Nissan has been betrayed by Brexit ideologues

There's something tragically appropriate about the fact that the most high-profile British industrial story, as the country staggers in the direction of a no-deal Brexit, should involve Nissan.

The proximate cause of the Japanese company's reversal of its decision to build a line of SUVs at its Sunderland plant was the collapse of European demand for diesel vehicles. But as its management has made perfectly clear Britain's departure from the EU was a factor too.

It's worth recalling why Nissan is here in the UK at all. In the 1980s Margaret Thatcher practically begged the Japanese firm to establish a plant in Sunderland, promising a smorgasbord of public subsidies and support to make it happen. Such interventionism jars with the popular image of her administration as a callous band of laissez-faire ideologues obsessed with the City of London and happy to let former northern industrial powerhouses crumble.

Yet the biggest lure for the Japanese was not those subsidies, but the UK's position in the European common market. As Keith Joseph, Thatcher's industry minister, wrote in a memo to Thatcher: "Nissan had chosen the United Kingdom because it gave them access to the whole European market. If we were outside the community, it is very unlikely that Nissan would have given the United Kingdom serious consideration as a base for this substantial investment."

Another irony about the Nissan investment is that France and Germany were, in those days, hostile to the idea of allowing Japanese car firms a production bridgehead within the European common market, fearing the impact of the competition on their own domestic automotive manufacturers.

Thatcher overcame those protectionist European impulses and indeed made the creation of a free market, regulation-harmonising, "single market" among the European member states a personal priority. Yet now, 33 years on, we have nominal Tory Thatcherites not only insisting that the UK must leave Thatcher's single market but also airily dismissing the Brexit concerns of Nissan's Japanese management - a management which their heroine was once so keen to court.

The suggestion by the chair of the European Research Group faction within the Tory party, Jacob Rees-Mogg, that because Nissan's former boss Carlos Ghosn stands accused of embezzlement in Tokyo that nothing the company has to say need be taken seriously, shows how far this wing of Conservatism has drifted into denial. The ERG prefers conspiracy theories and witch hunts to listening to firms' worries about trade barriers. Before the private "letter of comfort" to Nissan from the business secretary Greg Clark in 2016 was finally published on Monday, the great fear among these hardliners was that this letter had made unacceptably positive noises about Britain remaining in a customs union with the EU.

Another lip-chewing irony over Nissan is that the Labour leader Jeremy Corbyn has been fretting recently about the restrictiveness of EU aid rules and some of his supporters have gone as far as using this as an argument in favour of total rupture. But the Clark letter revealed £ 80m of promises of UK government assistance for Nissan, with £ 61m of grants formally offered. If such state aid is forbidden under "neoliberal" EU law, as some "Lexiteers" seem to suggest, the EU's institutions and courts have been surprisingly tolerant of it.

The air is thick with accusations of "betrayal" over Brexit. But the reality is that it is Nissan and other foreign corporate investors in the UK that have been betrayed; betrayed by political extremists ignorant of history and by those who find their ideology preferable to reality.

Japan's justice system is in the dock alongside Carlos Ghosn

On 19 November Carlos Ghosn, the most famous man in the global automotive industry, touched down at Haneda airport in his private jet and was immediately arrested by Japanese prosecutors. That was the last time he was seen in public.

Ghosn has now spent more than 30 days in detention, where he has been subject to questioning by the Tokyo Public Prosecutor's Office. He has not been allowed to have a lawyer present during those interrogations. Access to his family has been tightly limited.

Meanwhile, details of the allegations of what Ghosn is supposed to have done have been released by prosecutors to the media. We have heard nothing from Ghosn himself except a second hand report of a denial of wrongdoing.

It appeared that Ghosn was going to be released on bail last week, but fresh evidence produced by prosecutors at the last minute has kept him detained this weekend. In Japan suspects can be re-arrested on different allegations, which restarts the clock again on their maximum 23-day detention.

Ghosn has not even been formally charged yet. "Detention is essentially an investigative tool used to interrogate suspects and develop evidence," explains Colin Jones, a professor of the Doshisha Law School in Kyoto and an expert on the Japanese legal system.

Leave aside the issue of whether or not Ghosn is guilty of the allegations of under-reporting his Nissan income by tens of millions of dollars over many years, what does this kind of treatment of a suspect say about the state of the Japanese criminal justice system? The prolonged and indefinite detention without charge constitutes a punishment in itself. The majority of indicted detainees confess while in custody, during unrecorded interrogations. Rights groups have long complained of the risk that these confessions are extracted under duress.

According to some legal scholars, trial procedures favour the prosecution. There is a notorious 99 per cent conviction rate. "Most Japanese criminal trials are just about sentencing decisions," says Mr Jones. "A defendant may, of course, challenge the validity of their confession at trial, but the burden of proof is on them - they must prove they are innocent in the face of it."

