Fall from grace? Lebanon in disbelief over idol Carlos Ghosn’s business scandal

Updated 22 November 2018
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Fall from grace? Lebanon in disbelief over idol Carlos Ghosn’s business scandal

  • Results of the investigation into allegations of financial misconduct are pending
  • Regardless, many who looked up to their compatriot as a hero say that won’t change

DUBAI: The Lebanese community at home and abroad has rallied around auto tycoon Carlos Ghosn, the Lebanese-Brazilian-French chairman of the Renault-Nissan-Mitsubishi Alliance, whose arrest on Monday by Japanese authorities following an internal investigation at Nissan over “significant acts of misconduct” sent shock waves through the industry.

While Ghosn was born in Brazil and divides his time between Paris and Tokyo, his grandfather was from Lebanon, and it is clear from the dismayed reaction this week that the community claims him as their own.

The results of an investigation into the alleged financial misconduct of the man credited with forging the world’s largest auto alliance are still pending, but many Lebanese referred to him as a role model and an ambassador for the country. And although Renault announced it would keep Ghosn as CEO, both Nissan and Mitsubishi said they would propose that their boards dismiss him.

“The news is shocking,” said Michel Hamam, partner at Kingpin Consultancy in Beirut. “What is more surprising is the behavior of Nissan and Mitsubishi’s officers and board, who emitted a judgment against him even before knowing the results of the authorities’ investigation. The content of the press conference given by the head of Nissan against the company’s chairman is unheard of, and you cannot but feel (there has been) an internal coup to oust him.”

Ghosn was indispensable when it came to reviving the company, Hamam said. “But now they believe they can do without him. He was always viewed in the Arab world, and worldwide, as a top-notch businessman and this will not change. His achievements speak for themselves.”

The 64-year-old millionaire auto tycoon is one of the world’s most influential executives. In 2002, he was awarded Asia’s Businessman of the Year by Fortune magazine, followed by one of the top 10 most powerful people in business outside the US, in 2003. 

Surveys by the Financial Times and PricewaterhouseCoopers also ranked him as the fourth most respected business leader in 2003, jumping one spot in both the following years. For many Lebanese, that reputation will remain. 

“He was an ambassador carrying the name of Lebanon very high in the business sphere,” Hamam said. “While it is difficult to say if that will change since we have only heard one side of the story, there will be conflicting reactions to his arrest. Some will condemn him while others will ignore what happened — once the storm passes, he will still be highly regarded by Arab businessmen. After all, the reaction of Renault’s management is very important, confirming he is still the CEO of the company.”

For Robert Paoli, a Lebanese businessman in Beirut, the news came as a shock, with many questions unanswered. “I’m not sure a man like Carlos Ghosn, with such intelligence, can truly be that naive and make such mistakes, so we are really just waiting to find out the truth,” he said.

“It was a massive shock for me. Having someone like Ghosn in the world was a sense of pride. He was much like our ambassador in business.”

Paoli cited a number of projects undertaken by Ghosn in Lebanon that raised his profile. “We saw so much in him and hoped that one day he would come back and work in Lebanese politics, potentially to manage the country’s finances,” he said.

“I don’t think anyone will change their opinion of him until after the results of the investigations.”

Many Lebanese in the Gulf echoed such sentiments, calling Ghosn a role model not only for Lebanese businessmen but also Arabs at large.

“Many people respected and admired him for what he brought to the automotive world,” said Jean-Pierre Mondalek, a Lebanese working in the UAE. “The news is disappointing, and I am keen to find out what comes out of this because being arrested does not necessarily equate to guilt, so he is technically innocent until proven guilty.

“As an enthusiast who works in the automotive industry and a Lebanese, I wonder, on a human level, how a man who was so impactful in the automotive world could get caught up in all this. So I’m interested to see how it all plays out.”

Samer Hamadeh, founder of Aegis Hospitality in Dubai, said the Ghosn case trumped any other business scandal.

“A giant is falling from grace and who knows who, or what, he will take down with him,” he said.

