PARIS — French Finance Minister Bruno Le Maire called Tuesday for an “interim governance” structure to be put in place at Renault while the financial dealings of auto executive Carlos Ghosn are investigated.
Ghosn was arrested Monday in Japan, where he serves as the chairman of Nissan. The Japanese automaker announced that Ghosn would be dismissed because of “significant acts of misconduct” that allegedly included underreporting his salary and using company assets for personal benefit.
Ghosn, a Brazilian-born French citizen of Lebanese descent, also serves as chairman of Mitsubishi Motors and chairman and chief executive of Renault. Ghosn was instrumental in helping forge an alliance among the three companies.
The French government has a 15 percent stake in Renault, and the news from Japan seemed to catch Paris off guard.
Nissan said Ghosn’s arrest stemmed from a whistleblower’s report, but questions swirled about whether he was the victim of political maneuverings within Nissan or had simply created too many enemies by getting too big for his own boots.
While Renault’s most senior executives were reported to have pledged their full support to Ghosn, and Lebanon’s government said it stood by him, the French government was effectively forced to acknowledge that Ghosn could not continue as head of Renault for now.
“Carlos Ghosn is no longer in a state to lead the group,” said Le Maire, speaking Tuesday morning on France Info television.
But the French finance minister added that he was calling for answers, not necessarily for Ghosn’s resignation. He said the government began examining Ghosn’s financial activities in France once the Nissan news broke in Japan, but that, for now, “there is nothing special to report on the tax situation of Mr. Ghosn in France.”
For the moment, Le Maire said, the French government would not be demanding Ghosn’s departure from Renault’s board because “we have no proof” that he engaged in financial wrongdoing in France.
Industry watchdogs are waiting for news from Renault on a possible interim leadership change. A Renault spokesman said the company’s board was to meet Tuesday evening in Paris.
Le Maire and Japanese Economy, Trade and Industry Minister Hiroshige Seko spoke by telephone Tuesday and “reaffirmed the strong support” of both governments to the alliance between Renault and Nissan, “and their shared wish to maintain this winning cooperation,” describing it in a joint statement as one of the greatest examples of Franco-Japanese industrial cooperation.
The news of Ghosn’s arrest sparked a defensive reaction in Lebanon, where his heritage is a source of pride.
Lebanese Foreign Minister Gebran Bassil said in a statement that he has instructed the Lebanese ambassador in Tokyo to follow the case and ensure that Ghosn gets fair treatment, according to the Associated Press.
Ghosn represents “a model of Lebanese success abroad, and the Lebanese Foreign Ministry will stand by him in his crisis to make sure he gets a fair trial,” Bassil said.
The Financial Times reported that Renault’s chief operating officer, Thierry Bolloré, sent a note to employees late Monday stating management’s “full support” for Ghosn and calling the alliance with Nissan and Mitsubishi an “industrial gem that must be protected and nurtured.”
In Japan, Ghosn had been one of the most admired and well-paid executives. His sudden fall from grace dominated headlines, with details of the accusations against him leaking to the media.
National broadcaster NHK said Nissan had paid “huge sums” to buy and maintain luxury residences for Ghosn in Beirut, Paris, Amsterdam and Rio de Janeiro that were not for legitimate business reasons.
The purchases were not declared in stock market filings, while Ghosn was underpaying or not paying rent, NHK alleged, citing unidentified sources.
The Nikkei newspaper, again citing anonymous sources, alleged that nearly $18 million had been funneled through a Dutch subsidiary of Nissan to purchase a condominium on Rio’s Copacabana strip and a luxury home in Beirut.
NHK also alleged that Ghosn, who was in charge of paying Nissan’s top 13 executives, had secretly siphoned off some of that money for himself.
Public prosecutors have confirmed that Ghosn was arrested on suspicion of failing to declare around $44 million in income on Nissan’s official securities reports submitted over five years starting from 2011. Nissan representative director Greg Kelly also has been arrested.
Ghosn had won many admirers during his long career as one of the world’s leading auto executives. His ruthless cost-cutting and vision to promote electric vehicles and low-cost vehicles had helped rescue both Renault and Nissan. His high salary and that same ruthlessness had also attracted many critics.
Experts said one reason that he may have underreported his compensation may have been to avoid more criticism: The French government had long opposed his salary package, and Renault’s shareholders had voted down his pay in 2016, although the vote was nonbinding. Only by agreeing to a pay cut did Ghosn get shareholders’ approval at an annual meeting in Paris in June.
In an extraordinary news conference Monday night, Nissan CEO Hiroto Saikawa denied that there had been a “coup d’etat” at Nissan but nevertheless spoke openly about his “indignation” at allegations against Ghosn, suggesting that his long reign and concentration of power had undermined corporate governance.
Under pressure from the French government, Ghosn had been exploring an even closer tie-up between Renault and Nissan, something that had raised hackles in the Japanese company.
On Monday, Saikawa said structural issues, including the fact that 43 percent of Nissan is held by Renault and that Ghosn held key roles in both companies, was “one of the factors or drivers” for the governance problems.
Nevertheless, auto industry experts say the alliance has proved so valuable for both companies that it is unlikely to unravel.
Meanwhile, in Japan, there were questions about whether Ghosn was being treated in the same way that a Japanese executive might be treated in similar circumstances.
Japanese prosecutors have been criticized in the past for going soft on politicians and corporate executives accused of wrongdoing — not bringing charges against Toshiba executives accused of financial fraud in 2016, for example — but it seems there was no appetite to spare Ghosn, a rare foreigner at the top of the business ladder there.
Nobuo Gohara, the head of a law firm specializing in compliance, said he had not heard of a previous case in which a false statement regarding directors’ compensation in a securities report had resulted in such a punishment.
“There is a question whether this case should be charged as a criminal one,” Gohara wrote in a blog post.
Nissan shares fell more than 5 percent in Tokyo trading Tuesday.
“It’s extremely regrettable,” Japanese Chief Cabinet Secretary Yoshihide Suga told reporters. “We will watch developments closely.”
Akiko Kashiwagi in Tokyo contributed to this report. Denyer reported from Yokohama, Japan.