February 3, 2020 • 39 mins
In the Season One finale of Making A Killing, Bethany brings back her friend, colleague and co-author Joe Nocera (Bloomberg Opinion columnist and creator of The Shrink Next Door podcast) to bookend the season with a lively analysis of the former head of Nissan Motor Co. and Renault S.A., Carlos Ghosn... sure to go down in history as one of the wildest business stories ever. Time and time again we learn that in business, truth is always stranger than fiction.
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Episode Transcript
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Speaker 1 (00:00):
Thank you so much for downloading making a killing. I'm
Bethany McClain, and I'm cutting through the noise to reframe
the stories you know and uncover the ones you don't know.
Truth is stranger than fiction. I think about that saying
a lot, because it has the great virtue of being
well true, and it's particularly true when it comes to
(00:21):
the world of business. I mean, from the financial crisis
to Bernie Madoff, you could not make the stuff up
even with that high bar. The story of Carlos Gone
stands out. Gone, of course, is the former head of
Nissan Motor and Renault. He is was a revered figure
in the automotive world. In the fall of twenty eighteen,
(00:42):
he was jailed in Japan on charges of financial misconduct.
While he was out on bail, he hatched an escape
plan that involved being smuggled out of the country, escaping
security by hiding in a large black box, which, thank goodness,
apparently did have breathing holes cut in it. He's now
living in a pink mansion in Lebanon, a pink mansion
that Nissan had bought and renovated for his use. I mean, right,
(01:06):
talk about truth being stranger than fiction. So there are
at least two sides to this story. The official version,
the Japanese version, is that Gone stole from Nissan, partly
by paying himself more than anyone, including investors new Here's
a surprise. Going denies those charges. In his telling, Nissan's
Japanese executives wanted to be rid of him and found
(01:27):
a horrible way to do it. I have not fled justice,
I have escaped injustice and political persecution, Go and said
in a statement after his escape. For sure, Japan treat's
white color criminals very differently than the US does. Among
other things, Gone was held in solitary confinement and interrogated
for eight hours a day. The conviction rate is close
(01:50):
to one. My longtime friend Jonah Sarah wrote in a
recent Bloomberg piece that Gone thought to himself, you are
going to die in Japan if you don't get out,
So Gone took matters into his own hands. Is this
justifiable or is this a sign of the entitlement of
the global elite? And who is Carlos Going an innocent
(02:11):
man wrongly accused or a common thief. I began this
season of making a killing with Joan Oh Sarah talking
about Jewel, So it seemed fitting to end it with Joe,
who wrote this about Carlos going. When you get right
down to it, Nissan and the Japanese prosecutors put a rich,
powerful man, a man unaccustomed to being defied through hell.
(02:33):
Now that he has escaped, it's his turn to put
them through hell. I'm thrilled to have Joe here to
talk about what will surely go down in history is
one of the greatest business stories ever. Certainly one of
the greatest escapes ever, that's for sure. So how did
he do it? Let's start with that. Well, the best
part about that as nobody yet knows. There's only I mean,
(02:55):
for instance, you know, when you think about it, if
you make an escape like that, you have to plan
it for months, right months? How did he find the
guy who planned it? How did they how did they
communicate with each other? Well? Wait on that question, is
it even a guy who planned it or do we
think it might have been his wife? Oh? No, no, no, no, no,
(03:15):
well I'm pretty sure it wasn't his wife. No, there's
a there's a man who's a you know, a former
paramilitary type who does security these kind of high risk
security Michael Taylor. Right, Yes, that's right. His name is
Michael Taylor. Thank you. So how did Michael Taylor get
in touched with Carlos Gone? How did they plan it
so that Gone knew what to do and when to
(03:36):
do it? Um, it's obvious that they had They had
come to Japan and they were watching the people who
were watching Gone. So there was a there was a
camera that watched them all the time, and there were
people out Japanese you know, security guards outside. But they
(03:56):
realized that there was a certain week in the year
when the Japanese basically took the week off because it
was a you know, their high holidays, they're big vacation time,
and they weren't there, and they figured that out and
they realized that that was potentially the time to do it.
And so, you know, the first round of rumors, who
(04:18):
was I'm so sorry it wasn't true, was that he
had he had hidden in a in a in a
musical instrument case for like for a double base doesn't
but you know, it's kind of pretty amazing what he did.
He he walked out, he put one of those masks
around his face, as many Japanese people do when their outdoors.
(04:41):
You know, he walked about a mile, he walked into
a hotel and then he walked out to the other
side of the hotel um presumably not being followed, obviously
not being followed. And then he got on a train. Wow.
And he and he took like a three hour train
ride to Osaka. And once he got there, that's when
he was met. This team of people who put him
(05:03):
in this big black box, put him on that line alone,
this team of people who put him in a big
black box, righty, and they put him on an airplane,
a private airplane. They didn't want to fly directly to
Berute because they were afraid that that would send up
too many signals. So there was an istanbol right and
then he had to get past you know, customs, a
(05:24):
second round of customs. Having sneaked past the Japanese customs,
then he had to get past the Turkish customs. So
we went back in the black box. They took him
out of one airplane, put him in another airplane, and
he landed in Lebanon. And Lebanon presumably he can't be extradited. Well,
Lebanon does not have an extradition treaty with Japan. Also,
(05:45):
he is a Lebanese citizen among his other citizenships. He
is a highly revered figure in Lebanon. They even have
a postage stamp named after him. I mean, he's one
of their few kind of international businessman. They don't have
very many. And then his wife met him also in Lebanon,
so she obviously knew what was going on. So she
(06:05):
goes to Lebanon. And then the hilarious thing is he
you know that this is one of the houses that
he had refurbished, renovated Nissons die. Now the question is
whether Nissan knew that or not. But he's basically he's
squatting in it, and he's kind of daring Nissan to
try and kick him out. And is it true that
(06:26):
it's pink? I don't know why that details definitely think
it's definitely. I've seen it from the archide. But see,
this is why I asked the question about whether his
wife was involved, because his wife met him there, so
she had to have known. Yes, that's absolutely true. She
had to have known something for sure. But don't forget
that he had not been one of the things that
most upset him during his ordeal. And I'm sure, we'll
(06:49):
talk about that ordeal in a bit is that he is.
Part of his bail, he was not allowed to speak
to his wife at all, and his children really, at
least one of them couldn't come to Japan because she
was afraid she'd be arrested too, So he didn't have
a lot of contact with his family. He Wanda spoke
(07:11):
speaking to his wife twice with permission and with people
listening in. Once was around Thanksgiving and once was around Christmas.
We're going to come back to the conditions of his
bail and the conditions of his treatment because it's important
both in the micro and interesting in the macro. But
what's really interesting about this is we know the details
of the escape, but we have no clue how it
(07:32):
was planned. And listening to you talk about the monitoring
of his conversations with his wife, how did he manage
to have communication with the people who helped him escape
if everything he said was being monitored. When he was
in the home that he was using in Japan in Tokyo,
he was not allowed to have any electronics, no internet,
(07:52):
no television, no nothing. But when he but during the
day he was allowed to go to his lawyer's office
where he did to have access to a computer and
did meet with people, and he didn't meet people were
allowed to come and meet with him. So presumably that's
how it was done in person or possibly over the internet,
(08:12):
when he was at his lawyer's office. Although his lawyers
says he knows nothing, I'm not sure his lawyer didn't
know nothing. I'm sure his lawyer. Jampan is a country
where face matters so much, yep. And he humiliated his
lawyers by doing this. His lawyers had vouched for him,
and his lawyers were trying to show through his trial
(08:35):
that a Westerner could get a fair trial. That was
their goal. And you know, they one of the very
tiny handful of big time defense attorneys. I mean in
the US they're all over the place, but in Japan
they're very rare. And this was a moment for these
lawyers to try and make the case that Japan could
(08:56):
treat a Westerner fairly. I just wanted to pause on
this note, for it was from the Wall Street Journal
and they wrote that the planning involved a team of
between ten and fifteen people of different nationalities, and that
in all the team took more than twenty trips to
Japan and visited at least ten Japanese airports before selecting
the Osaka Airport as a week link. I mean, it's
a stunning degree of coordination. Right before we move on
(09:18):
from this, Michael Taylor, this operative who helped Going. He's
a story in his own right, isn't he? He is
He's done this a few times before. He's actually been
in prison for something, um, you know, and and yes
he when when the when the film gets made, Michael
Taylor will have a starring role forre. You can just
see that this is everything about this is cinematic, right right,
(09:41):
get right down to the black boxman. In fact, where's rumors?
