Renault may replace Ghosn as CEO, report say

November 20, 2018 09:45 CET

PARIS — France moved on Tuesday to oust Carlos Ghosn from the helm of Renault a day after his arrest in Japan on financial misconduct allegations, but sought to defend the automaker’s alliance with Nissan.

Ghosn was arrested on Monday after Nissan said he had engaged in wrongdoing, including personal use of company money and under-reporting how much he was earning, for years. Nissan said it would seek Ghosn’s removal as chairman at a board meeting on Thursday.

“Carlos Ghosn is no longer in a position where he is capable of leading Renault,” French Finance Minister Bruno Le Maire told France Info radio.

The French state owns 15 percent of Renault, which in turn holds a 43.4 percent stake in Nissan in a complex alliance forged by Ghosn over almost 20 years and which some analysts think could fall apart without the 64-year-old to steer it.

The Renault board will meet later on Tuesday, a company spokesman said. Sources familiar with the matter told Reuters it would discuss temporarily replacing Ghosn.

Le Maire singled out Renault Chief Operating Officer Thierry Bollore as having “great qualities” and able to step in.

In a memo to employees sent on Monday, Bollore expressed “full support for our chairman and CEO,” calling the alliance an “industrial gem that must be protected and nurtured.”

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 whistleblower.

France checked into Ghosn’s tax records in France and found “nothing particular,” he said. “We have not demanded the formal departure of Ghosn from the management board for a simple reason, which is that we do not have any proof and we follow due legal procedure,” Le Maire said.

Some people at Renault echoed questions raised in Japan as to whether Nissan CEO Hiroto Saikawa was carrying out a palace coup. Despite this, Ghosn may lack support to survive the charges emanating from Japan.

France 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, allowing Ghosn to focus on the future of the two-decade alliance that has forged deep cooperation between the partners.

Le Maire said he would contact his Japanese counterpart over the matter, and that Renault’s partnership with Nissan was in the interests of both France and Japan, and of both companies. “Renault has been weakened, which make it all the more necessary to act quickly,” Le Maire said.

Le Maire said he had asked French tax authorities to look into Ghosn’s affairs and that they had found nothing of particular note.

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. Macron and Ghosn appeared together at a plant tour in Maubeuge, France, on Nov. 8.

Close to bankruptcy when Renault bought its stake in 1999, Nissan has recovered to be the engine of an alliance that generates synergies for both companies and allows them to rival the likes of Volkswagen and Toyota on the global stage.

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, 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.

Ghosn’s alleged improprieties also raise questions over governance at the alliance in which the three partners’ boards are all chaired by a single executive.

Sales hit fears

One Nissan-headquartered manager told Reuters he was concerned decision making at the alliance could slow due to the lack of a unifying figure.

The manager, who declined to be identified as he was not permitted to speak to the media, said he was also worried Ghosn’s departure could hit sales as fans of the charismatic leader abandon the company and corporate customers bound by compliance rules put orders on hold due to the scandal.

Japanese public broadcaster NHK reported Nissan paid billions of yen for the purchase and renovation of homes for Ghosn in Rio de Janeiro, Beirut, Paris and Amsterdam, citing unidentified sources. The properties had no business purpose and were not listed as benefits in filings to the Tokyo bourse, NHK said.

In a sign of the broader political fallout, Hitoshi Kawaguchi, Nissan senior vice president handling government relations, met Japan’s top government spokesman on Tuesday, telling media he had requested good relations between Japan and France be maintained.

Bloomberg contributed to this report

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