The Ghosn scandal could weigh on the Renault-Nissan alliance

November 23, 2018/11 h 45 GMT

By Paul A. Eisenstein

After Nissan's board of directors voted unanimously to overthrow Carlos Ghosn as president at an emergency meeting at its headquarters in Yokohama, Japan, some observers from the industry question the real nature of the case.

Renault's board of directors, a partner of Nissan's French alliance, has chosen not to overthrow Ghosn as chief executive, pending clear evidence. Several sources told NBC News why Ghosn was even arrested.

The 64-year-old leader was arrested on Monday in Japan and accused of underestimating his income by nearly $ 45 million and misusing the company's assets. The Brazil-born executive could remain in custody in Tokyo for up to ten more days before prosecutors decide whether or not to indict him.

This may involve a "deadly infiltration of politics and international business intrigue," said Joe Phillippi of AutoTrends Consulting. While cautioning that this could be "exaggerated", he quickly added that it was "not out of reach of the possible" that the charges against Ghosn were motivated by an internal conflict within l & # 39; company.

This has been repeated in half a dozen other conversations with people inside or near Nissan, sources echoing the fact that there had been a serious scramble between Ghosn and Saikawa, who replaced Ghosn as Nissan's CEO last year.

"Businesses can usually give you a pat on the fingers" when you play a little with the use of items like a business jet or charge unjustified expenses on your expense account, a said a Nissan veteran, "but they do not do it. have their president arrested and put in prison. "

If the case is not sound, some industry observers predict that Saikawa could be forcibly evicted. Nissan's CEO seemed clearly confident in the charges against Ghosn at a press conference Monday at the group's headquarters, stating: "Beyond all regret, I am deeply disappointed, frustrated, desperate, indignant and resentful ".

But he may have also pointed out a personal element to the cause by suggesting that Ghosn had gained too much power and stayed in his position too long.

Ghosn joined Renault in 1996, responsible for restoring the finances of the French company. He put it in the dark in barely a year, earning the nickname "The Cost Killer". Ghosn was then sent to Japan in 1999, after Renault bought a 38.6% stake in Nissan, to implement a massive turnaround plan. Originally named Chief Operating Officer, Mr. Ghosn was soon promoted to CEO after the Japanese automaker began to generate profits and reduced crippling debt. He was then appointed Managing Director of Renault and held the same position within the umbrella organization now known as the Renault-Nissan-Mitsubishi Alliance.

In his various posts, Ghosn had not only to manage a distant business empire but also the political pressures related to the Franco-Japanese group. In 2017, the French government reduced its stake in Renault – partly because of Ghosn's maneuvers – to 15%. But he still has significant influence and insisted that the car manufacturer and Nissan based in Paris is further strengthened, which the French Minister of Finance, Bruno Le Maire, reiterated this week.

On the contrary, Nissan has asked for a little more independence under Saikawa. According to sources quoted by Reuters, "a sense of crisis prevails at the Ministry of Economy, Trade and Industry (Japanese) that Nissan and Mitsubishi will be seized by the French government."

Some observers have warned that things could go in the opposite direction of the alliance if the French press was too strong – or if the Japanese maneuver was too aggressive to prevent a takeover.

Earlier this week, Mitsubishi CEO Osamu Masuko said the alliance uniting Ghosn is in jeopardy. "I do not think anyone on Earth, like Ghosn, could run Renault, Nissan and Mitsubishi," he said.

French and Japanese supporters of the alliance have tried to minimize these concerns. Saikawa has expressed the desire to maintain an extremely positive relationship that has allowed Volkswagen to become one of the world's best-selling automotive groups in terms of volume.

While Renault members continued to demand evidence of Ghosn's alleged crimes, the company also issued a statement stressing its "commitment to defending Renault's interests in the alliance.

"But there is no doubt that Ghosn's loss will be a major challenge, and he is" the glue that binds Renault and Nissan, "said Max Warburton, an analyst at Bernstein." It's hard not to conclude gap between Renault and Nissan. "

If several questions arose as to the justification of the accusations against Nissan and the arrest of Ghosn, warned several sources, this chasm could turn into an ocean. And that could give unflattering new light to Saikawa himself.