Wall Street Journal pointed a rumor that, uh, Carlos Gone
was already in negotiations with Netflix, but he denied it.
He denied it, So tell tell me more about who
Carlos Gone is. For people who don't, who haven't followed
the craziness in the automotive industry, one way to think
about it, Carlos Gone is the Lee Iacocca of the
(10:03):
modern era, the larger than life auto exac who performs
miracles and does is that is that real? To some degree?
It is, yes, So he's hard, is what happened. Carlos
Gone was the CEO and chairman of Renault, a French company. Ye,
(10:24):
Nissan is in terrible, terrible trouble, and so they go
to him and they ask him to what could he
do to help them? So what he does is he
sets up It's not a merger, it's an alliance. They
remain separate companies, but they do things like they buy
supplies together, and they do some back office things that
(10:47):
save money, and they coordinate in various ways. They actually
even for a long time split up territories. So like
Nissan was big in the US, Renault was big in Europe.
They both went to China and you know, I said
he was Lee a Coca. A better phrase might be
he was the Marshal Tito of the of the auto business.
(11:10):
Because what you had was you had this very French
culture Renault, this extremely Japanese culture Nissan, and you had
this one guy who somehow managed to ride herd over
all of it. So then Nissan didn't. He did turn
Nissan around. I mean it was really quite dramatic, to
(11:32):
the point where Nissan became the stronger of the two.
Companies and Renault became the weaker, but because of the
way the alliance was structured, Renault owned more of Nissan,
like fifteen percent. Then Nissan owned a Renault which was
five percent. So one of the things, one of them
that began to upset the Japanese not the only thing,
(11:53):
but one of the things was that Renault, which had
become the weaker company, still add the stronger position on
the board and in terms of stock ownership, and so
do you credit do most people credit Nissan's ability to
thrive to Carlos Scone and he is he that guy
who was able to pull these companies through an incredibly
(12:16):
troubled and difficult time in the automotive industry globally, Most
people do give him that credit. Yes, he's viewed as
as a as a as a true giant of the AutoWorld,
to the point where as he as he noted during
his flamboyant press conference, once he escaped. You know, Steve
Rattner approached him during the financial crisis when he was
(12:36):
the autos Are Obama's artos Are and asked him if
he would be willing to come in and take over
General Motors. Wow, Okay, so this guy, he doesn't lack
for ego either. So well, I do have to say, yes,
if you've if you've been around CEOs, there's a certain type,
(12:56):
you know, larger than life, totally convinced they're right about everything.
Sometimes they're all never in doubt, exactly exactly. Um but really,
um kind of aggressive he was? He is was all
of those things. Um uh. And yeah, you could sort
of see how he would drive the Japanese mad. And
(13:17):
before we come back to that, wasn't he trying to
do something with fat and Chrysler? He was trying to
pull off yet another coup, right, Yes he was. He
had already um brought me to Beish into the alliance. Okay, Um,
he was, you know, maneuvering to bring other people into
other companies into the alliance. But the big issue really
really for Nissan was they felt that he was going
(13:39):
to not just have an alliance, but he was going
to merge Nissan and Renault and they were dead set
against that. And why because they perceived Nissan is a
stronger company, or because of Japanese pride and Nissan not
wanting to see it submerged or subsumed into Renauld. Both
is the answer. Um, you know they're they're you know,
(13:59):
the Pese. There were xenophobic people, without question, and um uh,
there were a lot of tensions within the alliance even
you know, before this this came up, the idea of
a merger, and yes, Nissan felt like, we're the king
of the hill. Now, why should we stoop to help,
you know, struggling we're now. Yeah, I just saw this
(14:20):
note in here that six years after after after Gone
took the top job, Nissan had surpassed Honda to become
Japan's number two automaker. It's market capitalization had quintupled and
its operating margin had risen tenfold. So that I mean,
as I and in the modern world, that's how you
become a legend. Yeah, I guess that's true. So were
there any whispers about him up until the fall of
(14:42):
twenty eighteen? Was there any talk that this guy was
somehow overstepping some kind of bounds or was the fall
of twenty and eighteen, when it all exploded out of
seemingly nowhere, there was not so much as a whisper
in terms of, you know, whether people thought he was
doing things on the fly or on the side, or
or or playing tricks or playing games. It was one
(15:05):
of the things that were so shocking about this story
is it's it's it's as if Mary Barra flew to
Canada and was was was arrested for you know, uh,
stealing from General Motors. That's how kind of shocking this was.
And the way they did it, you know, um, the
Japanese Nissan executives who were plotting this with prosecutors and
(15:31):
that that is why. Oh yes, there's no question about that. Um,
you know. They they they tricked Goons former number two
into flying back to Japan, which he had not done
in three years and was awaiting back surgery. Wow, they
tricked him. An old friend of his from Nissan called
(15:54):
him and said, hey, we really need to hear for
this meeting. We really come on, We'll send the private
plane and they did, and he lands and he gets arrested,
and then gone has no idea this is coming. He
lands and he gets arrested, and that's where they find out,
and that's where the world finds out that there are
these allegations against him. Truth is stranger than fiction, indeed, right,
(16:15):
it's it's it's it's an astonishing story. One of the
problems with trying to grapple with the story is that
it's really hard to know even now who's telling the truth.
Why is it so hard to know? His compensation was public? Right?
These were public companies, and so what was disclosed is
(16:37):
knowable and what he took is knowable. Where does the
complexity come in? Okay? Maybe pause first on what the
charges against him. So there's a couple of things. The
first charge is that he hid compensation from Nissan and
the board. This seems frankly pretty unlikely, although he did
settle with the sec for small, by his terms, a
(17:03):
small amount of money, um without uh, you know, denying.
Was it affirming or denying the charges? Yes, but the
exact language was that they he settled charges that that
he and Nissan had failed to disclose more than one
hundred and forty million in compensation and benefits due to
be paid to him in retirement. Right, So that hundred
So that one hundred and forty million is a big
(17:25):
is a big sticking point. So he and his former
number two, his name is Greg Kelly, they say there
was they had not signed off on the deal yet,
that that they had they had sketched it out along
with some Nissan executives. They had all sketched it out together,
but there was no uh guarantee it was going to happen.
(17:47):
It had not been um uh, it had not been certified,
had not been approved by the board, and so they
say there's no there there. Nissan says, you know, this
was that you were doing this behind our back, and
in so doing you were violating the Japanese law. Okay,
So that's number one. Number two the second set of
(18:08):
charges was that he was, you know, an effect laundering,
laundering Nissan's money to put it in his pocket. So
the big example of that that when they he uses
is um that there was a dealer in the Middle
East and Nissan paid this dealer millions of dollars and then,
(18:29):
according to Nissan, the dealer somehow funneled that back some
of that back to Carlos Gone. Gone says it was
all on the up and up, that the money that
was spent to this Midias dealer, who he acknowledges was
a friend, was not unlike any you know, up front
(18:49):
incentives to any dealer. So he says, you know, that
was on the up and up, and then the third
sort of set of charges. Um, it's really more like
Dennis Kozlowski's uh six thousand dollars curtain shower curtain. Yes,
that's right, it's more like that, which was not illegal, right,
but it was a waste of corporate assets. And so
(19:13):
he had these houses, you know, literally like five houses
that were all renovated for him on Nissan's dime, all
supposedly owned by Nissan. His kids all went to Stanford
on Nissan's dime. His kids cut and went to Stanford
on Nissan's dime. Well, but I want to figure out
how to work that one that that you really I
mean he had that in his contract, okay, but they
(19:34):
would pay for it. And then the famous, most famous
of all, the birthday party for his wife and Versailles
Marie Antoinette teamed right yes, and then he goes at
the press conference he gave, he really went off on that.
