Macron can’t afford to stick by Ghosn

France has done the right thing by paving the way for Carlos Ghosn’s succession at the top of automaker Renault SA. Whatever the merits of the legal case against the CEO in Japan, he remains in custody, has been denied bail, and his trial could be at least six months away. This is not an executive who’s able to properly carry out his duties. Replacing Ghosn would not mean presumption of his guilt, nor a vindication of Japan’s alarmingly harsh legal system.
The move by the French government, owner of a 15 percent stake in Renault, follows the drip-feed of allegations against Ghosn – who had been the driving force behind the global alliance between the French carmaker and Japan’s Nissan Motor Co. While his shock arrest and hard treatment in jail raised questions at first about the Japanese justice system and its unusually high conviction rate, the reports about how he ran the Renault-Nissan alliance have made uncomfortable reading at a time when capitalism’s excesses are in the dock.
With yellow-jacketed rioters regularly taking to the streets of Paris to denounce an elite that they say has cut taxes for the rich and raised them for the poor, the allegations about Ghosn understating his income to avoid tax, transferring personal trading losses to Nissan, and misusing company funds, are awkward to say the least.
The change of tone from the French finance minister, Bruno Le Maire, is telling. In November, after Ghosn’s arrest, Le Maire was quick to say there had been no evidence of the executive committing tax fraud in France. But a subsequent report in the Liberation newspaper showed that Ghosn was not actually a tax resident of France, rather of the Netherlands since 2012, and this meant he wasn’t liable to pay French wealth taxes. Given that President Emmanuel Macron’s tax breaks for the rich have been a prime motivation for the gilets jaunes, these were not great optics for Ghosn.
Paris has other stakeholders to consider, including employees. The future of the Renault-Nissan alliance, through which the French company owns 43 percent of the Japanese carmaker, is paramount. That means preparing for the post-Ghosn era and probably renegotiating the terms of the tie-up on a more equitable and transparent basis.
Le Maire called for “new and durable governance” at Renault, part of what he said was “a new phase.” While there was still no public acknowledgment of the need to tweak alliance’s shareholder structure, it’s a probable next step. It’s to be hoped that Japan might take the opportunity to re-examine its legal approach too. It must see that its image as a place to do business and a country with a fair rule of law has taken another knock after the Ghosn case.
Preserving the alliance is the priority for Macron, who won’t want to see Renault disadvantaged in any way.

—Bloomberg

Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes