too long, wielded unchecked "absolute power" and turned a deaf ear to criticism and dissent.

The 2018 arrest of Ghosn shattered company morale and exposed a yes-man mentality that pervaded Nissan Motor Co., undermining its competitiveness and cohesiveness, Uchida said.

Simply put, Nissan lost its way.

"Nissan's brand was damaged, the company employees' motivation was hurt, and their trust in the top management was damaged," Uchida told the court in a criminal trial against former Nissan director Greg Kelly.

Uchida's comments, made as a trial witness, painted Nissan as Ghosn's fiefdom and a company in need of urgent repair. Most of Uchida's testimony was focused on the various corporate governance reforms implemented after Ghosn's removal to improve transparency and accountability.

Ghosn's push for rapid expansion also weakened Nissan's financial footing, setting the stage for its current decline, Uchida said. Nissan just posted its biggest-ever full-year operating loss, and Uchida is currently executing a revival plan to forestall a third straight year of red ink.

Uchida, who became CEO in December 2019, a year after Ghosn's arrest, said he felt "ashamed and miserable" upon hearing of Ghosn's arrest from news reports.

"I simply cannot believe the nerve of partaking in such misconduct," he said.

Prosecutors allege Ghosn, 67, and Kelly, 64, hid some $85 million in postponed compensation from 2010 to 2018. Both men, arrested the same day in 2018, deny any wrongdoing. Whereas Ghosn jumped bail and escaped to Lebanon in late 2019, Kelly remains in Japan to stand trial.

Uchida's statements wrapped up the last day of testimony in Kelly's proceedings, which began on Sept. 15, 2020, Kelly's 64th birthday. Kelly now enters another long wait. Prosecutors make their closing argument on Sept. 29, and the defense makes its final appeal on Oct. 27.

A verdict could take as long as early next year.

Uchida's stinging rebuke of the Ghosn era stood in marked contrast to the testimony of Ghosn's immediate successor, Hiroto Saikawa. Saikawa, the CEO at the helm when Ghosn was arrested, testified this year that Ghosn was a "brilliant" business leader that Nissan couldn't afford to lose.

But Uchida insisted that Ghosn had overstayed his welcome at Nissan, after saving the company from near bankruptcy in 1999 and leading it for nearly two decades until his arrest and downfall.

"Mr. Ghosn served as CEO for too long a period," Uchida said.

Uchida said Ghosn's long tenure allowed him to consolidate too much power in himself and that the resulting culture of submission precluded open discussion and even serious talk of succession.

"The company gradually became a place where workers just wanted to please the boss. That absolute power applied to compensation and personnel matters," Uchida said. "People would wonder what would happen to them and their career if you mentioned succession."

Ghosn has objected to previous efforts by Nissan to portray him as a greedy dictator. He has said he was simply a strong leader providing clear direction and vision, something he says is lacking at Nissan today.

Ghosn also disputes the notion that his business strategies are to blame for Nissan's plunging sales and profits. The real problems, he has said, began after his arrest.

Uchida said improving corporate governance is a top priority of his tenure.

In late 2019, the company revised its Nissan Way, a kind of employee code of conduct, to emphasize a customer-first focus and what Uchida called "sincerity to people and society." He also adopted a Corporate Purpose in the summer of 2020: "Driving innovation to enrich people's lives." Ghosn, he said, had been pitched such an idea, but always turned it down.

"Mr. Ghosn's reaction to that request was 'thank you, but no thank you,'" Uchida said.

Employee surveys, Uchida said, show a rebound in morale and trust since he took the wheel.