France urges Renault to replace Ghosn as alliance with Nissan becomes strained

Jermaine Castillo
November 21, 2018

"The partnership among the three entities will not be affected by this event, rather we will closely work together with the alliance partners, contain any possible confusion and minimise any impact on alliance efforts", he said.

Mr Ghosn officially still leads the Renault-Nissan-Mitsubishi alliance as chief executive and chairman.

Ghosn has yet to respond to the allegations.

The board of Renault is to meet Tuesday to discuss his fate.

Prosecutors said on Tuesday that they were holding Mr Ghosn for allegedly collaborating to falsify securities statements and under report Mr Ghosn's income. "Renault has been weakened, which makes it all the more necessary to act quickly".

"The state, as a [Renault] shareholder, will be extremely vigilant regarding the stability of the alliance and the group", Macron said during a visit to Belgium. The joint statement added that the two ministers "reaffirmed the strong support of the French and Japanese governments to the Alliance formed between Renault and Nissan, a world-leading vehicle manufacturer and one of the greatest symbols of Franco-Japanese industrial cooperation and their shared wish to maintain this winning cooperation".

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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 Volkswagen and Toyota on the global stage.

But there have always been tensions as Nissan, while nearly 60 percent bigger than Renault by sales, remains the junior partner in their shareholding hierarchy with a smaller reciprocal 15 percent non-voting stake in Renault.

Renault shares were down 3 per cent at 1405 GMT, having slumped more than 8 per cent on Monday. Its shares fell about 7% in Tokyo on Tuesday morning.

Ghosn is also chairman of Mitsubishi Motors.

Ghosn was promoted to CEO of Nissan in 2001, and then made the unusual move of taking on the role of Renault CEO in 2005.

Bank of America Merrill Lynch cut its rating on Renault to "neutral" from "buy", while Exane BNP Paribas downgraded it to "neutral" from "outperform".

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It comes at a hard time for the industry, already grappling with tighter emissions regulations, a diesel sales collapse and big investments in electric and self-driving cars.

According to Nissan and sources relevant to the case, the company learned about the misconduct by Ghosn and Kelly from a whistle-blower several months ago.

Japanese prosecutors also said they had already raided Nissan's Yokohama headquarters, near Tokyo, as part of their investigation.

In the five-year period, the prosecutors believe Ghosn actually received a total of almost 10 billion yen in compensation but Nissan's annual securities reports show that his remuneration amounted to about 4.98 billion yen.

Broadcaster NHK reported, citing unnamed sources, that Nissan provided Mr Ghosn with houses in four countries without legitimate business justifications. The properties had no business objective and were not listed as benefits in compensation filings to the Tokyo bourse, NHK said.

Ghosn and Kelly have not been seen since and their exact whereabouts are not known.

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The financial reports also did not mention annual compensation of 100-150 million yen Ghosn received from the automaker's overseas subsidiaries, the newspaper said.

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