It's like, we've spent so much money helping Versailles, making
Rascaille great, Versaids the place everybody wants to go. Rasaide's
(19:55):
good for our customers, it's good for our you know,
ad agencies. Da da da da da da dada so
he somehow argue, we're defensive about at Versailles. I think
that every any single other thing that he spoke about.
So he somehow argues that hosting a Marie Antoinette themed
birthday party for his wife at Versailles was beneficial to
Nissan's brand pretty much. But I don't I don't know
(20:16):
that it was Marie Antoinette. Okay, I've read that somewhere
that might that might that might be like that, like
the musical instrument case right, too good to be true?
Um So, so what does Renault say about all of this,
because they you would think they would have a view too.
Are they on Nissan's site or are they going no
is uh Arna doesn't know what to do, to be honest.
(20:38):
Um Nau's main concern, especially at the beginning, was to
shore up the alliance and not let the alliance fall apart.
For the most part, that is a losing battle because
without going at the top, the culture classes have gotten
worse and worse. The board disagreements have gotten worse and worse.
(21:00):
And I do have to wonder whether whether the alliance
can survive or not, which it will be really bad
for a no UM in terms of in terms of
Carlos Gone, they have sort of been tiptoeing towards the
idea that maybe there was some wrongdoing, but they haven't.
They haven't really come out and laid out a set
(21:23):
of allegations the way Nissan did. Okay, so it's still unclear.
I mean, it's really complicated for the French because France
is in a very anti elitist mood right now. Makran,
the president is viewed as an elitist, Carlos Gone is
viewed as an elitist. In a different era, it's quite
(21:43):
possible the French would have gone, you know, to great
Lance to spring him from prison, but not today. But
not today, they just kind of kept their mouth shut
and really didn't hasn't done much of anything, great Kelly,
what's happened to him? Um? Nothing so far are which
he's still in jail and no, no, no, no, no.
He was. He was out on bail just as Carlos
(22:06):
Gohne was awaiting his trial, just as Carlos Gone was. Um.
There was some fear that he would be thrown back
in jail as as kind of punishment or revenge for
gons escape. But that does not appear to have happened,
and um, you know, on the one hand, this is
kind of rough for him because obviously he's not gonna
(22:27):
he's not gonna get out of Japan anytime soon. But
on the other hand, this doubles the The Japanese are
going to have a really hard time saying this guy
should go to jail for twenty years when the ring
leader quote unquote has escaped Lebanon, So that actually may
work out for him. So back to this point about
how Carlos Gone was treated in prison. Tell us about
(22:49):
the conditions first of all. Okay, so let me begin
by saying that there's a there's a phrase for how
the Japanese deal with people are accusing of crimes. It's
called hostage justice. And the idea is that the Japanese
are not looking for evidence, They're looking for confessions. And
(23:10):
that's the way the system works. And so and that's
why they have a ninety nine conviction rate because most
of the time when they go to court, the persons confessed.
And the way they get do you confess is you know,
um eleven and twelve hours of interrogation a day, uh
no lawyer present um lights on twenty four seven. Um,
(23:35):
you know, your room is constantly cold, your your cell
is constantly cold. Um. There's various other forms of you know,
what you might call benign torture. In other words, they're
not physically beating him, but they're making his life completely
utterly miserable. And then the way the system works is that, Um,
after twenty three days, they have to either let him
(23:59):
out on bail or come up with new charges. And
so what they did constantly was they would, you know,
wait till the last minute, and just as he was
about to be sprung from bail, they throw in new charges.
So we wound up spending a total of one hundred
and some odd days in prison, you know, under these conditions,
under these interrogation conditions, and they're always saying to him,
(24:20):
you know, if you ever want to see your wife again,
you better confess. You know, we're going to make this
much worse for you if you don't confess. It's it's
it's just like you know, what you would think and
think would not go on in Russia or China. And
the fact that he didn't confess suggests either that he
believes himself to be innocent or that he's really tough, well,
son of a bit, I think it takes a lot
(24:41):
to resist that. Yeah, I would think so too. So
is there just to play devil's advocate? And I'm not
arguing that people necessarily should be treated like Carloscone does.
But is there any argument that in a world where
many people here feel we go too easy on white
color criminals and that people who do damage, but our
white collar criminals get far lighter treatment than those who are,
(25:04):
for instance, in possession of marijuana, and so is there
is there any argument that that might deter the sort
of happenings that we see in the US from the
financial crisis to en Rondo Thranis well. I mean, I
would never argue that white collar criminals should be denied
new process and should be and confessions should be tried
to be forced out of them. I would never argue that.
(25:25):
To me, the issue is in the US that we
don't our prosecutors have lost the nerve to indict white
collar criminals, and that they and the courts, you know,
various rulings in court have made it more difficult to
bring white collar prosecutions. That's a lot different from from
(25:51):
what happens in Japan. And really the outrage about what
happened in Japan really had less to do with whether
or not Carlos Gone had committed a crime than this
kind of a new insight that, oh my god, look
how their justice system operates. Right, It's like what Western country.
(26:14):
I mean, it's not a Western country, but they have
Western principles. What Western country treats prisoners like this treats
and treats someone not even a prisoner, someone who's just
been accused without even being found guilty in that way. Right.
And so here's the other thing I was thinking about
this is that, you know, one of the things that
happened is that Greg Kelly gave an interview at some
(26:37):
point to a Japanese newspaper, and he made a series
of accusations about the top people at Nissan, the very
people who had plotted against him and Carlos Scone. Wow,
and what did he say? He said that they had
padded their salaries and that they had done things. They
had done the exact same sort of things that they
were accusing Carlos Scone of doing. And say that again,
(26:58):
when did he give this interview before or after he
was arrested. Oh no, well, okay, I think it might
have been this past summer. Okay, But anyway, that the
upshot was that the CEO had to resign, that the
other people involved had to resign, that they had to
pay back some of the money. They were guilty and
they admitted it, but they got slaps on the risk
(27:19):
because it was apparently in the interest of Nissan that
they did this. No, they got slaps on the risk
because they're Japanese. That's interesting. So in other words, even
that system of laws that it's in the company's interest
or against the company's interest doesn't really apply. It also
depends on who you are, right Well, in this particular case,
that was compounded by the fact that they didn't want
to put the people who were accusing Carlo's gone in
(27:42):
prison because that were completely undercut their ability to prosecute it.
So is it just a completely ridiculous idea that the
justice system should function the same way for everyone, regardless
of who they are. You look, that's not a ridiculous thing.
But you know, that's not how the world works. I mean,
it just isn't. Well, that's one of the larger implications
of this story. Isn't it that that's just not how
the world works. Well, it's the larger implication of the
(28:04):
Eptein story. It was, until very recently, the larger implication
of the Harvey Weinstein story. I mean, it's the larger
implication of the financial crisis story. I mean, you're, you know,
rich people get get top top lawyers, and they can
put pressure on that other people can't. I mean, Carlos
Gone didn't have that going for him, which is part
(28:28):
of why he is, which is a large part of
why he decided he had to escape because he had
he had no he had no swag in Japan. So
are you pro or con his escape? I mean, would
you say that he saw a set of rules that
he thought were unfair and so he used all the
resources he could marshal to flee that set of rules
and find a different set because he could. Or do
you think he should have stayed to face the music
(28:50):
in Japan because that's their system of rules, and that's
I don't know what you do. I agree that he
would not have gotten a fair trial in Japan, and
I also believe that he was fundamentally kidnapped and so
escaping for kidnappers, even though it's a government seems okay
to me. On the other hand, I really do understand
(29:11):
those who say, you know, just because you're rich, you
shouldn't get to decide what jurisdiction, you know, you get
prosecuted in. Right, isn't the essential problem with our world
the fact that people who don't have to follow the rules,
that people who can pay not to follow the rules
can pay not to follow them right where every video
else has to. That's exactly. And you know, you have
(29:32):
to be very rich to pull off what he pulled off.
