Abu Dhabi, UAESunday 21 July 2019

Ghosn resigns from Renault after being ousted from Nissan and Mitsubishi

He is in custody in Japan over allegations of financial misdeeds

The 64-year-old resigned as chairman and chief executive officer of the largest French carmaker late on January 23, French Finance Minister Bruno Le Maire told Bloomberg TV. AFP
The 64-year-old resigned as chairman and chief executive officer of the largest French carmaker late on January 23, French Finance Minister Bruno Le Maire told Bloomberg TV. AFP

For two decades Carlos Ghosn stood astride the global auto industry. His tenure atop Renault ended in humbler fashion, in a cramped prison cell on the outskirts of Tokyo.

The 64-year-old resigned as chairman and chief executive officer of the largest French carmaker late on January 23, French Finance Minister Bruno Le Maire told Bloomberg TV in an interview on Thursday. He is set to be replaced as chairman by Michelin chief Jean-Dominique Senard, and as CEO by Thierry Bollore, who’s been filling in on an interim basis.

It’s a turnabout few would have predicted before November 19, when police swept aboard Mr Ghosn’s private jet shortly after it touched down at Haneda airport. He’s been in custody ever since, accused of financial misdeeds at Nissan Motor that include understating his income by tens of millions of dollars and transferring personal trading losses to the company. If convicted, he could face decades in jail. Mr Ghosn has denied wrongdoing.

“It’s the kind of thing that happens when somebody stays in power for too long,” said Bernard Jullien, an independent auto industry consultant who has written extensively about Renault.

Before his arrest, Mr Ghosn had come to epitomise an elite cadre of brash, jet-setting industrialists focused squarely on the bottom line. The irony of his resignation was that it was announced by Mr Le Maire at Davos, a place where he was seen as the quintessential figure, someone on the A-list of the annual World Economic Summit in the Swiss ski resort.

Mr Ghosn ruled an automotive empire that stretched around the globe, from Russia to the US to Japan, and included not only Renault but also its alliance with Nissan and Mitsubishi Motors Corp. The world’s largest automotive partnership sold 10.6 million vehicles in 2017, more than Volkswagen or Toyota Motor.

Mr Ghosn is widely credited with holding the unwieldy two-decade alliance together, even as other combinations -- like Daimler-Chrysler -- came and went. His arrest jolted the partnership, raising questions over whether it can survive his demise. For his successors, bridging the corporate and cultural gaps between the companies and navigating the political crosscurrents in France and Japan will be among their biggest challenges.

The arc of Mr Ghosn’s career began and will in all likelihood end in France, where he attended elite prep schools and universities and got his first job as a young engineer at Michelin.

He spent 18 years at the tyremaker, rising through the ranks to run its North American division. In 1996, he moved to Renault, where CEO Louis Schweitzer picked him to develop and implement a massive restructuring plan. That’s when he got the nickname “Le Cost Killer,” while helping to pull the company back to profitability.

His next assignment was to avert collapse at Nissan, which was teetering on the brink of bankruptcy when Renault stepped in to rescue it. Arriving in 1999, he cut purchasing costs, shut factories, and eliminated 21,000 jobs, reinvesting the savings in a fleet of new models. The carmaker’s revival made Mr Ghosn a hero in Japan, complete with a manga, or comic series, celebrating his corporate exploits.

As the alliance between Renault and Nissan prospered -- adding Mitsubishi in 2016 – Mr Ghosn became the indispensable man at the center of the complex partnership, and held unusual decision-making powers within the carmakers’ boards.

His term at the helm of Renault wasn’t without challenges, including the 2008 financial crisis -- when car sales plummeted -- an ensuing wave of suicides at the company and a 2011 corporate espionage scandal. In recent years, Mr Ghosn repeatedly clashed with the French state over his pay, which was deemed excessive.

Questions over his compensation at Nissan led to his downfall. After a months-long internal investigation that was kept from Renault, the Japanese company alleged that he had understated his income for several years. Nissan also claims that Mr Ghosn misused company funds, including for homes from Brazil to Lebanon, and improperly hired his sister on an advisory contract. Both Nissan and Mitsubishi ousted him as chairman within days of his arrest.

Mr Ghosn, who has had only had one opportunity to speak publicly since his arrest, told a court hearing on January 8 that he’s innocent and called the accusations “meritless and unsubstantiated.” The judge said Mr Ghosn should remain in detention because of the risk that he could flee or tamper with witnesses or evidence. His lawyers have acknowledged he may stay in custody until his trial, which could be six months away.

Born in Brazil, raised in Lebanon and educated in Paris, Mr Ghosn jetted around the world visiting car plants, meeting ministers and eating and sleeping in the world’s finest restaurants and hotels. Revelations since his arrest have lifted the veil on luxury homes, opulent decor and lavish entertaining, including a 2016 wedding party at Versailles with a Marie Antoinette theme.

He showed little sign of slowing down. Last year he was pushing to take the partnership between Renault and Nissan to the next level, possibly through a full merger. The aim of the effort, which hasn’t came to fruition, was to trim expenses and bulk up enough to weather the industry’s looming challenges--and ensure that the partnership lived on when he retired.

Not that he had any plans to quit working, despite grueling 65-hour work weeks and near constant travel. While he stepped down last year as CEO at Nissan, he held on to that post at Renault. He was also chairman at all three companies and head of their alliance. In a 2017 interview, he predicted he could remain a boardroom fixture as long as Ferdinand Piech, who stayed on as chairman of Volkswagen until after his 78th birthday.

Updated: January 24, 2019 11:47 AM

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