Nissan Ousts Ghosn, Moves to Assuage Concerns Over Alliance
(Bloomberg) -- Carlos Ghosn was dismissed as Nissan Motor Co. chairman three days after his arrest on allegations of financial misconduct, marking a stunning fall from grace for an executive who had gained a cult-like status leading a global car alliance.
Nissan’s board voted unanimously to remove the manager from his post, it said after a meeting that lasted into the Tokyo evening. At the same time, the panel pledged continuity by saying its alliance with Renault SA won’t change. But in ousting Ghosn, the Japanese side chose a more aggressive path than their French partner, which had opted earlier to appoint only an interim leader for Ghosn’s post and had asked Nissan to do the same.
The removal fundamentally alters the balance of power at the companies that Ghosn steered. Nissan Chief Executive Officer Hiroto Saikawa is emerging as a driving force behind the investigation, while the French side has appeared blindsided by the rapidly unfolding events. Ghosn had planned to cement the alliance via a full merger of Nissan and Renault, a move resisted by Saikawa, who may instead seek to improve the Japanese bargaining position in a partnership he says has for too long favored the French side.
“It’s a coup,” said Tatsuo Yoshida, an analyst at Sawakami Asset Management, who used to work at Nissan. “Ghosn’s era is over.”
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Ghosn, 64, is set to officially remain a director, since a shareholder vote is needed to remove him from the board completely. The Japanese carmaker won’t nominate an interim chairman, and its three independent directors will nominate a permanent chairman later on.
Speaking to reporters after the meeting, Saikawa said that stabilizing the current structure is the best way forward. The two sides are in close communication and will continue to be so, he said.
Without Ghosn at the head of Nissan’s board, a full-fledged merger looks unlikely. The charismatic French-Brazilian executive was architect and linchpin of the two-decade-old alliance, which was created to add heft against global rivals. Ghosn’s arrest has now laid bare resentments that have built as the Japanese and French sides alternated successes and struggles over the years.
Lately, the structure has become increasingly controversial in Japan due to Nissan’s strong financial performance. Although it’s generally outgrown Renault in sales and profits, the Japanese company has far less influence within the alliance. It owns a 15 percent non-voting stake in Renault, which in turn owns 43 percent of Nissan, with voting rights. Mitsubishi Motors Corp. was added to the alliance in 2016.
Nissan has long been unhappy about what it considers an outsize French role, and Saikawa made reference to that perceived imbalance at the late-night press conference he called on Monday to respond to Ghosn’s arrest.
The French side, conversely, has been keen to maintain -- if not intensify -- the current relationship. French Finance Minister Bruno Le Maire said Wednesday that the partnership is set to continue and will be deepened. As Renault’s largest shareholder, the French state is “totally attached to the alliance of Renault and Nissan,” he said.
The unanimous vote means the former Renault executives on the board also backed his removal. The French carmaker itself put in place new interim leadership earlier this week but declined to fire Ghosn, saying he should be presumed innocent until more details become available. Interim Renault CEO Thierry Bollore said “the alliance is vitally important for Renault and we will ensure total continuity with our partners.”
Renault’s board indicated that it was in the dark about the details of the allegations. “At this stage, the board is unable to comment on the evidence seemingly gathered against Mr. Ghosn by Nissan and the Japanese judicial authorities,” it said in a statement earlier this week.
Ghosn, who was among the best-paid executives in both France and Japan, stands accused of under-reporting income of about $44 million and misusing company funds at Nissan. He is suspected of breaking the Financial Instruments and Exchange Law, and the alleged offense may carry a sentence of as much as 10 years, Shin Kukimoto, deputy chief prosecutor at the Tokyo District Public Prosecutors Office, told reporters Thursday. The alleged offense, he declared, is even more serious than insider trading.
Ghosn hasn’t commented on the allegations or been seen in public since his arrest. He has picked Motonari Otsuru, a former head of a special investigation task force of the Tokyo public prosecutor’s office, as his lawyer, broadcaster NHK reported.
Board member Greg Kelly, also arrested and accused of wrongdoing in relation to Ghosn’s pay, was stripped of his role as a representative director in Thursday’s board meeting, Nissan said.
The carmaker said it plans to set up a special committee to work with an independent third party toward better governance of director compensation, with independent directors Masakazu Toyoda, Keiko Ihara and Jean-Baptiste Duzan leading the effort.
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