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With their former chairman in jail, Nissan and Renault seek to revise partnership

The Carlos Ghosn scandal threatens to fracture what has long been described as one of the most successful partnerships in the auto industry.
Then Renault-Nissan chairman and CEO Carlos Ghosn in 2017.Eric Piermont / AFP - Getty Images

With former Nissan-Renault chairman Carlos Ghosn in jail since November, the new head of Renault said Tuesday the multibillion-dollar alliance is not focusing on “a show of strength” but on an “equitable” partnership.

Speaking at the Geneva Motor Show on Tuesday, Renault Chief Executive Officer Thierry Bolloré said, “The alliance is built on an equitable basis, rather than a show of strength” by any of the partner car companies.

Officials at both companies have publicly stated a goal of holding the alliance together. With the inclusion of the smaller Mitsubishi, it sold more than 10 million vehicles in 2018, second only to the Volkswagen Group.

Japanese prosecutors have appealed a ruling that could see Ghosn granted bail for the first time since his arrest on corruption charges on Nov. 19. The Tokyo District Court approved bail on Tuesday, but Ghosn still faces plenty of problems, including not only his upcoming trial in Japan but what could be a legal battle to collect on millions of dollars in severance pay he was expected to get after agreeing to resign from Renault.

The two automakers have their own challenges ahead. The Ghosn scandal has driven a wedge between their long-running alliance. The once high-flying executive himself has accused top Nissan management of engaging in a “plot” to bring him down as a way to prevent a complete takeover by Renault. But the case has also spotlighted concerns about the Japanese justice system and, according to some, could trigger changes there.

Tuesday marked the third time Ghosn has sought bail since he was unceremoniously hauled off his corporate jet last November, shortly after landing at Tokyo’s Haneda Airport. Under Japanese law, suspects are only supposed to remain in custody for up to 10 days, but prosecutors had used a variety of tactics to extend his stay. And they had previously convinced the court that Ghosn was both a flight risk and someone who might try to tamper with evidence if he were released.

His third-time’s-a-charm success came after he replaced his original legal team with Junichiro Hironaka, a lawyer renowned for his ability to clear defendants in a country where prosecutors win over 90 percent of their cases.

Known as “The Razor,” Hironaka told reporters gathered outside the court on Tuesday, “It was good we proposed concrete ways showing how he would not tamper with evidence or try to flee.”

Bail for the executive was set at 1 billion yen, or $8.9 billion. A trial date has not been set but is not expected until later this year and possibly not until 2020, according to Japanese news reports.

The Ghosn case has proved embarrassing for everyone involved. His arrest followed what Nissan said was an internal investigation triggered by a whistleblower that revealed an effort to conceal as much as $88 million in income, along with other instances of corruption.

For his part, Ghosn has repeatedly proclaimed his innocence, going so far as to allege the case was the result of a “plot” against him. As NBC News has previously reported, a number of high-ranking sources, including ones close to the Nissan board, question the allegations and have argued that the case may, as much as anything, be linked to Nissan Chief Executive Officer Hiroto Saikawa’s desire to put distance between the Japanese automaker and its French ally Renault. While Nissan fired Ghosn, Saikawa recently announced his own plans to step down, though he has not yet set a formal date for his departure.

For his part, attorney Hironaka has used the case to question the Japanese legal system. Despite the supposed limits on detention, Ghosn was kept in solitary confinement for 3.5 months and subject not only to repeated interrogation but efforts to get him to sign a confession written in Japanese, a language he doesn’t understand. That led “The Razor” to denounce what he called “hostage justice.”

A month ago, Ghosn’s wife called on human rights organizations to help free her husband, and “The court was partly influenced by the opinion of the entire world,” said Shin Ushijima, a former prosecutor and lawyer, after Tuesday’s court ruling. “People in general thought (the detention period) is too long. This will change Japan’s criminal procedures.”

The scandal threatens to fracture what has long been described as one of the most successful partnerships in the auto industry. In 1999, Ghosn was sent to Japan by Renault to manage its $6 billion bailout of the then nearly bankrupt Nissan. He was soon named CEO of Nissan and subsequently took the same title at Renault. Three years ago, when their partnership was expanded to become the Renault-Nissan-Mitsubishi Alliance, Ghosn stepped out of day-to-day management, becoming chairman of the two Japanese automakers.

Ghosn was fired by both Nissan and Mitsubishi shortly after his arrest. He later resigned from Renault. Ghosn was expected to receive millions as part of his termination agreement with the European automaker but it canceled that arrangement last month under pressure from the French government, its largest shareholder. Ghosn is eventually expected to sue to recover his payout.

The ongoing corruption case, meanwhile, could change the balance of power between Nissan and Renault. Insiders say Saikawa and other Japanese insiders had finally decided to revolt against what they saw as a lopsided relationship with the French automaker. Holding a 43 percent stake in its ally, Renault was able to unilaterally appoint board members and other senior executives at Nissan.