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Nissan's Ghosn crisis

Nissan presses on with boardroom reform as Renault demands input

French minister denies demands for integration

The Nissan logo at the North American International Auto Show in Detroit on Jan. 14.   © Reuters

TOKYO -- Nissan Motor has begun exploring governance reforms through a special panel to chart a path forward without ousted Chairman Carlos Ghosn even as the French government seeks to retain the upper hand in steering the automaker's alliance with Renault.

The special committee of experts and outside directors convened its first meeting Sunday, interviewing two people affiliated with the Japanese automaker about Ghosn's alleged wrongdoing. Set up in December, the panel is tasked with compiling improvement plans regarding executive compensation and personnel matters.

The panel's meeting came shortly after the French government -- the top shareholder in Nissan's alliance partner Renault -- informed Tokyo that it wants to integrate the two automakers. As Nissan works to set its own direction, Paris' attempt to exert control adds strain to the international tug of war that has sprung up in Ghosn's absence.

"Ghosn's misconduct represents a lapse in managerial ethics," Seiichiro Nishioka, the panel's chair, told reporters after the meeting.

Nishioka, a former Tokyo District Court judge, pointed to "the concentration of power in one person" as the root of the problem.

"We would like to offer improvement plans by getting to the bottom of Nissan's government problems," he said.

Ghosn, charged with underreporting years of income and shifting personal investment losses to the automaker, has remained in detention since his November arrest and denies the allegations against him.

His transgressions were "beyond imagining," especially in light of his achievements, said panel member Sadayuki Sakakibara, senior adviser to Japanese materials company Toray Industries. The panel is considering establishing a compensation committee and restructuring the board of directors, Sakakibara said.

Nissan will factor in the recommendations the panel will issue by the end of March when filling the chairman seat vacated by Ghosn.

In the meantime, French Economy and Finance Minister Bruno Le Maire denied Sunday that Renault's integration with Nissan has been discussed within the government. "Our focus is for Renault to set up a solid, steady and sustainable management structure," he told reporters in Cairo. His comments seemed intended to allay growing concerns in Japan about French pressure.

The French government is reportedly aiming to integrate Nissan and Renault, most likely under a single holding company, a plan conveyed to officials in Tokyo through Renault director Martin Vial last week. Nissan's stake in such a holding company would be lower than the 15% it currently holds in Renault.

France wants to maintain Renault's ties with Nissan as Ghosn's ousting shakes the three-way alliance that also includes Mitsubishi Motors. Renault relies heavily on Nissan in terms of earnings and research and development, and production of certain Nissan vehicles has been shifted to French Renault facilities at Paris' behest.

The unequal capital partnership between Nissan and Renault -- the French automaker holds a leading 43% stake in its Japanese partner, while Nissan holds a nonvoting stake of just 15% in return -- has drawn blame within Nissan for enabling Ghosn's one-man rule, spurring calls for an equal partnership. Nissan is expected to oppose the integration as well, as the French government would likely maintain a strong presence as a significant stakeholder in the resulting holding company.

Under Japanese law, if Nissan were to raise its stake in Renault to 25% or greater, Renault would lose the voting rights granted by its stake in its Japanese partner. The two automakers have an agreement that gives Nissan the right to unilaterally increase its stake in Renault, should it judge that the French government or other parties interfered in Nissan's business decisions.

Possibly to counter such a move by Nissan, Le Maire told Le Journal du Dimanche in an interview this weekend that rebalancing or changing the automakers' mutual shareholdings is not under consideration.

Paris has expressed an intent to appoint someone from Renault to succeed Ghosn at Nissan. It may propose a successor or an integration before the Nissan expert panel presents its recommendations, putting the Japanese automaker in a tight spot.

Renault is expected to decide soon who will replace Ghosn as its own chairman and CEO. The French government appears to be guiding the candidate selection process, suggesting that once new leaders are appointed, the company could take a tougher stance prompted by Paris in seeking negotiations with Nissan.

Relations between the two automakers soured quickly after Ghosn's arrest. Renault has repeatedly requested that Nissan hold an extraordinary shareholders meeting but has been rebuffed as Nissan insists on basing the rebuilding of its management on the governance panel's recommendations. With both sides still at odds, the road to shaping the alliance's post-Ghosn future will likely be rocky.

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