Business / Corporate

After Carlos Ghosn's removal as Nissan chairman, France and Japan look to secure car partnership he built

Bloomberg, Kyodo, AFP-JIJI

Amid the upheaval created by Carlos Ghosn’s downfall, the main players in Japan and France can at least agree on one thing: securing the two-decade-old Renault-Nissan car alliance is more important than the man who led it.

Hours after Nissan Motor Co. voted unanimously to remove Ghosn as chairman on Thursday night, French Finance Minister Bruno Le Maire and Economy Minister Hiroshige Seko pledged their strong support for the alliance, calling it a “winning cooperation.”

In a joint statement released after their talks in Paris, they said they reaffirmed “the strong support of both the French and Japanese governments to the alliance formed between Renault and Nissan and their shared wish to maintain this winning cooperation.”

Speaking to reporters after the meeting, Seko said, “We confirmed that it is very important that the alliance relationship continues in a stable manner.”

It’s a view shared publicly by Nissan’s Chief Executive Officer Hiroto Saikawa, who told the press after the board meeting that stabilizing the current structure is the best way forward.

The public commitment shows how the key stakeholders in the alliance want to avoid Ghosn’s removal from wrecking what has become one of the biggest car groups in the world. Both Renault and Nissan have benefited greatly over the years from closer integration, and the two companies would struggle to compete alone in an industry facing major transformations that require huge financial commitments to stay ahead.

After the board meeting on Thursday, Nissan said in a statement it found that Ghosn and his close aide Greg Kelly had “masterminded” understating the amount of the chairman’s remuneration in securities reports presented to Japanese regulators and his use of company assets for personal gain.

A Nissan source said the board will decide who will assume the post of chairman at a meeting in December. The automaker said an advisory committee will be set up to propose nominations from the current board members.

Nissan also said it will consider creating a special committee that will take advice from an independent third party on how best to improve governance of its management and compensation system of board members.

Media reports on Thursday said that Ghosn underreported his income by much more than the roughly ¥5 billion between June 2011 and June 2015 that was initially suspected.

The reports said Ghosn is now suspected of underreporting his income by another ¥3 billion for the following three fiscal years. Prosecutors are now planning to rearrest him on charges of understating his income by a total of ¥8 billion since June 2011.

The future of the alliance carries significant political weight particularly in France, where the state is Renault’s biggest shareholder. The French don’t see Ghosn’s jailing as a deliberate act to destabilize the alliance, said an official close to President Emmanuel Macron. The accusations against Ghosn are “unusual, precise, and serious,” he said.

It’s no secret that the Japanese have been unhappy about Renault’s outsize influence in the alliance. Still, it’s not a point of discussion on the agenda for now and certainly won’t be reviewed until the current governance situation is cleared, the official said, which is unlikely to be this year. Renault has a 43 percent voting stake in Nissan, which in turn owns 15 percent of Renault, with no voting rights.

The French are displaying their pragmatic side. While they acknowledged that Ghosn has been the keystone to the alliance, the partnership is viewed as more important to Renault and to French industry than the manager’s personal situation. To no small degree, the French are still catching up on developments, with the official saying that he and others only found out about Ghosn’s arrest through the press.

Still, France has extended more support than is typical to Ghosn, who has been in detention since Monday. He’s been visited by the French ambassador to Japan, an unusual move that shows the high political stakes in the unfolding drama.

In addition to underreporting income, Ghosn has been accused of misappropriating company funds. Prosecutors in Japan have said that he could face as much as 10 years in jail, calling the allegations one of the most serious categories of offenses.

Earlier this week, Renault put in place an interim CEO to fill Ghosn’s spot, though the board stopped short of ousting the manager outright, in contrast with the Japanese approach.