“Lebanon has seen its fair share of business villains, politically speaking, so Ghosn was the closest thing to a business hero. He represented a sense of pride the Lebanese don’t really get from their local businessmen,” Hamadeh said.

He believes public opinion of Ghosn was unlikely to change. “The region is used to business scandals, and this will end up like the rest of them — forgotten as soon as the next one comes along.”

Others agreed, saying that such cases had happened countless times in the business world, with its intricate rules and regulations.

“Ghosn is known to be one of the hardest-working men in the automobile industry,” said Walid Kanaan, a Lebanese businessman in the Gulf. “He adds great weight to the success of the Lebanese diaspora and was an example showing that Lebanese businessmen have attained the highest positions in the biggest companies in the world.”

For Pierre Haddad, a Lebanese working in Abu Dhabi, Ghosn’s arrest was anything but a surprise, coming after years of Japanese efforts to replace him as head of one of the world’s largest car manufacturers.

“Just a few years back, an attempt to limit his power over Renault failed,” Haddad said. “For now, the arrest publicized in the media is one-sided, and wise men should wait for the defense’s counterattack.”

In the eyes of the Arab world, and especially the Lebanese, Ghosn was a hero. “No matter what they try, he will remain the leader, the driver, the innovator and visionary of modern times. His image will remain shining,” Haddad said. “The final judgment is the one that counts and, regretfully, several years may slip before (that arrives).”

However, at least one academic believes Ghosn’s arrest will raise questions in the minds of other business people around the world, including the Gulf.

“Ghosn is one of the best-known global business leaders,” said Andre Spicer, professor of organizational behavior at Cass Business School, part of City, University of London. “There will be questions about whether Ghosn continues to be able to speak for business globally and whether he is able to hold together the multinational alliance of Nissan, Mitsubishi and Renault.” 

Spicer described Ghosn’s fall as a classic case of executive hubris. “Since being credited with turning around Nissan, he has been seen as a corporate demigod. He is featured in business books and has been the subject of case studies used to teach managers in training. In addition, he has become increasingly powerful in Nissan, Renault and Mitsubishi, all of which has fueled a sense he almost has superhuman abilities. When this happens, leaders start to think the normal rules don’t apply to them.” 

Ghosn’s departure could be an existential threat for all three companies since he had built a complex alliance between three automakers that served as the centerpiece of the car maker’s strategy. 

“The only thing holding it together was Ghosn,” Spicer added. “With him out of the picture, old differences between the companies could come to fore, the alliance could fall apart, and this would have profound implications for the direction of each company — particularly in an industry undergoing disruptive change.”


Normalcy restored in Egyptian Sinai city, but danger lurks

Updated 11 December 2018
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Normalcy restored in Egyptian Sinai city, but danger lurks

  • Authorities are building a wall around the city's airport after militants rocketed a helicopter used by the then defense and interior ministers
  • The pervasive security, and the great lengths to which the military went to protect the journalists, suggest danger may not be far away

