Renault Board Is Ready to Replace Carlos Ghosn as Chairman, CEO
Some Renault board members have concluded that a decision is needed fast.
(Bloomberg) -- Carlos Ghosn is on the verge of losing his final tether to power, with Renault SA said to be laying plans to remove him as its leader almost two months after the car titan’s shock arrest rocked its alliance with Nissan Motor Co. and Mitsubishi Motors Corp.
The French carmaker’s board will probably meet in the coming days to replace him as chairman and chief executive officer, according to people familiar with the matter. Renault directors were spurred into action by Ghosn’s failure this week to win bail, pointing to a lengthy incarceration, said the people, who asked not be named because the information isn’t public.
Accusations against Ghosn have mounted this week, including an alleged 7 million-euro payment ($8 million) from an entity named NMBV that is part of the manufacturing partnership he assembled between Renault, Nissan and Mitsubishi. Ghosn was removed by the two Japanese carmakers following his initial arrest Nov. 19 and an ouster from the leadership of Renault would cement a spectacular downfall.
Ditching the former industry leader would be Renault’s most significant response to the crisis -- and a U-turn. In contrast to its Japanese partners, Renault and its most important shareholder, the French government, have so far backed him, citing the principle of presumed innocence.
That stance has now shifted. The head of the French agency that handles the state’s shareholdings Martin Vial, and the chief of staff of the French finance minister Emmanuel Moulin, are in Tokyo Wednesday as part of a trip planned a few days ago to discuss Renault-Nissan, a spokesman for the ministry said Wednesday. Vial also sits on Renault’s board.
Ghosn is accused by prosecutors of understating his income at Nissan by tens of millions of dollars and of transferring personal trading losses to the carmaker. The executive has said he’s innocent and has called the accusations “meritless and unsubstantiated.”
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.”
‘Misconduct’
Spokesmen for Renault and for the French government 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,” resulting in a decision to dismiss Ghosn as representative director. The spokesman declined to comment on managerial decisions at Renault. Ghosn’s lawyers, represented by Motonari Otsuru, had no comment.
According to a person familiar with the investigation, a probe by Nissan and Mitsubishi uncovered a 7.04 million-euro payment to Ghosn in 2018 from a jointly owned, Amsterdam-incorporated venture named NMBV. Ghosn had struck an employment agreement with NMBV that year and had set his own salary, without discussing it with the other two directors of the entity, the person said. NMBV was funded through cost savings carved out by Nissan and Mitsubishi, according to the person. Mitsubishi plans to brief its board on the findings on Friday, the person said.
Jail Cell
Whatever the merits of the allegations against Ghosn, Renault’s need for a permanent replacement reflects at least one reality: He can’t run Renault from a small jail cell in Tokyo, where his spartan confinement is already taking a physical toll. He appeared in court last week thinner and grayer and days later developed a fever.
Renault’s board meeting may take place this weekend, according to Les Echos newspaper. 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 said.
Nissan CEO Hiroto Saikawa has told French media that Renault would reach the same conclusion if it had access to all the relevant information. While Saikawa brushed off speculation the probe was a ruse to overthrow Ghosn or push France out of the alliance -- a theory he called “absurd” -- replacing Ghosn could pave the way for Renault and Nissan to negotiate a future less dependent on one leader.
A dismissal by Renault would effectively end the career of one of the car industry’s most iconic executives. Ghosn turned around Nissan in the early 2000s, then added the CEO job at Renault in 2005. He stepped down as Nissan CEO in 2017 and is serving his last term as Renault chief.
While Ghosn formally remains chairman and CEO at Renault and the Renault-Nissan-Mitsubishi alliance, the French company opted for interim management, with lead director Philippe Lagayette as acting chairman. The new governance could be appointed on a temporary basis until approved at a shareholder meeting, the people said.
Renault lawyers have been briefed by Nissan’s legal team, but the French carmaker’s board hasn’t reviewed the allegations.
“Both companies need the alliance,” said Lewis at Macquarie Group Ltd. “Negotiating the future of the alliance needs to be done by people with the authority to do so, not acting representatives.”
To contact the reporters on this story: Ania Nussbaum in Paris at anussbaum5@bloomberg.net;Ma Jie in Tokyo at jma124@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Tara Patel, Frank Connelly
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