Nissan-Renault feud comes to surface post Ghosn’s arrest

Bloomberg

Tensions between Nissan Motor Co. and Renault SA over the future of their car-making partnership have exploded into the open as the downfall of Chairman Carlos Ghosn roils the
automotive industry and his top lieutenant, Hiroto Saikawa, moves to consolidate power in his absence.
The two companies, which are connected via a complex structure of cross-shareholdings and joint manufacturing, have drastically differed in their reactions to Ghosn’s arrest in Japan on suspicion of financial offenses.
Tuesday night in Paris, Renault’s board stopped short of firing the French-Brazilian executive, and asked Nissan to hand over details of his alleged misdeeds. Nissan, by contrast, said after he was detained on Monday that it intends to dismiss Ghosn, 64, as chairman — acting with a haste that’s fuelled open speculation that he was the victim of a coup by Saikawa, who serves as Nissan’s chief executive officer, and others opposed to deeper integration between the two companies.
Nissan’s board will meet on Thursday to make a formal decision on Ghosn’s future.
For its part, Renault’s board indicated that it was in the dark about the nature of the allegations against Ghosn. “At this stage, the board is unable to comment on the evidence seemingly gathered against Mr. Ghosn by Nissan and the Japanese judicial authorities,” it said.
Ghosn, who was among the best-paid executives in both France and Japan, stands accused of under-reporting income of about $44 million and misusing company funds at Nissan. According to NHK, Nissan paid “huge sums” toward Ghosn’s residences in four global cities, payments that the broadcaster said lacked a business justification, and also covered the cost of vacations for his family. Ghosn hasn’t commented on any of the allegations, or been seen in public since his arrest.
“Japan will not tolerate executive greed. And enriching for your own personal wealth — and this superstar mentality where the CEO gets paid 20, 25 times what the average worker gets paid — Japan does not want to tolerate,” Jesper Koll, the CEO of fund manager WisdomTree Investments, said in an interview with Bloomberg Television.
Japan’s legal system is opaque even to locals, and basic details of Ghosn’s location and immediate future are unknown, although he’s likely at a detention facility in northern Tokyo. Bail cannot be granted until prosecutors decide whether to proceed with an indictment, a process that could take weeks, and Ghosn won’t necessarily be joined by an attorney when he’s questioned during that time.
More than Ghosn’s personal future is at stake.
The charismatic executive led both Nissan and Renault as well as their wider alliance, which unites the iconic French and Japanese companies with the smaller Mitsubishi Motors Corp. He had worked towards a merger of Nissan and Renault to solidify their two-decade-old relationship, a union that would create a direct rival to Volkswagen AG and Toyota Motor Corp. for the title of the world’s largest automaker.
But Saikawa publicly played down that prospect earlier this year, prompting a private rebuke from Ghosn, his one-time mentor, who warned his Japanese colleague that his comments risked undermining Nissan’s credibility.