Carlos Ghosn is out at Nissan and Mitsubishi. What will Renault do?

Carlos Ghosn has been ousted as chairman of Nissan and Mitsubishi Motors. The big question now is whether he...

Posted: Nov. 26, 2018 10:16 PM
Updated: Nov. 26, 2018 10:16 PM

Carlos Ghosn has been ousted as chairman of Nissan and Mitsubishi Motors. The big question now is whether he can survive at alliance partner Renault.

A week has passed since Ghosn was arrested in Japan on suspicion of financial misconduct. The board of Mitsubishi (MMTOF) voted unanimously to remove him as chairman on Monday, days after Nissan (NSANY) took the same step.

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Renault (RNSDF) has so far taken a different approach, appointing an acting chief executive last week but keeping Ghosn in his positions of CEO and chairman.

The scandal has delivered a major shock to the industry alliance forged by Ghosn, and executives from the three carmakers are likely to assess the damage when they gather for a meeting in Amsterdam on Thursday.

The meeting, which was confirmed by a source familiar with the situation, was previously scheduled. But tensions could be high following demands from Renault that Nissan hand over evidence it has concerning Ghosn.

French Economy Minister Bruno Le Maire said Sunday that Nissan had not yet shared details with Renault or his government, which owns 15% of the carmaker.

"We have no information," he told BFM television. Le Maire said that Renault has also launched an internal financial audit.

Ghosn had worked in recent years to deepen the alliance between Nissan and Renault, which Mitsubishi joined in 2016. Together, the three companies employ more than 470,000 people in nearly 200 countries.

But the partnership was unequal. Nissan, which is much bigger and sells more vehicles than Renault, holds only a 15% non-voting stake in the French company. Renault has a much more powerful 43% shareholding in Nissan.

Some analysts suggest that this has stirred discontent among Nissan executives, who were also uncomfortable about the possibility of Renault and Ghosn seeking a full merger.

The alliance has been successful, but there is growing pressure on auto companies to work more closely together. Ford (F) and Volkswagen (VLKAF), for example, are in very public talks about how they can combine efforts.

Nissan CEO Hiroto Saikawa told employees at a town hall meeting on Monday that Ghosn had accumulated too much power at the top of the alliance, and he was concerned this was damaging business.

Still, both Nissan and Renault have said Ghosn's arrest won't affect the alliance. Officials from the French and Japanese governments have echoed those sentiments.

Ghosn was detained following an internal investigation at Nissan that revealed "significant acts of misconduct" over many years, including understating his income in financial reports and misusing company assets.

Prosecutors allege that he and another Nissan director, Greg Kelly, collaborated to understate Ghosn's income by about 5 billion yen ($44 million) over a five-year period ending in March 2015.

The maximum punishment in Japan for filing a false financial statement is up to 10 years in prison and a fine of up to 10 million yen ($89,000).

Ghosn has not yet commented publicly on the allegations. Japan's public broadcaster NHK, citing unnamed sources, reported over the weekend that Ghosn has denied wrongdoing.

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