[Column] Of leader risk and owner risk

Kim Hyun-ki

The author is the Tokyo bureau chief and rotating correspondent of the JoongAng Ilbo.

Until his downfall in 2018, Carlos Ghosn had been a superstar entrepreneur as CEO of the Renault-Nissan alliance. He earned the moniker as “the cost killer” after laying off 20,000, 15 percent of Nissan’s workforce.

Five factories in Japan was closed and more than 300 showrooms were shuttered. Executives had to buy stationery out of their pocket. As a result, the finances of Nissan sharply improved. He took all the credit, and took home $16.9 million a year.

His profligacy was underscored by his birthday extravaganza in March 2014, renting out the Palace of Versailles to entertain over 150 celebrities, including Michelin star chefs and his friends, in a lavish costume party that cost 635,000 euros. The check for the binge went to the company. The event was claimed to have been hosted to celebrate the 15th anniversary of the marriage of the French and Japanese carmakers.

But none from the two companies were invited. There is a French saying that a fish rots from the head down. The rotten head brought down the transcultural magnate as well as Nissan. Ghosn is wanted as an international fugitive while Nissan has never recovered from the scandal.

The “stinky” issue of Twitter has been shocking. Since Elon Musk completed the acquisition of the platform two months ago, he has been taking cost-cutting actions “like crazy,” axing half from the regular payroll. Four floors of the San Francisco headquarters building were closed off. Janitors and cleaners also were fired. Their absence has left the offices in disarray with rest rooms smelling persistently of takeout leftovers, the New York Times reported. Remaining employees have to bring their own toilet paper to work as the bathrooms have run out of toiler paper.

After Musk pushed out some essential employees with an “erratic and hands-on” style, the company is now beseeching some of them to return. After the work force was halved, the remaining employees also are packing out after working more than 80 hours a week without weekends.

No matter how able and rich the owner may be, no staffer would endure such draconian leadership. Tesla stock prices plummeted 65 percent to symbolize the owner risk.

President Yoon Suk Yeol speaks with Tesla CEO Elon Musk online from his office in Yongsan, Seoul, Dec. 23.

Korea is no stranger to the leader and owner risk. President Yoon Suk Yeol, who was elected with the slogan of governing on principles and common sense, is mimicking past mighty presidents. The decision-making relies on impromptu judgment of his aides instead of the system. He blamed the former government for the military’s failure to detect and shoot down North Korean drones. The comments from Yoon and U.S. President Joe Biden also differed over the proposed joint nuclear drill. People have to wonder who is right.

A bipartisan bill agreeing on an 8 percent tax incentive to chip investment after a lengthy wrangling by rivalling parties lifted the figure to 15 percent upon the president’s order. The president has undermined the role of the government. Former president Moon Jae-in declared that the hard-won democracy must not retreat, although he had used various aberrant means to regress democracy. Despite a plethora of criminal charges against him, Democratic Party Chair Lee Jae-myung vowed to “fight till the end for the people.”

Large companies are speeding up hereditary succession while the business-friendly conservative government is in power. Heirs are zooming up on the corporate ladder either to “improve” their underperformance or “keep up” their good performance. They do not care about the owner risk.

The abnormality has turned into normalcy. Leaders who should give hope to people have become the biggest risk to the country. We have to rely on ourselves to survive the tough year.