France Abandons Ghosn and Wants an Interim CEO at Renault

(Bloomberg) -- France is seeking an interim leader for Renault SA, distancing itself from Chief Executive Officer Carlos Ghosn after he was arrested in Japan on allegations of financial misconduct.

“He is de facto not in a position to run the group,” Finance Minister Bruno Le Maire said in an interview with France Info on Tuesday. While the government -- Renault’s most powerful shareholder -- will seek a change, “we will not demand his formal departure from the board for a very simple reason,” Le Maire said. “We have no proof.”

Ghosn was arrested on Monday in Japan over allegations he under-reported income of about $44 million at Nissan Motor Co., where he was chairman. The bombshell developments would leave Renault without a leader and have raised questions about the future of the three-carmaker Renault-Nissan-Mitsubishi Alliance he led.

Le Maire will meet with Renault management and board members on Tuesday to decide on interim governance for the French carmaker, the minister said, singling out Chief Operating Officer Thierry Bollore as having “great qualities” and the ability to step in. The French government will also seek evidence from Japanese authorities, Le Maire said, after Nissan conducted an investigation triggered by an internal whistle-blower. In a letter to employees sent late Monday, Bollore expressed “full support” for Ghosn, while pledging to protect the partnership with the Japanese automakers.

Before Ghosn’s shock arrest, the French government had been pushing to cement the alliance, which currently binds the two carmakers together through complex cross-shareholdings and shared manufacturing platforms, so it would survive after his tenure ended in 2022. Those plans have now been trashed, forcing the French and Japanese sides to find a path forward with out him.

In Paris, the board of Renault and the government of President Emmanuel Macron were both caught unaware by the allegations, according to people familiar with the matter. Some Renault insiders have echoed questions raised in Japan as to whether Nissan CEO Hiroto Saikawa is carrying out a palace coup. Yet Ghosn may lack support to survive the charges emanating from Japan.

A Renault spokeswoman declined to comment. Questions about Renault’s future without Ghosn weighed on shares, which dropped as much as 4.8 percent in Paris on Tuesday. Mitsubishi Motors stock fell 6.9 percent in Tokyo on Tuesday while Nissan dropped 5.5 percent. Nissan was placed on negative watch by Standard & Poor’s credit rating agency, which expects the revelations to hurt the brand, sales and its partnership with the two other automakers.

The French state has clashed with Ghosn in the past over his compensation. After negotiations earlier this year, Ghosn was reappointed as Renault CEO for another four years. At the time, Bollore was named as COO to allow Ghosn to focus on the future of the two-decade alliance that has forged deep cooperation between the partners.

The French government will seek evidence from Japanese authorities, Le Maire said, after Nissan conducted an internal investigation following a tip-off by a company whistle-blower. France checked into Ghosn’s tax records in France and found “nothing particular,” he said. The minister reiterated that France would seek to protect the Franco-Japanese alliance, without specifying how.

Renault’s board plans to meet Tuesday evening Paris time, a spokesman for the company said.

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