The Nissan governance failure is distinctive in the NAVETRA™ case study series because it is the clearest example of what happens when an organisation not only fails to build governance infrastructure — but actively allows one person to dismantle it. The board didn't just fail to see what Ghosn was doing. It gave him the tools to do it: authority over his own compensation, departments made deliberately opaque to internal review, and a corporate culture in which his status as the man who saved Nissan made challenge structurally unthinkable. Nineteen years without a functioning oversight mechanism is not an accident. It is an architecture.
What Actually Happened
Ghosn's arrival at Nissan in 1999 was, by any measure, one of the most remarkable corporate turnarounds in automotive history. Nissan was carrying $19 billion in debt, losing money on almost every model it sold, and widely regarded as beyond saving. Within three years Ghosn had cut the workforce by 21,000, shut five Japanese plants, halved the debt, and returned the company to profitability. He became a celebrity in Japan — the subject of comic books, ranked ahead of Barack Obama in a poll of Japanese citizens' preferred Prime Minister. His "Nissan Revival Plan" succeeded beyond every metric he had set for it, and he offered to resign if it failed.
This is the context in which everything else must be understood. Ghosn's governance failure did not begin in a vacuum of corporate mediocrity. It began in an organisation so grateful for his performance, and so dependent on his continued leadership of a three-company alliance, that no one inside the structure was positioned — or willing — to challenge him. The board in 2004 formally delegated to Ghosn the authority to set executive compensation, including his own. That single governance decision, made in gratitude rather than structure, created the condition that made everything that followed possible.
1999: Ghosn arrives at Nissan as COO following Renault's 36.8% stake acquisition. Nissan is $19 billion in debt. Three years later, the debt has been halved, the company is profitable, and Ghosn is promoted to CEO.
2004: Nissan's board formally delegates to Ghosn the authority to set individual director and executive compensation levels — including his own. This is the foundational governance failure: the board has removed itself from the one oversight function that would have made everything else visible.
2005: Ghosn becomes CEO of Renault simultaneously, holding top executive roles at two Fortune 500 companies at the same time — an unprecedented arrangement that further concentrates power and reduces the practical ability of either board to independently oversee him.
2009: Japan changes the law to require public disclosure of executive salaries above 100 million yen. Ghosn earned approximately 1.75 billion yen that year. Rather than disclose the full amount and face public scrutiny in a country where his pay already exceeded Toyota's CEO by more than four times, Ghosn and his subordinates begin a scheme to declare only approximately half the actual compensation, deferring the remainder to a series of undisclosed post-retirement arrangements tracked in internal spreadsheets. The SEC would later describe this as concealing more than $90 million in compensation from public disclosure over nine years.
2010 onward: Ghosn instructs board member Greg Kelly to establish Zi-A Capital BV, a Netherlands-based shell company, ostensibly for investment purposes. Nissan initially funds it with approximately $44 million. Over subsequent years, Zi-A and related shell entities in the British Virgin Islands and Lebanon are used to purchase luxury residences in Paris (2005), Rio de Janeiro (approximately $5 million), and Beirut (over $15 million including renovations) — funded with company money and not disclosed as compensation. Nissan compliance auditors begin attempting to track Zi-A activity in 2014 but are blocked by the chain of shell companies.
2016: Nissan acquires a 34% controlling stake in Mitsubishi Motors. Ghosn is immediately appointed Mitsubishi's chairman — giving him simultaneous board chairmanship of three global automakers and sole authority to dispense cash from a Netherlands-based Nissan-Mitsubishi joint venture. He uses this authority to pay himself an undisclosed $8 million in 2018 without the knowledge of either company's directors.
2017: A Nissan employee contacts a lawyer after learning of financial irregularities. The information eventually reaches a small group of Nissan executives who begin a months-long internal investigation, cooperating with Japanese prosecutors. Ghosn is not informed.
19 November 2018: Ghosn is arrested on arrival at Tokyo Narita airport by Japanese prosecutors. Nissan's board votes unanimously to remove him as chairman five days later. Renault and Mitsubishi follow. The SEC subsequently finds that Ghosn and Kelly concealed more than $140 million in compensation and retirement benefits. Nissan settles SEC charges for $15 million. Ghosn settles for $1 million and a 10-year officer and director bar without admitting wrongdoing.
