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France demands interim management at Renault

'Ghosn not able to manage company today,' French finance minister says

French Finance Minister Bruno Le Maire attends the inauguration of Renault's new sports car production line in Dieppe last December.   © Reuters

PARIS/TOKYO -- France's finance minister has called on Renault to appoint an interim replacement for Carlos Ghosn as chairman and chief executive, following his arrest on suspicion of financial misconduct in Japan on Monday.

"I am going to demand that interim management is put in place immediately. Carlos Ghosn is not able to manage the company today," said Bruno Le Maire, French finance minister, in an interview with France Info radio. "If the allegations are proved to be true, this would be ... serious."

He insisted, however, he was not yet formally demanding Ghosn's dismissal "for a simple reason: we do not have any proof." 

Ghosn has been accused of "serious misconduct" by Nissan Motor, the Japanese car company he helped to rescue from the brink of collapse almost 20 years ago. The carmaker alleges that he misused company funds for personal benefit and understated his salary by some 5 billion yen ($44 million) over five years. Nissan -- which is tied to Renault through cross-shareholdings -- will dismiss Ghosn as its chairman on Thursday. 

Le Maire revealed he would ask the Japanese government to transfer "all the elements that have been supplied by Nissan to Japanese justice so we know exactly what Mr. Ghosn is accused of." After hearing of Ghosn's arrest, French authorities had examined his tax situation in France, but there was "nothing in particular to signal," Le Maire said. 

Le Maire's comments come as the Renault board prepares to consider dismissing Ghosn at a hastily arranged board meeting, expected imminently, according to a source with knowledge of the matter.

Meanwhile, French junior finance minister Agnes Pannier-Runacher said it was too early to consider who might lead the carmaking alliance that brings together Renault, Nissan and Mitsubishi Motors, and which has been led by Ghosn for several years. 

She declined to comment on whether Paris would prefer a French person at the helm.

Instead, Pannier-Runacher said "someone who is professional is required, in order not to destabilize the alliance." The French junior minister stressed the importance of the alliance, saying she considered it would be "dangerous" for the partners to split.

The allegations against Ghosn raise questions regarding the delicate power balance among Renault's shareholders. The French state is the largest single shareholder, with 15.01%, while Nissan has 15%.

Ghosn was instrumental in resisting calls for a merger of Renault and its alliance partner, and managed to reach a compromise with a government seeking more involvement in the company's management.

Immediately after Nissan revealed the alleged misconduct, the French automaker announced that it would convene a board meeting, at which members are expected to discuss a management reshuffle.

In February, Ghosn signed a new contract that runs until 2022 with the aim of making the Renault-Nissan-Mitsubishi alliance "irreversible," while also reducing his remuneration package by 30%. 

He often cited the failed merger between Germany's Daimler and Chrysler of the U.S. in response to calls for Renault and Nissan to integrate operations.

Chief Operating Officer Thierry Bollore would be the most likely replacement if Ghosn is dismissed, according to a Renault representative.

Bollore, who was promoted from chief competitive officer in February, is considered the de facto No. 2 at Renault, having stood in for Ghosn at a number of motor shows.

He previously worked in Japan in a position at Michelin, and has seemingly been positioned to enhance synergies with Nissan and Mitsubishi.

However, Ghosn's leadership will be difficult to replace.

Having headed Renault since 2005, Ghosn led the automaker's expansion into Russia, South America and other emerging markets. The company managed to increase both sales and profits for four consecutive years through 2017.

Questions are also emerging over the implications for planned further expansion.

The company has set a sales target of 5 million units in 2022, an increase of 33% on 2017. That goal will be only be achievable if the company pushes up sales of electric cars in the Chinese market. Experts have pointed out that Ghosn was the driving force behind making the Renault Zoe Europe's best-selling electric car.

The scandal has also hit Nissan's share price, which fell to 59 euros in European markets on Monday, down 8.4% from Friday.

Some analysts believe the impact will even be felt by Daimler. The German maker and the Renault-Nissan alliance hold stakes of equal 3.1% in each other.

The two sides jointly run a plant in Mexico and are working together on more than 10 projects.

The incident risks stalling discussions on a possible joint production increase in North America aimed at absorbing the impact of the United States-Mexico-Canada Agreement, which replaces North American Free Trade Agreement.

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