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Ghosn gone as Mitsubishi joins Nissan in ousting chairperson

Nov 26 2018 17:13
Ma Jie, Bloomberg
CEO of Renault-Nissan Carlos Ghosn listens while a

Carlos Ghosn. (Eric Piermont, AFP)

Within a week of his arrest, Carlos Ghosn, a towering figure in the auto industry, has been removed as chairperson by two of the carmakers in a three-way global alliance.

The board of Mitsubishi ousted the 64-year-old on Monday, following in the steps of its biggest shareholder, Nissan. In contrast to Ghosn’s swift removal by the Japanese firms, France’s Renault SA has kept him on, while replacing him temporarily as chief executive officer.

The downfall of Ghosn, who built the alliance between Renault and Nissan, looks set to ignite a power struggle as the Japanese partner seeks to strengthen its position.

The Franco-Brazilian executive, accused of understating his income and misusing Nissan’s assets, has denied wrongdoing, according to NHK, Japan’s national broadcaster. The board of Mitsubishi, the newest member of the world’s biggest auto alliance, voted unanimously to remove him, a company filing showed.

“Continuing to keep Ghosn as our chairperson would present a reputational risk to our company,” CEO Osamu Masuko told reporters, echoing remarks from Nissan CEO Hiroto Saikawa last week. “I was honestly, absolutely shocked and struck with a sense of disbelief” at the allegations against him, he said. Masuko will take on the additional role of chairperson.

The offenses Ghosn is accused of carry a maximum sentence of 10 years in jail, Japanese prosecutors say. He remains in detention.

ghosn

With Ghosn gone, Nissan’s Saikawa is already plotting a review of the alliance to make it more equitable, according to people familiar with the plans. Renault owns about 43% of Nissan with voting rights, while the latter holds a 15% non-voting stake in the French company. After turning around Renault and a teetering Nissan in the late 1990s, Ghosn added the beleaguered Mitsubishi to the group in 2016.

“Mitsubishi is firmly in the Nissan camp, because Nissan is their main shareholder,” said Janet Lewis, an analyst at Macquarie Capital Securities in Tokyo. “Masuko has made it clear the future of the alliance is important to them and they will go along with supporting Nissan.”

The three carmakers are due to meet in Amsterdam this week. Nissan doesn’t expect that shareholding changes will be discussed at the meeting, a person familiar with the matter said. Nissan views that negotiations about rebalancing ties should be done with mutual understanding, and that first the two companies must share an understanding about the need to dismiss Ghosn, the person said.

Nissan today accelerated its bid to redress imbalances in the alliance, seeking to limit the power of its French partner to nominate officials to its board, people familiar with the plan said.

In an address to Nissan’s global employees Monday, Saikawa said Ghosn held too much power at the company. Conversations between Nissan and Renault had to go through Ghosn, who also had the final say on such matters, making their communications less meaningful, Saikawa said. Saikawa also said he feels he enjoys the trust of Renault’s top management, having worked with them frequently.

The structure has become increasingly controversial in Japan due to Nissan’s improved performance. Nissan sold about 5.8 million cars last year - compared with just 3.7 million for Renault - and provides links to China, where Renault only has a small presence, and the US, where the French carmaker is absent.

“The bigger issue is Nissan was in recent years contributing more to the alliance than you are seeing from Renault,” Macquarie’s Lewis said. “In that sense, it’s logical that Nissan doesn’t want to be controlled by Renault.”

Nissan has also long resented what it sees as the French government’s meddling in the alliance. The French state owns 15% of Renault. A Nissan spokesperson declined to comment.

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nissan  |  carlos ghosn  |  industrial  |  companies
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