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Marcel Renault, left, his brother Louis, centre, and Paul Huge ride on the early Renault models.
Marcel Renault, left, his brother Louis, centre, and Paul Huge ride on the early Renault models.

Renault limps out of wreck

The French car maker sacrifices its second in command to atone for the injustice done to three executives wrongly accused of industrial espionage and dismissed by the company.

It all seems enough to send the three brothers Renault, founders of the French motor giant, spinning faster in their graves than the 32kph top speed of their first car, the Voiturette.

The toppling of Patrick Pelata, the number two to Renault's present-day chief executive, Carlos Ghosn, is the latest twist in a saga that began with tales of international industrial spying before being exposed as nothing more than a case of old-fashioned fraud.

Mr Pelata's immediate fate was sealed on Monday when an extraordinary board meeting was convened at Renault's historic headquarters in the western Paris suburb of Boulogne-Billancourt.

Earlier hopes that he might ride out the storm, which has caused grave embarrassment to Renault and France, proved optimistic as board members settled down to ponder the findings of two investigations into the affair.

Ringing in their ears were the comments of France's steely finance minister, Christine Lagarde, who had said "if mistakes have been made, those who are responsible must go if the extent of their mistakes justifies it".

Even before Mr Pelata offered his resignation as chief operations officer, which the board accepted, it was clear the minister had him in mind when she spoke.

And since the government has a 15 per cent stake in the company, there was little doubt its will would prevail.

Nor does the fallout end with the removal of Mr Pelata, who can perhaps consider himself fortunate to have been promised another, as yet unspecified, position in the Renault-Nissan alliance, the world's third-largest vehicle manufacturer on 2008 sales figures.

Six other executives implicated in the debacle have also been relieved of their duties.

Renault is contemplating the fate of three of them, but the others have already left the company. One, Dominique Gevrey, who became Renault's security director after serving in French defence intelligence, has been arrested and put under criminal investigation for fraud, which he denies.

And for the three vastly experienced Renault men who were dismissed after being unjustly accused of betraying the secrets of the company's 4 billion (Dh21.19bn) electric car project, there is the prospect of a compensation jackpot.

Lawyers had demanded 11 million on their behalf, insisting that the settlement had to show the public that their good names had been restored.

Renault has not disclosed what it has provisionally agreed to pay them, but there has been speculation that the trio will share at least half of that amount.

Some eyebrows have been raised by the survival of Mr Ghosn, who heads both the Renault and Nissan elements of the alliance.

It was he, after all, who went on peak-time television in January to talk about the "certainties" and "multiple" elements of proof behind the suspicions of industrial espionage.

Money earned from selling details of the electric car programme had allegedly been channelled into secret foreign bank accounts; a government source was quoted as suggesting Chinese involvement.

Once it became clear that the claims were bogus, and that Renault was almost certainly the victim of an elaborate scam, Mr Ghosn publicly apologised to the wrongly dismissed executives: Michel Balthazard, head of development projects, and two colleagues, Bertrand Rochette and Matthieu Tenenbaum.

He also announced that he would, along with Mr Pelata, forgo his bonus for last year, in his case amounting to 1.6m.

Mr Ghosn has also given up his stock option for this year.

But the damage done has been considerable. Renault's reputation has suffered appallingly, China was indignant at being falsely accused and three men with nearly 70 years' service languished for several weeks under the threat of professional and financial ruin.

It is only because Mr Pelata was more closely involved in the day-to-day stewardship of Renault that the chief executive's head has been spared. Some observers still feel Mr Ghosn's position is barely tenable, but the government regards his presence as vital to the company's stability.

In a history stretching back to the end of the 19th century, Renault has known its share of controversy.

Louis Renault, who became the autocratic controller of the company after his brothers' deaths, died in mysterious circumstances after being jailed as a suspected collaborator with Nazi Germany near the end of the Second World War.

There was evidence of mistreatment before he was moved first to a psychiatric hospital and then to the nursing home where he died. His widow considered his death murder.

But his reputation was never rehabilitated, despite claims that he co-operated with the Nazis only to the extent needed to preserve France's manufacturing base and save Renault workers from deportation and forced labour in Germany. "It is better to give them the butter, or they'll take the cows," he said, according to one biographer.

Mr Pelata, to carry the farming metaphor forward to this year's crisis, was offered to government and shareholders as a sacrificial lamb. Renault, and in particular Carlos Ghosn, will be fervently hoping the bloodletting ends there and that they can once again concentrate on making cars.


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