December 2019: Ghosn escapes Japan hidden in a musical instrument equipment case, flown by private jet to Lebanon via Turkey. He holds a press conference in Beirut, describes his escape as fleeing injustice rather than justice, and remains in Lebanon beyond the reach of Japanese authorities.
What makes this case particularly instructive for NAVETRA™ purposes is the post-arrest disclosure that Nissan CEO Hiroto Saikawa — who had worked directly under Ghosn — himself had to resign in September 2019 amid a separate scandal involving overpaid stock compensation. The governance failure was not contained to one individual. It was systemic. The culture Ghosn had built made everyone around him complicit in the opacity he required — because no one had the structural standing, the board backing, or the individual willingness to challenge a man who had saved the company and was regarded as its indispensable core.
"Too much authority had been placed in Ghosn's hands. After being a CEO for 19 years without real governance mechanisms, it had to be expected that he would misuse his power. The board and legal regulations failed to remove Ghosn as CEO — and that failure is what made everything else possible."
The Five NAVETRA™ Domains That Were Failing
The Nissan case is unique in the NAVETRA™ series because the governance failure was not primarily about information not reaching the right people. It was about an organisation that had been structurally reconfigured — deliberately — so that the oversight mechanisms that would normally catch what Ghosn was doing could not function. Five domains were failing, and in this case, their failure was not accidental.
Is the board operating from the same accurate picture of what the CEO is actually doing — including how he is compensating himself, what assets the company is funding for his personal use, and what arrangements are being made for his post-retirement payments?
At Nissan: the board delegated to Ghosn in 2004 the authority to set his own compensation. This is not a failure of Leadership Alignment in the normal sense — where information doesn't reach the board. It is a failure of Leadership Alignment architecture: the board removed itself from the information chain entirely, by design, and gave the person it was supposed to oversee the authority to determine what it would be told about his own pay. The CFO was misled about the accounting for pension increases. The LTIP awards were backdated. The Zi-A Capital shell company structure prevented compliance auditors from understanding what company funds were being used for from 2010 to 2014. The board that voted to remove Ghosn in November 2018 was not a board that had been receiving incorrect information. It was a board that had abdicated the structural responsibility to receive any independent information at all.
Is the organisation structured so that the culture supports transparency, challenge, and honest reporting upward — or has a culture formed in which the CEO's status and indispensability make challenge structurally unthinkable and loyalty to the individual more powerful than accountability to the institution?
At Nissan: Ghosn's reputation as the man who saved Nissan — the comic books, the polls, the decorations — had created a culture in which he was not just powerful but revered. The academic analysis of the governance failure is direct: Nissan lacked independent directors who were willing to speak up against a strong CEO, which "did not promote the desired corporate culture." The organisation that allows a single individual to be simultaneously indispensable and unchallengeable has produced an Organisational Alignment failure that cannot be corrected by individual courage. No individual director — Japanese, French, or otherwise — was in a structural position to stand up to a man who simultaneously ran Nissan, Renault, and Mitsubishi, was revered in Japan, decorated by France, and had made his boards entirely financially dependent on his continued leadership of the Alliance. Organisational Alignment failed because the culture that would have made challenge possible had never been built.
Does the organisation have audit, compliance, and risk functions with the structural independence and board-level access to identify, escalate, and act on executive misconduct — including misconduct by the CEO himself — before it accumulates for nineteen years?
At Nissan: the board at the time of Ghosn's arrest had no audit committee, no nomination committee, and no remuneration committee — the three foundational structures of functional corporate governance. It had a single independent non-executive director, described in academic analysis as lacking sufficient business experience. Compliance auditors who began investigating Zi-A Capital in 2014 were "stymied" by the chain of shell companies — for four years — before the whistleblower report in 2017 gave internal investigators enough leverage to work with Japanese prosecutors directly. The SEC's investigation found that Ghosn's subordinates were actively misleading Nissan's own CFO in order to process the fraudulent accounting. Internal Risk Management at Nissan was not just absent — it was being actively circumvented by the very person it was supposed to constrain.
Across the three-company Alliance — Nissan, Renault, Mitsubishi — are the boards of each entity receiving consistent, complete, and accurate information about the compensation and conduct of the individual who simultaneously chairs all three? Or does the multi-company structure create opacity that makes each board structurally less informed than it would be overseeing a single company?
