Corporate Governance Issues in Carlos Ghosn Case

Running head: CARLOS GHOSN CASE
CARLOS GHOSN CASE
Name of the student
Name of the university
Author note

Question 1
Summary of the articles
Carlos Ghosn, who was the chairman of alliance between Nissan Motors Company,
Renault and Mitsubishi Motors Corp, was arrested in November, 2018 as he was accused of
underreporting his income and misusing company’s funds (Japantimes.com.jp, 2018). The arrest
was so catastrophic that it introduced a shockwave throughout the automaker group of the world.
Carlos Ghosn, who had been negatively influencing and affecting the firm due to his
misconducts in his long reign, was about to be relieved from his designated post from the
company by the chief executive officer Hiroto Saikawa, finalizing the respective plan with the
Board of Directors of the company. The carmaker group had declared that they had initiated an
internal investigation about Ghosn and his conducts within the company after a whistleblower
had alleged about the misconducts of Ghosn and Nissan Representative director Greg Kelley, as
the whistleblower had alleged that the two executives would have been conspiring to underreport
Ghosn’s salary in order to take unethical and undue advantage of the financial funds of the
company for a number of years. The Tokyo District Public Prosecutor Office had earlier, in the
course of time, questioned Ghosn earlier in the day and arrested Ghosn and Kelley in the due
course of time. The amount of the underreporting they committed (Ghosn and Kelly) amount of
certain five billion from the year 2011 to 2015. The two executives had been using the
company’s assets for personal use. The whistleblowers had been exposing their unethical course
of actions throughout their investigations and findings (Thenewstribune.com, 2019).

Corporate governance issues raised in the articles and corporate governance practice in
Australia/Japan.
Corporate governance can be defined as a collective mechanism, processes and relations
by which corporations and business enterprises are controlled and operated. The structures that
are set up by the government in case of corporate governance identifies the distribution of rights
and responsibilities among different participants in the corporation, which includes board of
directors, managers, shareholders, creditors, auditors and stakeholders and also includes the
rules, regulations and processes for making decisions in corporate affairs. The corporate
governance frameworks of Australia have been built to provide the ever evolving and flexible
corporate firms of Australia. The Australian Securities Exchange (ASX) corporate government
council was formed in the month of August in 2002. The ASX has been chaired by the ASX
Group since its inception. Carlos Ghosn was widely regarded as a hero of Japan as he turned the
fate of Nissan when it was almost in the bankruptcy in the year 1999. As Ghosn was arrested in
charge of criminal case of unethical conduct within the organization, it disclosed the weak
governance of the company in the global platform. It provides a good lesson for the upcoming
investors in Japan for much stronger government protection than the ones which had been
brought up by the Japanese reforms. Since the year 2009, the Japanese listed companies had been
required to disclose the compensation of the executives if it exceeded 100 million or more, that
could be equivalent to $800,000. The respective rule was synergized in the new head of Japan’s
Financial Services Agency and had been distributed throughout the corporate arena of Japan. The
agency declared executive compensations which included bonuses which had to be disclosed
once they were fixed in amount. However, the lawyer of Ghosn and Kelly fabricated the fact and
declared that since the payment of Ghosn was not fixed therefore it was not in a position to be