Some have suggested that in understating his remuneration Ghosn was simply doing what many other executives in Japan do and that this is a case of selective justice, and therefore no justice at all, similar to the way formal corruption prosecutions in authoritarian regimes like China and Russia are about eliminating political rivals rather than tackling graft.

Others have claimed that Ghosn has been a victimised because he is a foreigner. Another view is that one has to understand his downfall in the context of a power struggle between France and Japan over the future of the Renault-Nissan alliance.

There are questions about Japanese corporate governance. Does this show there has been no improvement since the 2011 Olympus scandal that exposed astonishing levels of fraud in a Japanese boardroom? Or is the fact that this alleged scandal has been exposed, supposedly after a whistle-blower came forward, demonstrate the opposite? But we should keep the issues separate. It's possible that Ghosn is guilty of corruption, that the issue was brought to a head by a global corporate power struggle, that Japanese corporate governance is still deficient - and also that the Japanese legal system is in need of reform.

Japan's legal system is based on the imperial German inquisitorial model, where the courts are involved in investigating facts. Yet it also has elements of the US adversarial system, laid over the top after the Second World War. The result is a hybrid system that seems to give an unhealthy amount of latitude to prosecutors but with insufficient checks on their behaviour.

A former Japanese civil servant, Kazuo Yawata, has asked whether Ghosn's high-profile treatment might constitute the "suicide of Japan's judicial system". On the evidence we have, hara-kiri would seem to be rather welcome.

The rise and fall of Carlos Ghosn shows the folly of treating businessmen like gods

This June, Carlos Ghosn, the boss of a French-Japanese automotive conglomerate, sat down for lunch with the Financial Times at an old-fashioned bistro in Paris.

As the interviewee dug into a € 40 chateaubriand steak, the FT broached the sensitive issue of Ghosn's high remuneration. His pay had recently prompted a major row with the French government, which owns a 15 per cent share in Renault, an outpost of his empire.

"You won't have any CEO say, 'I'm overly compensated'," Ghosn laughed. He's not laughing now.

Or at least we can presume he's not. Ghosn was arrested in Japan on Monday, accused of concealing the true value of his Nissan remuneration from shareholders over the last five years by 5 billion yen (£ 35m).

There are also allegations Ghosn benefited from the Japanese firm purchasing various luxury homes around the world for his personal use.

They are allegations at this stage, but this is clearly the end of the road for this titan of the automotive industry. Ghosn is already likely to be ousted from his leadership positions at Nissan, Mitsubishi and Renault.

That this scandal was unearthed in Japan might come as something of a surprise given that country's reputation as a land of corporate secrecy and extreme deference. Yet a succession of level eight richter scale scandals - beginning with the Olympus affair in 2011 - appear to have precipitated a landslide of genuine reform when it comes to policing corporations.

Apparently, the Ghosn scandal was exposed by an internal Nissan whistleblower. This is one of the encouraging elements of the affair: it is hard to imagine a better advertisement for whistleblowing than this case, in which exposure of wrongdoing led to the downfall of one of the world's most powerful and feted industrialists.

There's another Japanese lesson in this. Chief executives in the country have not shared in the explosion of compensation relative to the workforce that we have seen among their counterparts in the US and the UK since the 1980s.

That's one of the reasons why the (pre-tax and post-tax) income share of the top 1 per cent of earners has not soared in Japan as it has in the Anglophone world.

Sometimes we're told that the rise in this form of equality is inevitable due to inexorable global market forces such as technological advance, scalability and fierce competition for the finest management talent.

In fact, the rewards that corporate bosses receive across the world still depend mostly on local pay "norms" - the social acceptability about how much some company employees get relative to others. Those norms, for various reasons, have been distorted more in some countries than others. And Ghosn's greed appears to have exposed him in Japan.

But let's not rewrite history to suggest that this was someone widely seen as heading for a fall. Ghosn was lauded by the business media around the world like few other figures; he was the subject of countless fawning profiles.

And even Japan was infected by the cult-like atmosphere around him. He featured in a manga cartoon comic book and his face adorned a bento lunchbox. One poll in 2011 suggested many Japanese people would like him to run their country.

This adulation was excessive. As effective as "Le Cost Killer" might have been as a manager and strategist, it was always ludicrous to present him as single-handedly responsible for turning around the fortunes of these giant companies. Too many people in business, markets, politics and the media who ought to have known better were caught up in that simplistic presentation.

Venerating business leaders as gods not only leads to hubris on their part, it also interferes with our moral sensibilities and misleads the public about the true sources of our prosperity. And there really is nothing funny about that.