At the Alliance level: Ghosn's simultaneous chairmanship of three companies in three countries — under three different legal frameworks, with three sets of board obligations — created a Cross-Functional Alignment failure at the inter-company governance level. Renault's board, which held 43% of Nissan, was not receiving the same information as Nissan's board. The Netherlands-based joint venture between Nissan and Mitsubishi gave Ghosn "sole authority to dispense cash" — without the knowledge of either company's directors. When Ghosn was arrested, Renault initially declined to remove him because it had not yet seen Nissan's evidence. Each board was operating from its own partial picture of the same individual. Cross-Functional Alignment failure at the Alliance level meant that the multi-company structure — which was supposed to be a source of competitive strength — became the structural mechanism that prevented any single governance body from having a complete view of what Ghosn was doing.
Does the knowledge that exists within the organisation about executive conduct — in compliance, in finance, in the secretariat functions that track compensation — travel reliably to the board in a form that is complete, accurate, and actionable?
At Nissan: the compensation spreadsheets tracking Ghosn's total, paid, and deferred compensation were maintained each year by a named Nissan employee and shown to Ghosn annually. The Nissan Secretariat's Office held records showing actual remuneration from 2009 through 2017 that significantly exceeded what was disclosed. The internal LTIP backdating was designed — explicitly — to create a paper trail that would allow eventual payment of the undisclosed amounts after retirement, while concealing the obligation in present-period financial statements. Every piece of information required to expose the scheme existed inside Nissan. The Knowledge Transfer Gap was structural: it was not that the information couldn't travel — it was that the governance architecture gave the person holding the undisclosed information the authority to control who received it. There was no independent path from the Secretariat's records to the board that didn't run through Ghosn himself.
The Architecture of Unchecked Power
The most significant governance lesson from Nissan is not about Ghosn's misconduct. It is about the architecture that made nineteen years of misconduct possible without detection — and would have continued indefinitely without the single whistleblower report in 2017.
The architecture that allowed this had four specific features. First, Ghosn set his own salary — a delegation no functional board makes to any CEO. Second, Nissan had no audit, nomination, or remuneration committee — the three structures that would normally have provided independent oversight of executive compensation. Third, Ghosn had made certain departments deliberately opaque and "hard to understand," as the internal report after his arrest noted. Fourth, his simultaneous chairmanship of three companies across three jurisdictions meant no single board had a complete picture of his total position.
The academic analysis of the case makes the structural point precisely: after nineteen years as CEO without governance mechanisms, it was to be expected that a CEO would eventually act in his own interest. That is not a moral judgment about Ghosn specifically. It is a structural observation about what organisations produce when they remove the architecture of accountability and replace it with trust in an individual's performance record.
A board that set its CEO's compensation by delegating the decision to the CEO. No audit committee. No nomination committee. No remuneration committee. One independent director. Nineteen years. $140 million concealed. Six properties in four countries funded through shell companies. A whistleblower report the only reason the scheme ever ended. Nissan is not a story about a corrupt CEO. It is the cleanest available demonstration of what NAVETRA™ domains look like when they don't just fail — but are structurally prevented from functioning. Leadership Alignment, Organisational Alignment, Internal Risk Management, Cross-Functional Alignment, and Knowledge Transfer Gaps all failed because the governance architecture was built, deliberately or through negligence, to ensure they would.
The board didn't miss the signals. It gave Ghosn the authority to make sure the signals never existed.
The Question for Every Alliance, Group, and Multi-Entity Board
The Nissan case carries a specific lesson for any organisation operating across multiple entities, geographies, or ownership structures — which describes most industrial companies of meaningful scale. When a single individual holds authority across multiple boards, the oversight architecture of each individual board becomes insufficient. Each board holds a partial picture. The individual holds the whole one.
NAVETRA™ is designed for exactly this condition. The ten domains it measures are not governance frameworks in the abstract — they are the specific structural conditions that determine whether a board, in practice, receives the information it needs to govern the organisation it is responsible for. At Nissan, five of those domains were absent or actively suppressed for nineteen years. The whistleblower who ended the scheme in 2017 should not have been the governance mechanism of last resort. That is what NAVETRA™ exists to prevent.
Governance is not the trust you place in a CEO who has performed. It is the architecture that would catch a problem if the trust turned out to be misplaced.