So before we before we come back to how this
all plays out, what does it mean for Nissan and
renew Nothing good? Nothing good for Nissan either, No, no Nissan.
If you look at Nissan's stock, it's just tumbled since
he since this happened, Renee Reneau remains a very troubled company.
(29:53):
You know, we're in a glot of autos right now.
Neither company is doing all that well. China. Nissan's working
really hard to uh, you know, move to electric vehicles.
They have some. They have the Leaf, which is a
fairly popular model. Um, but you know, the range of
(30:14):
the Leaf doesn't even come close to a Tesla, and um,
you know, I think this is a bet that's so
far not particularly working well for them. You wrote this,
which is great. Going has been an awful distraction for Nissan,
which has costed dearly. With Going now free to defend
himself and to hurl his own allegations at the company,
it's only going to get worse. At this point. Nissan
couldn't call a truce even even if it wanted to,
(30:37):
and it can't win either. Nissan has to decide whether
it is more interested in pursuing Going or fixing what's
wrong with the company. It has already proved that it
can't do both. Well. I think that's true. I think
that's absolutely true. Of course I did write that, so
of course you better think it's true. Right, But you know,
think about it. Nissan has spent so much of the
past year and a half just trying to you know,
(30:58):
leak to the press and do this and do that,
to to throw these allegations out, to to to be
smirge going to I mean, they really, uh, this has
kind of been their obsession. Can I ask the dumb
question that I should have asked at the beginning, Why
couldn't they just fire him. Why couldn't they just get
the board of directors exactly exactly? If that's what's so
(31:21):
nuts about this whole thing is I think were they
afraid of him? Did they think he still had too
much power on the board? Right? How do you when
you when you're sick of a CEO or sick of
a chairman, and even if you think he's done something wrong,
you fire him. Maybe you've maybe you you you file
a civil suit, you try to clawback some money. Whatever.
(31:45):
It's not that hard, it's not that hard. It speaks
to either a particular mindset among the Japanese or the
fact that there must have been a lot of hatred
of going brewing in those in those ranks for a
long time, or maybe both. I think I think there's
a third aspect of that, though, which is the going
back to the governance structure, which is that n don't forget,
(32:06):
owned fifteen percent of Nissan, right, and so it had
an automatic fifteen percent for gone on the board among
sheer old as if you had to have a vote
to get rid of him or not. And I think
they may have also feared because he's Carlos gone, and
he believes in the rightness of him his cause that
(32:26):
he would have put up a huge proxy fight and
may not have just you know, lied down and crawled away.
And why does it shake out that he was so
valuable for Nissan? Why why can't they just rise and
conquer without him? Why was this a one man show
twenty years ago? They needed a visionary? Yea, they truly did.
(32:46):
And I think maybe part of his problem Carlos Gone,
is that he didn't want to be surrounded by other
people who were as smart as he was, or people
who were in a position to take over. So his successor,
who did turn on him, but who had who he
had groomed, really turned out to be a very passive
(33:06):
and not very good CEO. Um So I think part
of the part of the problem was Gone was a visionary,
but he, you know, he didn't. He didn't create a
culture of people who wanted to carry on that vision.
And those two don't necessarily go hand in hand, right,
(33:26):
the visionary and the person who can create the culture, right,
But in fact usually they are pretty diametrically opposed if
you look at history. I think it's an interesting tangent
to to to all of this So what happens now
to Nissan and Andrenau assuming this nothing good? But how
does how does this shake out? Well, um, you know,
(33:48):
one of two things has to happen for the for
the companies. You know, either they have to get together
and agree. You know, by god, we got to make
this alliance work. It saves us so much money. It'll
be it'll be disaster if we try to break it up,
and you know, let's just put our problems, let's put
our squabbles aside and get back to get back to basics.
(34:10):
Or they will break it up and it'll be short
term disastrous and I don't know what it'll mean in
the long term, they'll probably boths get bought and amid
all the craziness in the global automotive industry, it's that
this just adds to the moving chest places. It's a
terrible time for this to be happening in the in
the global auto industry, especially with you know, we're in
(34:31):
such a time of fermat and when it's really it's unclear.
It's clear that electric vehicles are going to be a
big deal, but it's unclear how quickly that will come,
and the automobile industry has to be ready to move
if it does, and these two companies are just kind
of mired in their troubles. And for Going, how do
(34:53):
you think this shakes out? Well? Actually, before we get
to him, do you think Japan ever brings charges against
the people who helped him escape? Uh? If they can
figure out who they are, well for sure. Yeah, I
do think they'll bring charges that that. I hadn't thought
about that before, but yeah, that's that would so there'll
be another leg to this. Yes, and for Going, does
he get tried somewhere? Can he live as a fugitive forever? Um?
(35:17):
I think it's very unlikely that he'll ever be tried,
you think really? Um? Yes, Right now, he's stuck in Lebanon.
He can't leave, even if he wants to. He certainly
can't leave to it for any country that has an
extradition treaty with Japan, Interpol has a red dot with
something out. You know, he's a wanted man worldwide thanks
(35:43):
to Interpol. So he's he's in a different kind of prison,
you know, it's it's country wide. It's a country wide prison,
but it's still a prison. He can't go anywhere. The
Lebanese have actually taken his um, taken his passport away.
So and oh, they've indicted his wife, so she can't
go anywhere either. Japan has indicted his wife. Wow, Okay,
(36:05):
so they're stuck, but at least they're stuck together. They're
stuck in a country that they're very familiar with. She's Lebanese.
I think he's going to be spending the next couple
of years, you know, writing a book, dealing with a movie,
trying to and mostly trying to clear his name. He's
got he's rich, but he's not rich like he used
(36:26):
to be. This the this between the money he spent
on his defense lawyers and the money he's spent escaping.
I mean, it's like in the in the tens of
millions of dollars. And you know, I haven't had a
chance to point this out yet, but one of Gong's
frustrations was that he was being paid like a European
(36:47):
and a Japanese executive and not like an American executive.
So he was making fifteen million or whatever, when you
know in the US he'd been making forty million. So
there's a global competitiveness issue to this too. Or I'm rich,
but I'm not as rich as they are. A relativity
aspect of this, someone call that jealousy. Someone just called
(37:09):
that jealousy. That's probably a better word, right, So that's
that's interesting. So Kenny, so does he get is this
a form of hell in and of itself? Then? And
that this is a guy who wasn't done with the world.
But if he does end up ditching a trial and
staying in Lebanon, the world is done with him at
some point. I think that's right. He's obviously never going
to run at an auto company again. The Japanese, unless
(37:34):
Lebanon or France decides to try to negotiate some kind
of truce with Japan over this. Japanese will never drop
the charges. So it's really hard to see how this
works out for him in a way that gives him
the freedom to go to Davos, to go to the
(37:57):
US to find another company to run, So in a
weird way, regardless of what happens the Japanese one though,
they may never see it that way. They'll never see
it that way never. But yeah, he's stuck. He's stuck.
On that note, Thank you so much. This is a
really fun conversation, and I can't wait to see the movie.
I can't wait to see it either. And then, of
(38:19):
course is the podcast. There's the podcast. There has to
be a podcast. Thank you all so much for listening,
Thank you Joe for coming, Thank you well. I for
one can't wait to see this movie. Do you feel
the same way. This story has everything money, power, the
abuse of power, global intrigue, and there's an entire industry
(38:43):
at stake. It seems to me that Carlos Gohen's time
in a Japanese jail and his exile mean that he
has and is going to continue to pay a price
for whatever sins he has committed. Is it a high
enough price? And will Renault and Nissans shareholders be the
ones who ultimately pay more? Stay tuned. Thank you so
much for listening to season one of Making a Killing.
(39:05):
I hope you've enjoyed it. Follow me on Twitter at
Bethany mac twelve for news about season two. Making a
Killing is a co production of Pushkin Industries and Chalk
and Blade. It's produced by Ruth Barnes and Laura Hyde.
My executive producers are Alison mcclein. No relation in Making Casey,
the executive producer at Pushkin is Mia Loebell. Engineering by
(39:28):
Jason Rostkowski. Our music is by Jed Flood. Special thanks
to Jacob Weisberg at Pushkin and everyone on the show.
