The Nissan Qashqai is Britain’s second bestselling car. Renault and Nissan became strategic partners in 1999 and have nearly 450,000 employees and control ten major brands, globally. The car group is fourth in the world in volume, behind Toyota, General Motors and Volkswagan.

The recent downfall of Carlos Ghosn, the engineer of the alliance between Renault and Nissan, is just the latest in a series of shocks involving some of Japan’s biggest companies. His detention in prison has thrown into doubt the future of the alliance and raised questions about Japan’s corporate culture.

Renault effectively rescued Nissan from the brink of bankruptcy. The French carmaker has a 43% stake in its Japanese partner, while Nissan has a 15% stake in Renault. In 2016, Mitsubishi was added. Damaged by scandal and struggling financially, it was effectively bailed out by Nissan, which acquired 34% of its shares.

Today, although the three companies retain distinct identities, they develop and use common technologies, buy parts from the same suppliers, and are developing systems for building cars from common platforms.

Before this scandal erupted, Ghosn was chairman of both Nissan and Mitsubishi, as well as being chairman and chief executive of Renault. He was and remains chairman and chief executive of the alliance, which has its own board.

Ghosn had plans to bring them closer together. Whilst this would have fallen short of a full merger, with both companies maintaining their separate corporate identities, it might well have involved Renault taking a majority stake in its partner. This is believed to have caused significant concern and resentment at Nissan.

But however badly the affair reflects on Ghosn himself, his arrest over allegations of “significant financial misconduct” raises equally serious questions about the health of Japan’s overall corporate culture.

Critics have attributed the scandal to his overbearing personality and the lure of personal wealth, after prosecutors arrested him on allegations of understating his income in financial statements by ¥5bn (£35m) over a five-year period.

When he joined Nissan in 1999, he already enjoyed the nickname 'le Cost Killer' in France for his actions at Renault. He brought a similar ruthlessness to Nissan, closing factories, cutting jobs and transforming the way it operated. Operating profits soared and remained high until the financial crisis, when like other manufacturers Nissan saw its earnings plummet. Nissan recovered from the crisis quickly but, in recent years, its margins have been hit by declining sales, rising costs, and claims that emissions figures were being falsified, as exposed earlier at Volkswagen.

Nissan claims that Ghosn had been systematically under-reporting his earnings to security regulators and had been misusing company assets for personal benefit. Those allegations are now being examined by prosecutors.

However, there are broader cultural factors involved. While corporate governance scandals are not unique to Japan, there are certainly cultural factors that mean bad business behaviour can happen more easily in Japan. Poor corporate oversight and the dominance on Japanese boards of company “insiders” – almost always middle-aged men with impenetrable networks formed through decades spent working for the same company. Instead of exercising vigilance against potential wrongdoing, employees – and especially those at senior level – are expected to maintain harmony.

Given the strict hierarchies in Japanese society, expecting individuals to blow the whistle on their peers – or, even worse, their seniors – is simply culturally unacceptable. This is compounded by the consensus-driven and long-winded nature of Japanese decision making, which often leads to a lack of willingness to be accountable and a tendency to avoid the consequences until forced.

Michael Woodford understands that better than most. Seven years ago he was lauded by some as a champion of corporate transparency when, soon after becoming the first foreign chief executive of Olympus, he exposed systematic accounting fraud at the Japanese imaging company. His colleagues, however, viewed him with contempt – a pariah who in his role as chief whistleblower had breached Japan’s corporate code of silence. As it turned out, the Olympus scandal was a foretaste of what was to come. Four years later, Toshiba, which makes items ranging from laptops to nuclear power plants, revealed that it had hugely overstated its operating profits, ultimately by almost $1.2bn (£940m). More recently, Kobe Steel admited falsyfying data about the strength and durability of its aluminium and copper products, which are used in the transport and defence industries.

There is much that differentiates the Ghosn case from other Japanese business scandals. The evidence against him was reportedly built around information from a Nissan whistleblower – proof, according to some, that western-style controls on power are beginning to take hold in Japan. In addition, the allegations centre on an individual rather than a company-wide attempt to cover up wrongdoing. But despite Nissan’s attempts to contain the fallout from their former chairman’s disgrace, questions were still being asked about its internal governance.

Attempts by Japan’s prime minister, Shinzō Abe, to introduce measures designed to improve corporate governance and shore up Japan’s reputation among overseas investors have had mixed results so far. Since he began revamping the corporate code in 2014, there are signs that firms are being more responsive to long-ignored activist shareholders, and there are more outsiders sitting on company boards.

So what does this scandal teach us from a broader risk perspective? It’s well established these days that culture is fundamental to a firm’s long term success or failure. Culture ultimately succeeds because of the ‘tone at the top’ of the organisation, and if that tone is corporately dysfunctional, then ultimately no risk management policy will succeed.