MMC: Alliance can survive turmoil

Fresh allegations against Ghosn emerge

OKAZAKI, JAPAN: A senior executive at Mitsubishi Motors Corp said yesterday that the alliance with Nissan Motor Co and Renault SA could survive management upheaval, a day after it fired Carlos Ghosn as chairman citing financial misconduct.

The future of the 19-year alliance, one of the biggest automotive groups in the world, has been thrown into doubt after the Nov 19 arrest and subsequent ousting of Ghosn as chairman of both Nissan and Mitsubishi Motors.

Ghosn, 64, is the architect of the alliance and its chairman. He also remains CEO and chairman of Renault.

Senior executives of the alliance are due to meet for their regularly scheduled gathering later this week in Amsterdam that sources said would start today.

“Executives are also expected to discuss Ghosn’s chairmanship of the alliance,’’ one source at Nissan told Reuters, seeking anonymity because the contents of the meeting are not public.

Mitsubishi CEO Osamu Masuko said on Monday that he would join the meeting via video conference, while Nissan CEO Hiroto Saikawa, who remains in Japan, hasn’t decided whether he will travel for the meeting, two company sources said. Nissan declined to comment.

A major longer-term focus is whether and how the capital alliance structure might evolve, as Ghosn, under pressure from the French government, had pushed for a deeper tie-up, including potentially a full merger between Renault and Nissan, despite strong reservations at Nissan.

Renault holds around 43% of Nissan, which in turn owns a controlling 34% stake in Mitsubishi Motors. Nissan, the biggest partner in the alliance by sales, has a nonvoting 15% stake in the French partner.

Speaking to reporters at a research and development centre in Okazaki, central Japan, Mitsubishi executive vice president Mitsuhiko Yamashita said that regardless of the shape the alliance takes, the three companies would continue to source more parts together and leverage their ties to develop new technologies.

“I can’t say how the three-way partnership might evolve, but as car-making requires more and more new technologies, the days when a single carmaker can handle everything on its own are going to disappear,” Yamashita, who once served as Nissan’s top engineer, said.

He said that the alliance would need to work out who would make decisions, and how, without the binding figure of Ghosn, but was confident the partnership was strong enough to withstand the challenge.

“Renault and Nissan have a history of nearly 20 years, and we’re coming up on two years since Mitsubishi Motors joined,” Yamashita said. “The foundation on which the cooperation has been built is becoming strong so I have faith that we can work with that.”

Sealed in 1999 when Nissan was rescued from near-bankruptcy, the FrancoJapanese alliance was enlarged in 2016 to include Mitsubishi and enabled the members to jointly develop products and control costs.

Yamashita’s remark echoes comments by Saikawa who told staff in a town hall meeting on Monday that the alliance remained important to generate synergies.

Saikawa also said that there was an “excessive concentration of power” on Ghosn, and that in future alliance members should communicate better to help preserve their independence.

Ghosn is in detention in Tokyo over suspicion of financial misconduct, including alleged understating of his income and personal use of corporate money. He has denied those allegations, public broadcaster NHK has reported.

He has not made public comments on those allegations and Reuters could not contact him or his lawyers for comments.

In fresh allegations yesterday, Japanese media reported that Ghosn had shifted personal investment losses incurred during the 2008 financial crisis to Nissan to avoid millions of dollars in losses for himself.

Citing multiple unnamed sources, the Asahi Shimbun newspaper said that when Ghosn’s bank had called for more collateral from the executive, he instead handed the rights over the derivatives trade to Nissan, which effectively shouldered 1.7 billion yen ($15 million) in losses.

Japan’s Securities and Exchange Surveillance Commission (SESC) discovered this incident during that year’s routine inspection, the newspaper said.

Nissan said it could not comment on the report. An SESC spokesman said the watchdog could not comment on individual cases.

TOKYO: Nissan Motor Co plans to appoint CEO Hiroto Saikawa to double as its chairman at a board meeting next month following the dismissal of Carlos Ghosn over alleged financial misconduct, according to sources with knowledge of the situation.

“The board plans to meet on Dec 17, where three independent directors will nominate a candidate for chairman from among the six other directors,’’ the sources said.

Ghosn, who was arrested by Tokyo prosecutors about a week ago for allegedly underreporting his compensation, and Greg Kelly, an executive who was accused of orchestrating the misconduct and was also arrested, remain on the board.

Both men are currently in detention but have yet to be charged. They have denied the allegations, according to investigative sources.

Saikawa had been slated to be named Nissan’s chairman on an interim basis at an emergency board meeting last Thursday but the plan was put on hold over concerns that it would anger alliance partner Renault SA, of which Ghosn is still chairman and CEO.

The l eadership vacuum i ncreasingly appears to be turning i nto a power struggle.

French Finance and Economy Minister Bruno Le Maire has said he believes it is preferable for the tripartite alliance to continue to be led by a person from Renault.

Ghosn, sent to Nissan from Renault as chief operating officer in 1999, turned the Japanese automaker’s fortunes, dragging it from the brink of bankruptcy through drastic cost-cutting measures.

Renault, which owns 43.4% of Nissan, is expected to push for one of its own executives, rather than Saikawa, to succeed Ghosn.

Nissan holds a 15% stake in the French automaker and a 34% stake in fellow alliance member Mitsubishi Motors Corp.

Japanese Industry Minister Hiroshige Seko told a press conference on Tuesday that the government would not provide commentary on the make-up of Nissan’s new management team, given that it is not a shareholder of the company.

On Monday, the board of Mitsubishi Motors Corp also voted unanimously to dismiss Ghosn as its chairman.