I'm Bethany McLain. Thanks so much for listening. Find me
on Twitter at Bethany mac twelve and let me know
which episodes you've most enjoyed.
Thank you so much for downloading making a killing. I'm
Bethany McClain, and I'm cutting through the noise to reframe
the stories you know and uncover the ones you don't know.
Truth is stranger than fiction. I think about that saying
a lot, because it has the great virtue of being
well true, and it's particularly true when it comes to
(00:21):
the world of business. I mean, from the financial crisis
to Bernie Madoff, you could not make the stuff up
even with that high bar. The story of Carlos Gone
stands out. Gone, of course, is the former head of
Nissan Motor and Renault. He is was a revered figure
in the automotive world. In the fall of twenty eighteen,
(00:42):
he was jailed in Japan on charges of financial misconduct.
While he was out on bail, he hatched an escape
plan that involved being smuggled out of the country, escaping
security by hiding in a large black box, which, thank goodness,
apparently did have breathing holes cut in it. He's now
living in a pink mansion in Lebanon, a pink mansion
that Nissan had bought and renovated for his use. I mean, right,
(01:06):
talk about truth being stranger than fiction. So there are
at least two sides to this story. The official version,
the Japanese version, is that Gone stole from Nissan, partly
by paying himself more than anyone, including investors new Here's
a surprise. Going denies those charges. In his telling, Nissan's
Japanese executives wanted to be rid of him and found
(01:27):
a horrible way to do it. I have not fled justice,
I have escaped injustice and political persecution, Go and said
in a statement after his escape. For sure, Japan treat's
white color criminals very differently than the US does. Among
other things, Gone was held in solitary confinement and interrogated
for eight hours a day. The conviction rate is close
(01:50):
to one. My longtime friend Jonah Sarah wrote in a
recent Bloomberg piece that Gone thought to himself, you are
going to die in Japan if you don't get out,
So Gone took matters into his own hands. Is this
justifiable or is this a sign of the entitlement of
the global elite? And who is Carlos Going an innocent
(02:11):
man wrongly accused or a common thief. I began this
season of making a killing with Joan Oh Sarah talking
about Jewel, So it seemed fitting to end it with Joe,
who wrote this about Carlos going. When you get right
down to it, Nissan and the Japanese prosecutors put a rich,
powerful man, a man unaccustomed to being defied through hell.
(02:33):
Now that he has escaped, it's his turn to put
them through hell. I'm thrilled to have Joe here to
talk about what will surely go down in history is
one of the greatest business stories ever. Certainly one of
the greatest escapes ever, that's for sure. So how did
he do it? Let's start with that. Well, the best
part about that as nobody yet knows. There's only I mean,
(02:55):
for instance, you know, when you think about it, if
you make an escape like that, you have to plan
it for months, right months? How did he find the
guy who planned it? How did they how did they
communicate with each other? Well? Wait on that question, is
it even a guy who planned it or do we
think it might have been his wife? Oh? No, no, no, no, no,
(03:15):
well I'm pretty sure it wasn't his wife. No, there's
a there's a man who's a you know, a former
paramilitary type who does security these kind of high risk
security Michael Taylor. Right, Yes, that's right. His name is
Michael Taylor. Thank you. So how did Michael Taylor get
in touched with Carlos Gone? How did they plan it
so that Gone knew what to do and when to
(03:36):
do it? Um, it's obvious that they had They had
come to Japan and they were watching the people who
were watching Gone. So there was a there was a
camera that watched them all the time, and there were
people out Japanese you know, security guards outside. But they
(03:56):
realized that there was a certain week in the year
when the Japanese basically took the week off because it
was a you know, their high holidays, they're big vacation time,
and they weren't there, and they figured that out and
they realized that that was potentially the time to do it.
And so, you know, the first round of rumors, who
(04:18):
was I'm so sorry it wasn't true, was that he
had he had hidden in a in a in a
musical instrument case for like for a double base doesn't
but you know, it's kind of pretty amazing what he did.
He he walked out, he put one of those masks
around his face, as many Japanese people do when their outdoors.
(04:41):
You know, he walked about a mile, he walked into
a hotel and then he walked out to the other
side of the hotel um presumably not being followed, obviously
not being followed. And then he got on a train. Wow.
And he and he took like a three hour train
ride to Osaka. And once he got there, that's when
he was met. This team of people who put him
(05:03):
in this big black box, put him on that line alone,
this team of people who put him in a big
black box, righty, and they put him on an airplane,
a private airplane. They didn't want to fly directly to
Berute because they were afraid that that would send up
too many signals. So there was an istanbol right and
then he had to get past you know, customs, a
(05:24):
second round of customs. Having sneaked past the Japanese customs,
then he had to get past the Turkish customs. So
we went back in the black box. They took him
out of one airplane, put him in another airplane, and
he landed in Lebanon. And Lebanon presumably he can't be extradited. Well,
Lebanon does not have an extradition treaty with Japan. Also,
(05:45):
he is a Lebanese citizen among his other citizenships. He
is a highly revered figure in Lebanon. They even have
a postage stamp named after him. I mean, he's one
of their few kind of international businessman. They don't have
very many. And then his wife met him also in Lebanon,
so she obviously knew what was going on. So she
(06:05):
goes to Lebanon. And then the hilarious thing is he
you know that this is one of the houses that
he had refurbished, renovated Nissons die. Now the question is
whether Nissan knew that or not. But he's basically he's
squatting in it, and he's kind of daring Nissan to
try and kick him out. And is it true that
(06:26):
it's pink? I don't know why that details definitely think
it's definitely. I've seen it from the archide. But see,
this is why I asked the question about whether his
wife was involved, because his wife met him there, so
she had to have known. Yes, that's absolutely true. She
had to have known something for sure. But don't forget
that he had not been one of the things that
most upset him during his ordeal. And I'm sure, we'll
(06:49):
talk about that ordeal in a bit is that he is.
Part of his bail, he was not allowed to speak
to his wife at all, and his children really, at
least one of them couldn't come to Japan because she
was afraid she'd be arrested too, So he didn't have
a lot of contact with his family. He Wanda spoke
(07:11):
speaking to his wife twice with permission and with people
listening in. Once was around Thanksgiving and once was around Christmas.
We're going to come back to the conditions of his
bail and the conditions of his treatment because it's important
both in the micro and interesting in the macro. But
what's really interesting about this is we know the details
of the escape, but we have no clue how it
(07:32):
was planned. And listening to you talk about the monitoring
of his conversations with his wife, how did he manage
to have communication with the people who helped him escape
if everything he said was being monitored. When he was
in the home that he was using in Japan in Tokyo,
he was not allowed to have any electronics, no internet,
(07:52):
no television, no nothing. But when he but during the
day he was allowed to go to his lawyer's office
where he did to have access to a computer and
did meet with people, and he didn't meet people were
allowed to come and meet with him. So presumably that's
how it was done in person or possibly over the internet,
(08:12):
when he was at his lawyer's office. Although his lawyers
says he knows nothing, I'm not sure his lawyer didn't
know nothing. I'm sure his lawyer. Jampan is a country
where face matters so much, yep. And he humiliated his
lawyers by doing this. His lawyers had vouched for him,
and his lawyers were trying to show through his trial
(08:35):
that a Westerner could get a fair trial. That was
their goal. And you know, they one of the very
tiny handful of big time defense attorneys. I mean in
the US they're all over the place, but in Japan
they're very rare. And this was a moment for these
lawyers to try and make the case that Japan could
(08:56):
treat a Westerner fairly. I just wanted to pause on
this note, for it was from the Wall Street Journal
and they wrote that the planning involved a team of
between ten and fifteen people of different nationalities, and that
in all the team took more than twenty trips to
Japan and visited at least ten Japanese airports before selecting
the Osaka Airport as a week link. I mean, it's
a stunning degree of coordination. Right before we move on
(09:18):
from this, Michael Taylor, this operative who helped Going. He's
a story in his own right, isn't he? He is
He's done this a few times before. He's actually been
in prison for something, um, you know, and and yes
he when when the when the film gets made, Michael
Taylor will have a starring role forre. You can just
see that this is everything about this is cinematic, right right,
(09:41):
get right down to the black boxman. In fact, where's rumors?
