Driving off the Road of Integrity

There’s a scene in the recent children’s movie Smallfoot where a character named Percy Patterson comes up with a scheme to reignite the ratings of his once-popular wildlife television show.

“What happened to your integrity?” his sidekick character says after she’s asked to put on a yeti costume so they can film a fake encounter with the mythical bigfoot.

He assures her that he still has integrity – buckets of it, in fact. He just needs to suspend his integrity briefly to help pay the bills. Once he’s back on top, he assures her, she’ll see lots of integrity.

Fortunately for Percy Patterson, his sidekick refuses to help and the plot of the movie intervenes. He stumbles a little along the way, but, in classic Hollywood fashion, he turns out OK in the end.

I wonder if anyone ever asked Carlos Ghosn such a question during his rise to the top of one of the world’s biggest automaker groups. Ghosn attained rock-star-type fame as the jet-setting chairman of Nissan, CEO of Renault, and chairman of the Nissan-Renault alliance. He was arrested Nov. 19 in Tokyo, where he was put in jail and charged with violating Japanese security laws by underreporting his pay by tens of millions of dollars over the last eight years.

The scandal has both automakers scrambling for new direction. Nissan dropped Ghosn as its chairman shortly after his arrest, but hasn’t replaced him. Renault, meanwhile, has kept him as CEO, at least for now. And the two companies are struggling to align within their alliance, which was formed more than twenty years ago, now is incorporated under Dutch law, and had grown into a complex relationship filled with tension.

The French-based Renault owns a 43 percent stake in the Japanese-based Nissan. It helped rescue Nissan from near bankruptcy a decade ago, but now is seen as the weaker partner in the alliance. The French government, meanwhile, owns a 15 percent stake in Renault. Further complicating matters, Ghosn hasn’t been allowed to talk to either of his employers since his arrest.

The result, as a Bloomberg report put it, is that the “alliance is threatened with disarray over a rift between the partners about how to fill a leadership vacuum.”

On the one hand, it’s amazing that any global company could find itself in such a situation given the amount of scrutiny that comes with our increasingly transparent culture. On the other hand, people have been abusing power since the dawn of time, and the only things that are likely to change are their methods for covering it up.

Ghosn, of course, has denied the charges, according NHK, Japan’s largest broadcaster. It will be months if not years before justice runs its course, and, hopefully, the truth will be revealed. But what’s obvious in this case is that the concentrated power held by Ghosn went unchecked for far too long. Seijiro Takeshita, the dean of the School of Management and Information at the University of Shizuoka in Japan, summed it up nicely for The New York Times: “I think one of the most acute issues here is that there has been excessive concentration of power into one person. I don’t think anyone can deny that.”

Ghosn’s leadership no doubt helped create the success of the automaker alliance, but it’s clear now that he also helped build an organization that was heavily dependent on him for its stability and survival. In other words, the system lacked the integrity of checks, balances, and accountability. And without integrity, eventually everything crumbles and falls.

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