Business / Corporate

Nissan rejects Renault’s request to send successor to replace Ghosn

Kyodo

Nissan Motor Co. has rejected partner Renault SA’s request to send a successor with equal authority to replace ousted Chairman Carlos Ghosn, according to sources close to the matter, in a heightening leadership tussle at one of the world’s biggest automaker groups.

Renault, which has retained Ghosn as CEO and chairman following his arrest last month for alleged financial misconduct, made the request during the Japanese automaker’s emergency board meeting on Nov. 22, according to the sources.

The proposal was made to protect its business interests and maintain its influence within Nissan following Ghosn’s dismissal, the sources said on Tuesday. The French automaker is Nissan’s top shareholder.

But regarding the future relationship with Renault, Nissan CEO Hiroto Saikawa has said he wants to review the management structure, believing that the excessive concentration of power in Ghosn had undermined transparency and governance.

Ghosn, known as the man who saved Nissan from the brink of bankruptcy, was sent to the Japanese automaker from Renault in 1999 to be its chief operating officer. He became Nissan president in 2000 and served as CEO from 2001 to 2017.

Saikawa also views Nissan’s relationship with Renault as unbalanced and favoring the French carmaker. Although it generates smaller earnings than Nissan, Renault owns a 43.4 percent stake in the Japanese automaker, which holds only a 15 percent stake in its French peer, but without voting rights. Nissan has a 34 percent stake in Mitsubishi Motors Corp., the third alliance partner.

Under the current agreement between Nissan and Renault, the Japanese automaker is to receive senior executives from the French peer, other sources said earlier.

Saikawa, Renault’s acting CEO Thierry Bollore and Mitsubishi Motors CEO Osamu Masuko agreed on Nov. 30 to lead the three-way alliance through a consultative process between them, in an apparent departure from the decision-making process mainly until now led by the partnership’s CEO and Chairman Ghosn, according to the Japanese executives.

Still, the struggle for leadership is expected to continue. Under the current accord between Nissan and Renault the post of CEO and chairman of the alliance is to be assumed by someone from the French automaker, analysts said.

The French government, the largest shareholder in Renault, has also stepped up efforts to keep Renault’s strong control over the alliance.

It has said that a person from Renault should continue to lead Renault-Nissan BV, an Amsterdam-based company in charge of overseeing the partnership, and that the current cross-shareholdings should be maintained.

For French President Emmanuel Macron, who has seen recent sagging support ratings and street protests triggered by fuel tax hikes initially planned for January, it is crucial that Renault maintains its role in the country’s economy while creating jobs, analysts said.

At the Nov. 22 meeting, the Nissan board decided to dismiss Ghosn as chairman and set up a three-member panel comprised of external directors to select his successor from among the current board members.

The three independent directors held their first meeting Tuesday to discuss who should succeed Ghosn as chairman, but did not reach a conclusion, according to Nissan officials.

The board is expected to formally approve the successor at its meeting on Dec. 17. One of the plans is to have Saikawa double as interim chairman, the sources said.

Ghosn was arrested by Tokyo prosecutors on Nov. 19 on suspicion of violating the Financial Instruments and Exchange Act by underreporting his remuneration by a total of about ¥5 billion ($44 million) over five years to March 2015.

Additionally, sources said Tuesday that Tokyo prosecutors have decided to seek a fresh arrest warrant for Ghosn on suspicion that he failed to report around ¥4 billion ($35.5 million) of his remuneration in its securities reports for the three years through March.

Along with Greg Kelly, a former Nissan representative director, Ghosn, who is being held at the Tokyo Detention House, is expected to be served with a fresh arrest warrant on Dec. 10, when the detention period for the pair expires.

Ghosn and Kelly have told the prosecutors that it was unnecessary to report some of the remuneration as the payments had yet to be settled, according to different sources with knowledge of the investigation.

The unreported remuneration of the 64-year-old charismatic automotive industry figure is believed to total ¥9 billion.

Under the law, crime suspects can be kept in custody for 10 days, which can be extended for another 10 days if a judge grants prosecutors’ request for extension. At the end of that period, prosecutors must file a formal charge or let the suspect go.

However, they can also arrest suspects for a separate crime, in which case the process starts over again. This process can be repeated, sometimes keeping suspects detained for months without formal charges and without bail.