Wall Street Journal pointed a rumor that, uh, Carlos Gone
was already in negotiations with Netflix, but he denied it.
He denied it, So tell tell me more about who
Carlos Gone is. For people who don't, who haven't followed
the craziness in the automotive industry, one way to think
about it, Carlos Gone is the Lee Iacocca of the
(10:03):
modern era, the larger than life auto exac who performs
miracles and does is that is that real? To some degree?
It is, yes, So he's hard, is what happened. Carlos
Gone was the CEO and chairman of Renault, a French company. Ye,
(10:24):
Nissan is in terrible, terrible trouble, and so they go
to him and they ask him to what could he
do to help them? So what he does is he
sets up It's not a merger, it's an alliance. They
remain separate companies, but they do things like they buy
supplies together, and they do some back office things that
(10:47):
save money, and they coordinate in various ways. They actually
even for a long time split up territories. So like
Nissan was big in the US, Renault was big in Europe.
They both went to China and you know, I said
he was Lee a Coca. A better phrase might be
he was the Marshal Tito of the of the auto business.
(11:10):
Because what you had was you had this very French
culture Renault, this extremely Japanese culture Nissan, and you had
this one guy who somehow managed to ride herd over
all of it. So then Nissan didn't. He did turn
Nissan around. I mean it was really quite dramatic, to
(11:32):
the point where Nissan became the stronger of the two.
Companies and Renault became the weaker, but because of the
way the alliance was structured, Renault owned more of Nissan,
like fifteen percent. Then Nissan owned a Renault which was
five percent. So one of the things, one of them
that began to upset the Japanese not the only thing,
(11:53):
but one of the things was that Renault, which had
become the weaker company, still add the stronger position on
the board and in terms of stock ownership, and so
do you credit do most people credit Nissan's ability to
thrive to Carlos Scone and he is he that guy
who was able to pull these companies through an incredibly
(12:16):
troubled and difficult time in the automotive industry globally, Most
people do give him that credit. Yes, he's viewed as
as a as a as a true giant of the AutoWorld,
to the point where as he as he noted during
his flamboyant press conference, once he escaped. You know, Steve
Rattner approached him during the financial crisis when he was
(12:36):
the autos Are Obama's artos Are and asked him if
he would be willing to come in and take over
General Motors. Wow, Okay, so this guy, he doesn't lack
for ego either. So well, I do have to say, yes,
if you've if you've been around CEOs, there's a certain type,
(12:56):
you know, larger than life, totally convinced they're right about everything.
Sometimes they're all never in doubt, exactly exactly. Um but really,
um kind of aggressive he was? He is was all
of those things. Um uh. And yeah, you could sort
of see how he would drive the Japanese mad. And
(13:17):
before we come back to that, wasn't he trying to
do something with fat and Chrysler? He was trying to
pull off yet another coup, right, Yes he was. He
had already um brought me to Beish into the alliance. Okay, Um,
he was, you know, maneuvering to bring other people into
other companies into the alliance. But the big issue really
really for Nissan was they felt that he was going
(13:39):
to not just have an alliance, but he was going
to merge Nissan and Renault and they were dead set
against that. And why because they perceived Nissan is a
stronger company, or because of Japanese pride and Nissan not
wanting to see it submerged or subsumed into Renauld. Both
is the answer. Um, you know they're they're you know,
(13:59):
the Pese. There were xenophobic people, without question, and um uh,
there were a lot of tensions within the alliance even
you know, before this this came up, the idea of
a merger, and yes, Nissan felt like, we're the king
of the hill. Now, why should we stoop to help,
you know, struggling we're now. Yeah, I just saw this
(14:20):
note in here that six years after after after Gone
took the top job, Nissan had surpassed Honda to become
Japan's number two automaker. It's market capitalization had quintupled and
its operating margin had risen tenfold. So that I mean,
as I and in the modern world, that's how you
become a legend. Yeah, I guess that's true. So were
there any whispers about him up until the fall of
(14:42):
twenty eighteen? Was there any talk that this guy was
somehow overstepping some kind of bounds or was the fall
of twenty and eighteen, when it all exploded out of
seemingly nowhere, there was not so much as a whisper
in terms of, you know, whether people thought he was
doing things on the fly or on the side, or
or or playing tricks or playing games. It was one
(15:05):
of the things that were so shocking about this story
is it's it's it's as if Mary Barra flew to
Canada and was was was arrested for you know, uh,
stealing from General Motors. That's how kind of shocking this was.
And the way they did it, you know, um, the
Japanese Nissan executives who were plotting this with prosecutors and
(15:31):
that that is why. Oh yes, there's no question about that. Um,
you know. They they they tricked Goons former number two
into flying back to Japan, which he had not done
in three years and was awaiting back surgery. Wow, they
tricked him. An old friend of his from Nissan called
(15:54):
him and said, hey, we really need to hear for
this meeting. We really come on, We'll send the private
plane and they did, and he lands and he gets arrested,
and then gone has no idea this is coming. He
lands and he gets arrested, and that's where they find out,
and that's where the world finds out that there are
these allegations against him. Truth is stranger than fiction, indeed, right,
(16:15):
it's it's it's it's an astonishing story. One of the
problems with trying to grapple with the story is that
it's really hard to know even now who's telling the truth.
Why is it so hard to know? His compensation was public? Right?
These were public companies, and so what was disclosed is
(16:37):
knowable and what he took is knowable. Where does the
complexity come in? Okay? Maybe pause first on what the
charges against him. So there's a couple of things. The
first charge is that he hid compensation from Nissan and
the board. This seems frankly pretty unlikely, although he did
settle with the sec for small, by his terms, a
(17:03):
small amount of money, um without uh, you know, denying.
Was it affirming or denying the charges? Yes, but the
exact language was that they he settled charges that that
he and Nissan had failed to disclose more than one
hundred and forty million in compensation and benefits due to
be paid to him in retirement. Right, So that hundred
So that one hundred and forty million is a big
(17:25):
is a big sticking point. So he and his former
number two, his name is Greg Kelly, they say there
was they had not signed off on the deal yet,
that that they had they had sketched it out along
with some Nissan executives. They had all sketched it out together,
but there was no uh guarantee it was going to happen.
(17:47):
It had not been um uh, it had not been certified,
had not been approved by the board, and so they
say there's no there there. Nissan says, you know, this
was that you were doing this behind our back, and
in so doing you were violating the Japanese law. Okay,
So that's number one. Number two the second set of
(18:08):
charges was that he was, you know, an effect laundering,
laundering Nissan's money to put it in his pocket. So
the big example of that that when they he uses
is um that there was a dealer in the Middle
East and Nissan paid this dealer millions of dollars and then,
(18:29):
according to Nissan, the dealer somehow funneled that back some
of that back to Carlos Gone. Gone says it was
all on the up and up, that the money that
was spent to this Midias dealer, who he acknowledges was
a friend, was not unlike any you know, up front
(18:49):
incentives to any dealer. So he says, you know, that
was on the up and up, and then the third
sort of set of charges. Um, it's really more like
Dennis Kozlowski's uh six thousand dollars curtain shower curtain. Yes,
that's right, it's more like that, which was not illegal, right,
but it was a waste of corporate assets. And so
(19:13):
he had these houses, you know, literally like five houses
that were all renovated for him on Nissan's dime, all
supposedly owned by Nissan. His kids all went to Stanford
on Nissan's dime. His kids cut and went to Stanford
on Nissan's dime. Well, but I want to figure out
how to work that one that that you really I
mean he had that in his contract, okay, but they
(19:34):
would pay for it. And then the famous, most famous
of all, the birthday party for his wife and Versailles
Marie Antoinette teamed right yes, and then he goes at
the press conference he gave, he really went off on that.
