How losing trust can alienate customers.

Nissan CEO, Carlos Ghosn, hit the headlines this month as he was arrested following fraudulent financial claims.

Reports suggest that Ghosn used company funds to hide a personal investment loss and concealed personal bonuses to avoid a higher tax burden.

Crumbling reputation

Prior to these reports, Ghosn was one of the most highly-respected CEOs in the automotive industry – steering Nissan through the financial crisis.

Ghosn was also, most commonly known, for taking on the role of CEO for Renault in 2005 – a move which made history as he became the first executive to run two Fortune Global 500 companies at the same time.

Together  with another board member, Ghosn was arrested by Japanese prosecutors on suspicion of violating financial law by filing false statements about his earnings:  under-reporting his income by over $40 million over five years ending March 2015.

The maximum punishment for Ghosn’s crimes is up to 10 years in prison and a $90,000 fine.


Picking up the pieces

Nissan’s internal investigation found numerous other significant acts of misconduct – such as personal use of company assets.

The company moved quickly to remove Ghosn from his position as CEO.

Since the outbreak, Nissan has vowed to tighten internal controls – suggesting that the issue may have risen following the ongoing investment of power into an individual.

The scandal – seen by many as a wake-up call for companies to install effective compliance management – has already heavily impacted the company’s bottom-line with their share price falling by 5.5% to an all-time low of 940 yen

Rebuilding reputation

Nissan must now work to renew trust with their customers – rebuilding its reputation piece by piece on the world stage.

This scandal reminds us that business is no longer just about product – but also about people. It proves how actions of one employee can affect the entire reputation of a company.

As Warren Buffet famously says, “It takes 20 years to build a reputation and five minutes to ruin it.”

At Kinetic, we believe every decent business deserves to be trusted.

Without accountability, it is impossible to trust a company – and to be a decent business, you must be trustworthy.

Nissan has begun to take positive steps to rebuild its reputation in the last weeks – but this scandal proves that trust is as much about the people you empower, as it is about the products you sell.