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France moves to oust Ghosn from Renault, defends alliance

France owns 15 percent of Renault, which in turn holds a 43.4 percent stake in Nissan — an alliance that some analysts think could now fall apart.
Image: Renault Shares Drop After Reports Of Emissions Probe
Flags with the Renault logo fly in front of the French carmaker's headquarters on Jan. 14, 2016 in Boulogne-Billancourt, France. Chesnot / Getty Images

France moved on Tuesday to oust Carlos Ghosn from the helm of Renault a day after his arrest in Japan on financial misconduct allegations, but sought to defend the carmaker's alliance with Nissan, which has been rocked by the scandal.

Ghosn, one of the best known leaders in the car industry, was arrested on Monday after Nissan said he had engaged in wrongdoing, including personal use of company money and under-reporting how much he was earning, for years. The Japanese carmaker plans to remove him as chairman on Thursday.

"Carlos Ghosn is no longer in a position where he is capable of leading Renault," French Finance Minister Bruno Le Maire told France Info radio, calling on Renault's board to meet "in the coming hours" to set up an interim management structure.

The French state owns 15 percent of Renault, which in turn holds a 43.4 percent stake in Nissan in a complex alliance forged by Ghosn over almost 20 years and which some analysts think could fall apart without the 64-year-old to steer it.

The Renault board will meet later on Tuesday, a company spokesman said. Sources familiar with the matter told Reuters it would discuss temporarily replacing Ghosn.

"We have not demanded the formal departure of Ghosn from the management board for a simple reason, which is that we do not have any proof and we follow due legal procedure," Le Maire said.

He said he would contact his Japanese counterpart over the matter, and that Renault's partnership with Nissan was in the interests of both France and Japan, and of both companies.

"Renault has been weakened, which make it all the more necessary to act quickly," Le Maire said.

Close to bankruptcy when Renault bought its stake in 1999, Nissan has recovered to be the engine of an alliance that generates synergies for both companies and allows them to rival the likes of Volkswagen and Toyota on the global stage.

Renault shares were down 4.3 percent Tuesday morning, having slumped 8.4 percent on Monday. Nissan shares fell another 5.5 percent, while those of Mitsubishi Motors, the third member of the alliance, ended down nearly 7 percent.

Le Maire said he had asked French tax authorities to look into Ghosn's affairs and that they had found nothing of particular note.

Japanese public broadcaster NHK reported Nissan paid billions of yen for the purchase and renovation of homes for Ghosn in Rio de Janeiro, Beirut, Paris and Amsterdam, citing unidentified sources.

The properties had no business purpose and were not listed as benefits in filings to the Tokyo bourse, NHK said.

There has been no comment from Ghosn on the allegations, and Reuters could not contact him for comment.