It's like, we've spent so much money helping Versailles, making
Rascaille great, Versaids the place everybody wants to go. Rasaide's
(19:55):
good for our customers, it's good for our you know,
ad agencies. Da da da da da da dada so
he somehow argue, we're defensive about at Versailles. I think
that every any single other thing that he spoke about.
So he somehow argues that hosting a Marie Antoinette themed
birthday party for his wife at Versailles was beneficial to
Nissan's brand pretty much. But I don't I don't know
(20:16):
that it was Marie Antoinette. Okay, I've read that somewhere
that might that might that might be like that, like
the musical instrument case right, too good to be true?
Um So, so what does Renault say about all of this,
because they you would think they would have a view too.
Are they on Nissan's site or are they going no
is uh Arna doesn't know what to do, to be honest.
(20:38):
Um Nau's main concern, especially at the beginning, was to
shore up the alliance and not let the alliance fall apart.
For the most part, that is a losing battle because
without going at the top, the culture classes have gotten
worse and worse. The board disagreements have gotten worse and worse.
(21:00):
And I do have to wonder whether whether the alliance
can survive or not, which it will be really bad
for a no UM in terms of in terms of
Carlos Gone, they have sort of been tiptoeing towards the
idea that maybe there was some wrongdoing, but they haven't.
They haven't really come out and laid out a set
(21:23):
of allegations the way Nissan did. Okay, so it's still unclear.
I mean, it's really complicated for the French because France
is in a very anti elitist mood right now. Makran,
the president is viewed as an elitist, Carlos Gone is
viewed as an elitist. In a different era, it's quite
(21:43):
possible the French would have gone, you know, to great
Lance to spring him from prison, but not today. But
not today, they just kind of kept their mouth shut
and really didn't hasn't done much of anything, great Kelly,
what's happened to him? Um? Nothing so far are which
he's still in jail and no, no, no, no, no.
He was. He was out on bail just as Carlos
(22:06):
Gohne was awaiting his trial, just as Carlos Gone was. Um.
There was some fear that he would be thrown back
in jail as as kind of punishment or revenge for
gons escape. But that does not appear to have happened,
and um, you know, on the one hand, this is
kind of rough for him because obviously he's not gonna
(22:27):
he's not gonna get out of Japan anytime soon. But
on the other hand, this doubles the The Japanese are
going to have a really hard time saying this guy
should go to jail for twenty years when the ring
leader quote unquote has escaped Lebanon, So that actually may
work out for him. So back to this point about
how Carlos Gone was treated in prison. Tell us about
(22:49):
the conditions first of all. Okay, so let me begin
by saying that there's a there's a phrase for how
the Japanese deal with people are accusing of crimes. It's
called hostage justice. And the idea is that the Japanese
are not looking for evidence, They're looking for confessions. And
(23:10):
that's the way the system works. And so and that's
why they have a ninety nine conviction rate because most
of the time when they go to court, the persons confessed.
And the way they get do you confess is you know,
um eleven and twelve hours of interrogation a day, uh
no lawyer present um lights on twenty four seven. Um,
(23:35):
you know, your room is constantly cold, your your cell
is constantly cold. Um. There's various other forms of you know,
what you might call benign torture. In other words, they're
not physically beating him, but they're making his life completely
utterly miserable. And then the way the system works is that, Um,
after twenty three days, they have to either let him
(23:59):
out on bail or come up with new charges. And
so what they did constantly was they would, you know,
wait till the last minute, and just as he was
about to be sprung from bail, they throw in new charges.
So we wound up spending a total of one hundred
and some odd days in prison, you know, under these conditions,
under these interrogation conditions, and they're always saying to him,
(24:20):
you know, if you ever want to see your wife again,
you better confess. You know, we're going to make this
much worse for you if you don't confess. It's it's
it's just like you know, what you would think and
think would not go on in Russia or China. And
the fact that he didn't confess suggests either that he
believes himself to be innocent or that he's really tough, well,
son of a bit, I think it takes a lot
(24:41):
to resist that. Yeah, I would think so too. So
is there just to play devil's advocate? And I'm not
arguing that people necessarily should be treated like Carloscone does.
But is there any argument that in a world where
many people here feel we go too easy on white
color criminals and that people who do damage, but our
white collar criminals get far lighter treatment than those who are,
(25:04):
for instance, in possession of marijuana, and so is there
is there any argument that that might deter the sort
of happenings that we see in the US from the
financial crisis to en Rondo Thranis well. I mean, I
would never argue that white collar criminals should be denied
new process and should be and confessions should be tried
to be forced out of them. I would never argue that.
(25:25):
To me, the issue is in the US that we
don't our prosecutors have lost the nerve to indict white
collar criminals, and that they and the courts, you know,
various rulings in court have made it more difficult to
bring white collar prosecutions. That's a lot different from from
(25:51):
what happens in Japan. And really the outrage about what
happened in Japan really had less to do with whether
or not Carlos Gone had committed a crime than this
kind of a new insight that, oh my god, look
how their justice system operates. Right, It's like what Western country.
(26:14):
I mean, it's not a Western country, but they have
Western principles. What Western country treats prisoners like this treats
and treats someone not even a prisoner, someone who's just
been accused without even being found guilty in that way. Right.
And so here's the other thing I was thinking about
this is that, you know, one of the things that
happened is that Greg Kelly gave an interview at some
(26:37):
point to a Japanese newspaper, and he made a series
of accusations about the top people at Nissan, the very
people who had plotted against him and Carlos Scone. Wow,
and what did he say? He said that they had
padded their salaries and that they had done things. They
had done the exact same sort of things that they
were accusing Carlos Scone of doing. And say that again,
(26:58):
when did he give this interview before or after he
was arrested. Oh no, well, okay, I think it might
have been this past summer. Okay, But anyway, that the
upshot was that the CEO had to resign, that the
other people involved had to resign, that they had to
pay back some of the money. They were guilty and
they admitted it, but they got slaps on the risk
(27:19):
because it was apparently in the interest of Nissan that
they did this. No, they got slaps on the risk
because they're Japanese. That's interesting. So in other words, even
that system of laws that it's in the company's interest
or against the company's interest doesn't really apply. It also
depends on who you are, right Well, in this particular case,
that was compounded by the fact that they didn't want
to put the people who were accusing Carlo's gone in
(27:42):
prison because that were completely undercut their ability to prosecute it.
So is it just a completely ridiculous idea that the
justice system should function the same way for everyone, regardless
of who they are. You look, that's not a ridiculous thing.
But you know, that's not how the world works. I mean,
it just isn't. Well, that's one of the larger implications
of this story. Isn't it that that's just not how
the world works. Well, it's the larger implication of the
(28:04):
Eptein story. It was, until very recently, the larger implication
of the Harvey Weinstein story. I mean, it's the larger
implication of the financial crisis story. I mean, you're, you know,
rich people get get top top lawyers, and they can
put pressure on that other people can't. I mean, Carlos
Gone didn't have that going for him, which is part
(28:28):
of why he is, which is a large part of
why he decided he had to escape because he had
he had no he had no swag in Japan. So
are you pro or con his escape? I mean, would
you say that he saw a set of rules that
he thought were unfair and so he used all the
resources he could marshal to flee that set of rules
and find a different set because he could. Or do
you think he should have stayed to face the music
(28:50):
in Japan because that's their system of rules, and that's
I don't know what you do. I agree that he
would not have gotten a fair trial in Japan, and
I also believe that he was fundamentally kidnapped and so
escaping for kidnappers, even though it's a government seems okay
to me. On the other hand, I really do understand
(29:11):
those who say, you know, just because you're rich, you
shouldn't get to decide what jurisdiction, you know, you get
prosecuted in. Right, isn't the essential problem with our world
the fact that people who don't have to follow the rules,
that people who can pay not to follow the rules
can pay not to follow them right where every video
else has to. That's exactly. And you know, you have
(29:32):
to be very rich to pull off what he pulled off.
So before we before we come back to how this
all plays out, what does it mean for Nissan and
renew Nothing good? Nothing good for Nissan either, No, no Nissan.
If you look at Nissan's stock, it's just tumbled since
he since this happened, Renee Reneau remains a very troubled company.
