PARIS/TOKYO — On November 20, 2018, France moved to remove Carlos Ghosn from the top of Renault after his arrest in Japan on financial misconduct allegations, while insisting the Renault-Nissan alliance should be protected from the fallout.
French Finance Minister Bruno Le Maire said Ghosn was no longer fit to lead Renault and urged the board to meet quickly to put interim management in place. Renault said its board would meet later that day, and sources familiar with the matter told Reuters the discussion would include a temporary replacement for Ghosn.
Ghosn was arrested on Monday after Nissan Motor Co said he had engaged in wrongdoing for years, including personal use of company money and under-reporting how much he was earning. Nissan planned to remove him as chairman on Thursday.
Le Maire said France had not demanded Ghosn’s formal departure from the management board because there was no proof and legal procedure had to be followed. He also said he would speak with his Japanese counterpart and stressed that the partnership between Renault and Nissan served the interests of both countries and both companies.
The French state owns 15 percent of Renault, which holds a 43.4 percent stake in Nissan. The alliance, built over almost 20 years, was created after Renault bought into Nissan in 1999, when the Japanese carmaker was close to bankruptcy. It later became a global force able to challenge Volkswagen and Toyota.
Markets reacted sharply to the scandal. Renault shares were down 4.3 percent at 0915 GMT after falling 8.4 percent on Monday, while Nissan shares dropped another 5.5 percent. Mitsubishi Motors, the third member of the alliance, ended the day nearly 7 percent lower. Renault stock had already tumbled 11 percent on Monday.
Analysts also turned cautious. Bank of America Merrill Lynch cut Renault to “neutral” from “buy,” while Exane BNP Paribas downgraded it to “neutral” from “outperform.”
Le Maire said he had asked French tax authorities to review Ghosn’s affairs and that they had found nothing of particular note. Even so, the scandal raised fresh questions about governance inside the alliance, where the three boards are all chaired by a single executive.
The timing was especially sensitive for the auto industry, which is facing tighter emissions rules, falling diesel sales and heavy investment needs in electric and self-driving technology. One Nissan-headquartered manager told Reuters he feared decision-making could slow without a unifying figure and warned that some customers might delay orders because of the controversy.
Japanese public broadcaster NHK reported that 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. NHK said the properties had no business purpose and were not listed as benefits in filings to the Tokyo bourse.
There was no comment from Ghosn on the allegations, and Reuters said it could not reach him. Ghosn was born in Brazil, is of Lebanese descent and is a French citizen.
The political impact also reached Tokyo. Hitoshi Kawaguchi, Nissan’s senior vice president handling government relations, met Japan’s top government spokesman on Tuesday and told media he had asked for good relations between Japan and France to be maintained.
Additional reporting by Sam Nussey and Leigh Thomas; writing by Mark Potter; editing by Keith Weir.
