Seeds of Renault-nissan crisis sown in Macron’s ‘raid’

The arrest of Renault-nissan boss Carlos Ghosn has triggered new attempts by the Japanese carmaker to shake off the control of its French parent — adding to the problems piling up on President Emmanuel Macron’s desk in the Elysee Palace. But this one, more than most, may be of Macron’s own making.

In April 2015, as a 37-year-old economy minister with then-unknown presidential ambitions, Macron ordered a surprise government stake increase in Renault, designed to secure double voting rights for the state.

The overnight move profoundly rattled the Japanese end of the Renaultnissan alliance.

In the ensuing eight-month boardroom fight between Macron’s ministry and Hiroto Saikawa — Nissan’s second-in-command at the time — many now see the seeds of today’s crisis.

When Ghosn’s Gulfstream touched down in Tokyo, prosecutors were waiting. Nissan, the company he rescued from bankruptcy and had overseen for almost two decades, outlined allegations of financial misconduct against its chairman and said governance had been eroded by Renault’s control.

Saikawa has since contested Renault’s right to appoint executives and directors under the alliance master agreement, in correspondence seen by Reuters. Such fundamental differences now threaten the future of the partnership, which rivals Volkswagen and Toyota on the global auto industry stage.

“President Macron himself has skin in the game,” Max Warburton, an analyst with New York-based asset manager Alliancebernstein, said.

“He must recognise that his decision in 2015 to increase the French state’s holding in Renault... likely impacted Japanese perceptions of the alliance and heightened concerns that Nissan was ultimately within the control of the French government.”

Macron, who surged to victory in elections last year to became France’s youngest president, now finds himself battling street protests and record low approval ratings. The Renault-nissan crisis may draw more attention to the risks of his bold interventionism, once seen as refreshing.

The year before his move on Renault, the government under Socialist President Francois Hollande had passed the Florange law. Named after a steel furnace whose closure became a symbol of decline, it doubled voting rights for longterm investors — chief among them the French state — in any listed companies that did not opt out via a shareholder vote.

Over several months starting in late 2014, Macron, a former Rothschild dealmaker, tried in vain to dissuade Ghosn and the Renault board from proposing an opt-out at the company’s meeting. With a 15 per cent stake in the carmaker and an only slightly larger share of the vote, the government seemed likely to lose such a face-off.

Then, Macron called Ghosn to let him know — as a courtesy — that the state had bought another 4.73 per cent of Renault for $1.4 billion, would announce its manoeuvre and planned to sell back down to 15 per cent only after defeating his opt-out.

“He would always go in with guns blazing,” a former minister said of Macron. “Only then would the real power dynamics of the situation register.”

With that step, seen by detractors and admirers alike as an unprecedented government “raid”, the simmering battle of egos between Ghosn the global CEO and Macron the wunderkind bankerturned-minister had burst into the open.

Brushing aside warnings, Macron pressed ahead and defeated the opt-out. The vote handed France an effective blocking minority at Renault, which in turn controlled Nissan shareholder meetings via its 43.4 per cent stake in the

IN APRIL 2015, MACRON ORDERED A GOVERNMENT STAKE INCREASE IN RENAULT, DESIGNED TO SECURE DOUBLE VOTING RIGHTS FOR THE STATE. THE MOVE RATTLED THE JAPANESE END OF THE RENAULT-NISSAN ALLIANCE

Japanese firm.

Alarm bells rang in Tokyo as that sank in, ratcheting tensions higher over the months that followed. Nissan threatened to exit the Restated Alliance Master Agreement — a radical step that would have freed it to buy up shares in its smaller French parent, and end or reverse Renault’s control.

“The governance of Renault and consequently the autonomy of Renault management, which have been the basis of trust (for) the alliance, will be significantly impacted,” Saikawa wrote in a note to the Renault board .

Macron’s staff initially dismissed Saikawa’s demands — that Renault sell down its controlling Nissan stake, restore voting rights to Nissan’s 15 per cent Renault holding and relinquish control of the alliance — seeing them as dictated by Ghosn, who at that point remained Nissan CEO.

“When Ghosn talks about what Nissan and Japan think, he’s speaking for himself,” an official at the French agency that oversees state shareholdings said at the time. “It’s all rubbish as far as I’m concerned.”