France Abandons Carlos Ghosn, All But Ensuring Renault CEO's Ouster
French officials are visiting Tokyo to discuss the future of the alliance between the automakers, a government spokesman said.
(Bloomberg) -- Carlos Ghosn is looking increasingly isolated in his Tokyo cell, where the fallen car executive has languished for the better part of two months amid dimming prospects of a release any time soon.
Renault said on Thursday that it’s seeking a change in governance after French Finance Minister Bruno Le Maire called for one that is “new and durable,” a signal from the carmaker’s most powerful shareholder that Ghosn’s last line of defense, the French government, has fallen.
It’s a reversal for the government, which had shown restraint until now to call for Ghosn’s head, saying he should be presumed innocent until proven otherwise. But as Ghosn’s chances of a release from detention anytime soon become increasingly unlikely, the realization has set in at Renault’s biggest and most important shareholder that the company needs to move on from Ghosn, the figurehead of the carmaker and the Renault-Nissan alliance for years.
Renault’s acting chairman and lead independent director, Philippe Lagayette, and Patrick Thomas, who heads governance committee, said in a statement that Renault is actively working to find a solution for its future governance. For now, the company will continue to operate under its existing set-up, Renault said.
French officials -- among them Renault board member Martin Vial -- arrived in Tokyo to discuss the future of Renault’s partnership with Nissan, in which it is the largest investor after bailing out the Japanese company in the early 2000s. Vial, who heads the agency that oversees French state shareholdings, will meet Thursday night with Nissan CEO Hiroto Saikawa, Nikkei newspaper reported.
The French state had previously refused to follow partners Nissan Motor Co. and Mitsubishi Motor Corp. in sacking Ghosn shortly after he was detained on Nov. 19. France was caught unawares when Japanese prosecutors acted on allegations of Ghosn’s financial misconduct over years at Nissan. The executive has said he’s innocent and has called the accusations “meritless and unsubstantiated.”
Ghosn’s arrest at Tokyo’s Haneda airport has jolted the world’s biggest auto alliance, raising questions over whether their partnership will survive his downfall. While the unexpected turn of events has created a climate of suspicion between the companies, Renault’s new focus on a post-Ghosn reality may help relieve some of the tension.
Renault’s board will probably meet in coming days to replace him, people familiar with the matter said earlier, asking not be identified because the information isn’t public. The board was spurred into action by Ghosn’s failure this week to win bail, which points to a lengthy incarceration and would prevent him from carrying out his roles at Renault, they said.
Ghosn lost an appeal Thursday of the latest bail rejection. His lawyers said they plan a further appeal to Japan’s Supreme Court. They have previously acknowledged that he may stay in custody until his trial, which could be six months away.
Ghosn has been indicted for understating his income at Nissan by tens of millions of dollars and transferring personal trading losses to the carmaker. Nissan has also accused Ghosn of misusing company funds, including over homes from Brazil to Lebanon and hiring his sister on an advisory contract.
The French delegation in Japan also includes Emmanuel Moulin, Le Maire’s chief of staff, according to a ministry spokesman. The state’s priority is to defend the “stability” of the partnership and the jobs it provides, government spokesman Benjamin Griveaux said earlier in Paris.
Renault and the French state had cited the principle of presumed innocence in backing Ghosn, while Nissan and smaller alliance partner Mitsubishi removed him as chairman. Accusations against Ghosn mounted this week, including a reported 7 million-euro payment ($8 million) from a Dutch entity named NMBV that is part of the manufacturing partnership he assembled between the three carmakers.
Nissan’s Saikawa was interviewed in the French press this week, defending his efforts to remove Ghosn and seeking to downplay the portrayal of the saga as a power struggle.
While both firms have repeatedly said they are committed to the alliance, Nissan has long been unhappy about what it considers an outsized French role in the partnership. Renault has a 43 percent voting stake in Nissan, which in turn owns just 15 percent of the French company, with no voting rights.
Some Renault board members have concluded that a decision on Ghosn’s position is needed fast, one of the people familiar with the matter said. There’s no way Ghosn can stay in charge of Renault, no matter how the legal saga ends, the person said.
“Renault must realize Ghosn had stepped beyond what is appropriate,” said Janet Lewis, a Tokyo-based auto analyst with Macquarie Group Ltd. “Too much power would appear to have accrued to one person, so it is important to try and develop a leadership team that can continue the work of the alliance.”
A spokesman for Renault declined to comment on any possible changes in governance at the carmaker.
A spokesman for Nissan reiterated the company’s internal investigation uncovered “substantial and convincing evidence of misconduct.” The spokesman declined to comment on managerial decisions at Renault. Ghosn’s lawyers, represented by Motonari Otsuru, had no comment.
The state has called for a Renault board meeting in the next few days, Le Maire said. Interim CEO Thierry Bollore’s mandate could be made more permanent, while Michelin CEO Jean-Dominique Senard is the leading candidate to become chairman, one of the people told Bloomberg.
Le Maire, asked about Senard in the TV interview, described him as a “great industrial manager.”
--With assistance from Gregory Viscusi and Ma Jie.
To contact the reporters on this story: Ania Nussbaum in Paris at anussbaum5@bloomberg.net;Helene Fouquet in Paris at hfouquet1@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly
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