EL-ARISH, Egypt: Mohammed Amer Shaaban stood over trays of fresh fish at his tiny store in the coastal Sinai Peninsula city of El-Arish, pointing to his right and left while recalling the tough days when Daesh militants operated with impunity.
"They killed a Christian who owns a knife shop there and an informant over there. They also killed one of my cousins," he said.
"We have enjoyed some stability and peace for the past six or seven months," added the 48-year-old father of five as some two dozen journalists descended on El-Arish's fish market as part of a rare, army-organized trip.
The trip was chiefly designed to show off signs of normalcy in El-Arish, northern Sinai's largest city, as evidence that the military's all-out offensive against militants launched nearly 10 months ago has succeeded.
But in the city and the surrounding deserts, the signs of war are difficult to miss, particularly the enormous security presence. The Associated Press was required to submit the photos and video accompanying this story to Egypt's military censor, which did not say two weeks after submission if or when the material would be released.
The carefully scripted trip included visits to an indoor arena packed with thousands of screaming schoolchildren, a new housing project, a school and a factory. No one is claiming the militants have been defeated, but there have been no major attacks for several months, save a recent ambush of buses carrying Christian pilgrims to a remote desert monastery south of Cairo that left seven dead.
The fight against militants in Sinai has gone on for years, but the insurgency gathered steam after the 2013 ouster by the military of a freely elected but divisive president, the Islamist Mohammed Morsi of the Muslim Brotherhood. Authorities have since shut down almost all underground tunnels that they suspected militants used to smuggle fighters and weapons into Sinai from neighboring Gaza, ruled by the Islamist Hamas group since 2007.
They also razed to the ground much of the town of Rafah on the Gaza border in a bid to deny the militants a safe haven and stop its use as cover for tunnels. Elsewhere in northern Sinai, olive orchards have been bulldozed to deny the militants sanctuary.
A brutal militant attack on a Sinai mosque that killed more than 300 worshippers a year ago — the deadliest such attack in Egypt in living memory — prompted general-turned-president Abdel-Fattah el-Sissi to order a major offensive.
The operation, with thousands of troops backed by tanks, jet-fighters and warships, got underway in February. Security forces almost completely sealed off northern Sinai, causing shortages of food and fuel. The siege was eased in May, allowing normalcy to gradually return to the mostly desert region, especially in El-Arish.
Barely a year ago, militants in El-Arish killed suspected informants in broad daylight, set up bogus checkpoints, shot Christians in their stores, snatched clerics and members of the security forces to later dump their bodies on the streets. Now traffic is heavy, families are out in public, stores are filled with goods, and school classes are packed with children.
The military is eager to tout the changes.
"Terrorism will be completely defeated in a matter of a few months," announced Mohammed Abdel-Fadeel Shoushah, a retired general who serves as the governor of northern Sinai. "Now we are focusing on development, which is the basis of security."
For now, though, El-Arish shows enduring signs of conflict.
A Pharaonic-style building across the road from the governor's heavily guarded office has almost every one of its windows shattered. Some streets are blocked by sand berms, while others are sealed off by concrete blocks. Unfinished buildings are everywhere in the city, parts of which look deserted. Many of the date palms in the city look like they have received little care for years.
Authorities are building a wall around the city's airport after militants last December rocketed a helicopter used by the then defense and interior ministers while parked on the tarmac. The ministers were unharmed, but one officer was killed in the attack.
Another wall with heavily fortified watch towers is being built on the southern reaches of the city to prevent militants from infiltrating through dense olive orchards.
The pervasive security, and the great lengths to which the military went to protect the journalists, suggest danger may not be far away. The reporters traveled in armored cars with gunners in full combat gear perched atop, and a signal-jamming vehicle tagged along as a precaution against roadside bombs. The top officials in the convoy were protected by heavily armed policemen in black fatigues and ski masks.
In late October, militants twice attacked workers employed by the company building the wall just south of El-Arish, killing at least six and wounding 16. Earlier in November, security forces killed 12 militants hiding in unused buildings in El-Arish.
"Stay put in the vehicle and don't come out and wander around," an armed plainclothes police officer sternly warned reporters during one stop. "It is not as safe as you might think," he said, pointing to the expanse of desert on one side of the road.
The magnitude of the counterterrorism task becomes apparent during the nearly 200-kilometer (125-mile) journey through the desert from the east bank of the Suez Canal to El-Arish.
All along the road are military positions. At some, tanks are buried in the sand for protection with only their turrets showing. Soldiers on watch towers in the middle of nowhere cut forlorn figures against a backdrop of desert. The checkpoints create long lines of vehicles. Helicopters occasionally hover above.
El-Arish resident Hassan Mahdi, a lawyer who came to Sinai from a Nile Delta province as a young boy nearly 30 years ago, said the restored security is a welcome change.
"To be honest, life was very, very difficult here," he said. "Businesses were relocating out of Sinai in search of security and many things were in short supply. Not anymore."