Not to prejudice anything about this inquiry but when someone leads such an incredibly complex life as Ghosn, the chances of his personally finding out the detail of tax law in each of the jurisdictions he has an actual or potential liability in is zero.
Sure, he is responsible if the allegations are correct but it is close to inconceivable that the entirety of his tax matters were not delegated to those who sold him and the companies compliance services.
There’s a lesson for all “responsible officers” who carry the risk of failure while implementation happens far below them, especially in complex international businesses.
The case is particularly fascinating as it reportedly arose from an internal investigation at Nissan where, upon receiving a report, the Board dismissed him and reported him to the authorities who then arrested him as he flew into Japan yesterday. The internal investigation also alleges “misuse” of Nissan’s assets for personal use although details on that are at best sketchy.
A statement issued by Nissan after the Tokyo stock exchanged closed last night placed the blame squarely on the shoulders of Ghosn and American Greg Kelly, who was also dismissed.
“”The investigation showed that over many years both Ghosn and Kelly have been reporting compensation amounts in the Tokyo Stock Exchange securities report that were less than the actual amount, in order to reduce the disclosed amount of Carlos Ghosn’s compensation. Also, in regards to Ghosn, numerous other significant acts of misconduct have been uncovered, such as personal use of company assets, and Kelly’s deep involvement has also been confirmed.”
That, of course, once again re-opens the question of the value of audit and the competence of auditors.
Finally, there’s an important lesson for senior officers. As you climb the pyramid, there’s always someone who will notice if you misbehave and, quite rightly, hold you to account if there is something that doesn’t look right.
It’s a mess but it’s a mess that can already deliver lessons.