(29:53):
You know, we're in a glot of autos right now.
Neither company is doing all that well. China. Nissan's working
really hard to uh, you know, move to electric vehicles.
They have some. They have the Leaf, which is a
fairly popular model. Um, but you know, the range of
(30:14):
the Leaf doesn't even come close to a Tesla, and um,
you know, I think this is a bet that's so
far not particularly working well for them. You wrote this,
which is great. Going has been an awful distraction for Nissan,
which has costed dearly. With Going now free to defend
himself and to hurl his own allegations at the company,
it's only going to get worse. At this point. Nissan
couldn't call a truce even even if it wanted to,
(30:37):
and it can't win either. Nissan has to decide whether
it is more interested in pursuing Going or fixing what's
wrong with the company. It has already proved that it
can't do both. Well. I think that's true. I think
that's absolutely true. Of course I did write that, so
of course you better think it's true. Right, But you know,
think about it. Nissan has spent so much of the
past year and a half just trying to you know,
(30:58):
leak to the press and do this and do that,
to to throw these allegations out, to to to be
smirge going to I mean, they really, uh, this has
kind of been their obsession. Can I ask the dumb
question that I should have asked at the beginning, Why
couldn't they just fire him. Why couldn't they just get
the board of directors exactly exactly? If that's what's so
(31:21):
nuts about this whole thing is I think were they
afraid of him? Did they think he still had too
much power on the board? Right? How do you when
you when you're sick of a CEO or sick of
a chairman, and even if you think he's done something wrong,
you fire him. Maybe you've maybe you you you file
a civil suit, you try to clawback some money. Whatever.
(31:45):
It's not that hard, it's not that hard. It speaks
to either a particular mindset among the Japanese or the
fact that there must have been a lot of hatred
of going brewing in those in those ranks for a
long time, or maybe both. I think I think there's
a third aspect of that, though, which is the going
back to the governance structure, which is that n don't forget,
(32:06):
owned fifteen percent of Nissan, right, and so it had
an automatic fifteen percent for gone on the board among
sheer old as if you had to have a vote
to get rid of him or not. And I think
they may have also feared because he's Carlos gone, and
he believes in the rightness of him his cause that
(32:26):
he would have put up a huge proxy fight and
may not have just you know, lied down and crawled away.
And why does it shake out that he was so
valuable for Nissan? Why why can't they just rise and
conquer without him? Why was this a one man show
twenty years ago? They needed a visionary? Yea, they truly did.
(32:46):
And I think maybe part of his problem Carlos Gone,
is that he didn't want to be surrounded by other
people who were as smart as he was, or people
who were in a position to take over. So his successor,
who did turn on him, but who had who he
had groomed, really turned out to be a very passive
(33:06):
and not very good CEO. Um So I think part
of the part of the problem was Gone was a visionary,
but he, you know, he didn't. He didn't create a
culture of people who wanted to carry on that vision.
And those two don't necessarily go hand in hand, right,
(33:26):
the visionary and the person who can create the culture, right,
But in fact usually they are pretty diametrically opposed if
you look at history. I think it's an interesting tangent
to to to all of this So what happens now
to Nissan and Andrenau assuming this nothing good? But how
does how does this shake out? Well, um, you know,
(33:48):
one of two things has to happen for the for
the companies. You know, either they have to get together
and agree. You know, by god, we got to make
this alliance work. It saves us so much money. It'll
be it'll be disaster if we try to break it up,
and you know, let's just put our problems, let's put
our squabbles aside and get back to get back to basics.
(34:10):
Or they will break it up and it'll be short
term disastrous and I don't know what it'll mean in
the long term, they'll probably boths get bought and amid
all the craziness in the global automotive industry, it's that
this just adds to the moving chest places. It's a
terrible time for this to be happening in the in
the global auto industry, especially with you know, we're in
(34:31):
such a time of fermat and when it's really it's unclear.
It's clear that electric vehicles are going to be a
big deal, but it's unclear how quickly that will come,
and the automobile industry has to be ready to move
if it does, and these two companies are just kind
of mired in their troubles. And for Going, how do
(34:53):
you think this shakes out? Well? Actually, before we get
to him, do you think Japan ever brings charges against
the people who helped him escape? Uh? If they can
figure out who they are, well for sure. Yeah, I
do think they'll bring charges that that. I hadn't thought
about that before, but yeah, that's that would so there'll
be another leg to this. Yes, and for Going, does
he get tried somewhere? Can he live as a fugitive forever? Um?
(35:17):
I think it's very unlikely that he'll ever be tried,
you think really? Um? Yes, Right now, he's stuck in Lebanon.
He can't leave, even if he wants to. He certainly
can't leave to it for any country that has an
extradition treaty with Japan, Interpol has a red dot with
something out. You know, he's a wanted man worldwide thanks
(35:43):
to Interpol. So he's he's in a different kind of prison,
you know, it's it's country wide. It's a country wide prison,
but it's still a prison. He can't go anywhere. The
Lebanese have actually taken his um, taken his passport away.
So and oh, they've indicted his wife, so she can't
go anywhere either. Japan has indicted his wife. Wow, Okay,
(36:05):
so they're stuck, but at least they're stuck together. They're
stuck in a country that they're very familiar with. She's Lebanese.
I think he's going to be spending the next couple
of years, you know, writing a book, dealing with a movie,
trying to and mostly trying to clear his name. He's
got he's rich, but he's not rich like he used
(36:26):
to be. This the this between the money he spent
on his defense lawyers and the money he's spent escaping.
I mean, it's like in the in the tens of
millions of dollars. And you know, I haven't had a
chance to point this out yet, but one of Gong's
frustrations was that he was being paid like a European
(36:47):
and a Japanese executive and not like an American executive.
So he was making fifteen million or whatever, when you
know in the US he'd been making forty million. So
there's a global competitiveness issue to this too. Or I'm rich,
but I'm not as rich as they are. A relativity
aspect of this, someone call that jealousy. Someone just called
(37:09):
that jealousy. That's probably a better word, right, So that's
that's interesting. So Kenny, so does he get is this
a form of hell in and of itself? Then? And
that this is a guy who wasn't done with the world.
But if he does end up ditching a trial and
staying in Lebanon, the world is done with him at
some point. I think that's right. He's obviously never going
to run at an auto company again. The Japanese, unless
(37:34):
Lebanon or France decides to try to negotiate some kind
of truce with Japan over this. Japanese will never drop
the charges. So it's really hard to see how this
works out for him in a way that gives him
the freedom to go to Davos, to go to the
(37:57):
US to find another company to run, So in a
weird way, regardless of what happens the Japanese one though,
they may never see it that way. They'll never see
it that way never. But yeah, he's stuck. He's stuck.
On that note, Thank you so much. This is a
really fun conversation, and I can't wait to see the movie.
I can't wait to see it either. And then, of
(38:19):
course is the podcast. There's the podcast. There has to
be a podcast. Thank you all so much for listening,
Thank you Joe for coming, Thank you well. I for
one can't wait to see this movie. Do you feel
the same way. This story has everything money, power, the
abuse of power, global intrigue, and there's an entire industry
(38:43):
at stake. It seems to me that Carlos Gohen's time
in a Japanese jail and his exile mean that he
has and is going to continue to pay a price
for whatever sins he has committed. Is it a high
enough price? And will Renault and Nissans shareholders be the
ones who ultimately pay more? Stay tuned. Thank you so
much for listening to season one of Making a Killing.
(39:05):
I hope you've enjoyed it. Follow me on Twitter at
Bethany mac twelve for news about season two. Making a
Killing is a co production of Pushkin Industries and Chalk
and Blade. It's produced by Ruth Barnes and Laura Hyde.
My executive producers are Alison mcclein. No relation in Making Casey,
the executive producer at Pushkin is Mia Loebell. Engineering by
(39:28):
Jason Rostkowski. Our music is by Jed Flood. Special thanks
to Jacob Weisberg at Pushkin and everyone on the show.
I'm Bethany McLain. Thanks so much for listening. Find me
on Twitter at Bethany mac twelve and let me know
which episodes you've most enjoyed.
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