Nissan, Renault boards wrestle with fallout from Ghosn’s arrest
PARIS — Renault’s board of directors says that Carlos Ghosn will remain as chairman and CEO of the carmaker even though he is detained in Japan for alleged misuse of Nissan assets.
The board on Tuesday, however, tapped the carmaker’s No. 2, Thierry Bollore, to fill in for Ghosn while he’s “temporarily incapacitated.”
A statement issued after a three-hour board meeting said that the board was “unable to comment on the evidence seemingly gathered” against Ghosn, who was arrested Monday. It said Bollore, Renault’s chief operating officer, will lead “on a temporary basis.”
Prosecutors in Japan are investigating claims that Ghosn, who is also chairman of Nissan and Mitsubishi Motors, underreported his taxable income by half for several years.
One of the auto industry’s most prominent executives, Ghosn was arrested Monday in Japan and held for questioning, but has not yet been charged. The prosecutor’s office in Tokyo said it could hold him for 72 hours but, with a court’s approval, could extend the detention an additional 20 days before it decides whether to indict him.
Ghosn created the alliance of Renault, Nissan and Mitsubishi, and has been hailed for rethinking the way vehicle manufacturers could share technology and innovate in a competitive global market. His arrest stunned investors and sent Nissan’s share price falling to a two-year low Tuesday.
But even as Nissan and Mitsubishi prepared to quickly sever ties with Ghosn, the French government, which is Renault’s biggest shareholder, was cautious.
The French economy minister, Bruno Le Maire, said Tuesday that France has no evidence of the crimes that Ghosn has been accused of committing in Japan.
In a joint statement released Tuesday afternoon, Le Maire and Hiroshige Seko, the Japanese economic minister, said that they had spoken by phone and “reaffirmed the strong support of the French and Japanese governments to the alliance formed between Renault and Nissan.”
Ghosn was detained on his private jet at Haneda Airport, which serves Tokyo, after a whistle-blower at Nissan made allegations that he had underreported compensation to the Japanese government. Another executive, Greg Kelly, whom authorities described as the architect of the scheme, was also arrested.
Neither Ghosn nor Kelly could be reached for comment.
After a months-long internal inquiry, Nissan said it is planning to strip Ghosn of his position as chairman when its board meets Thursday.
Ratings agencies warned of the scandal’s financial impact. Standard & Poor’s said it could downgrade Nissan’s credit rating over the allegations, a move that would raise the company’s borrowing costs.
Nissan’s profitability could “weaken substantially” in the fiscal years 2018 and 2019 if it turned out that Ghosn’s alleged misconduct had hurt sales or the company’s alliance with Renault and Mitsubishi, S&P said in a statement.
Moody’s Investors Service said that the scandal raised questions about Nissan’s compliance and control systems “given such an incident occurred and seemingly went unreported for some time,” and that it could affect the company’s credit rating.
Ghosn instituted sweeping changes at Nissan beginning in 1999 and created a working arrangement between Nissan and Renault that allowed them to operate like a single carmaker. In 2016, that agreement included Mitsubishi and all three shared the cost of developing models and cooperated on their supply chains. In 2017, the alliance accounted for the sale of 10.6 million cars.
Ghosn’s swift downfall raised questions about the stability of the alliance as well as of the individual carmakers.