Abu Dhabi, UAEMonday 14 October 2019

'Nissan and state officials pushed to loosen Renault grip', documents show

Emails said to show concern was mounting in Japanese government - months before Mr Ghosn’s arrest on allegations of financial wrongdoing

Nissan and government chiefs were apparently concerned at Renault gaining more control of Japanese car maker. Reuters
Nissan and government chiefs were apparently concerned at Renault gaining more control of Japanese car maker. Reuters

As then-chairman Carlos Ghosn pushed to strengthen Nissan Motor’s ties with partner Renault last year, officials at the Japanese company were working behind the scenes with government officials to defend Nissan’s independence, according to emails seen by Bloomberg.

The efforts by the Ministry of Economy, Trade and Industry to head off changes in the two-decade alliance show concern was mounting in top echelons of the Japanese government - months before Mr Ghosn’s arrest on allegations of financial wrongdoing - that his push to cement a new alliance structure, would boost Renault and its largest shareholder, the French state, at Nissan’s expense.

The emails, which were either addressed to Mr Ghosn or copied to him, also show Nissan’s leadership trying to protect the company’s interests in a relationship the Japanese already saw as one-sided. While they sought help in heading off merger plans being floated by the French side, Nissan executives also worked to prevent Japanese officials from over-reacting and inflaming a delicate situation and sought direction from Mr Ghosn.

In an April 2018 email recounting a meeting with a French government official, the former head of Nissan’s CEO office, Hari Nada, said the Japanese company would rather keep the existing structure of the alliance than merge with Renault, and that “a re-balancing of the shareholding” to reduce the French company’s 43 per cent stake in Nissan was the preferred option.

The Japanese government was also wary of France’s insistence on making the 20-year alliance permanent. The next month, a message from another Nissan executive, head of government affairs Hitoshi Kawaguchi, describes a draft memorandum of understanding from the economy ministry aimed at their French counterparts. Nissan’s independence “should be respected”, the draft says.

Nissan declined to comment directly on the emails, while reiterating that misconduct by Mr Ghosn and his former aide, Greg Kelly, is “the sole cause of the chain of events”. The company declined to make Mr Nada or Mr Kawaguchi available for comment.

Hiroshige Seko, Japan’s economy minister, declined to comment on exchanges it had with France. “It’s obvious that we exchange various opinions and information with the French government,” he said on Tuesday.

A spokesman for the French finance ministry declined to comment, as did a spokeswoman for Renault.

The jockeying last year came as uncertainty hung over the partnership Mr Ghosn had dominated for two decades. The 65-year old car titan, who remains jailed in Japan awaiting trial, was chairman of Nissan at the time and had just signed a new deal to remain chairman and CEO at Renault. In doing so, he had pledged to honour French demands that he make the three-way alliance that includes Mitsubishi Motors. “irreversible”, while cautioning that Japan would resist a tighter structure if France remained a shareholder.

The rear-guard action at Nissan also lays bare the depth of suspicion between the companies and countries over the alliance - among the top producers of cars globally - before Mr Ghosn was arrested in November on allegations of financial misconduct. He has denied the charges and blamed a “plot” against him by Nissan executives who are playing “dirty games”.

While the content of the documents, first reported by French newspaper Journal du Dimanche, don’t prove Mr Ghosn’s allegations, they do show a Nissan leadership preoccupied with preventing what they saw as a French power grab.

Nissan officials, who had been coordinating with the Japanese economy ministry, were also concerned the demands in its memo could harm the discussions that Mr Ghosn was carefully trying to inch toward a solution.

“As you could see, the draft is going a little too far even in our view, when the French state is staying quiet,” said Nissan’s head of government affairs, Hitoshi Kawaguchi, in a May 21, 2018 message attached to the draft memo. “Though support by the Japanese government is appreciated, it is a private company matter at the end of the day.”

He reports to Mr Ghosn that so far, Nissan had asked the ministry to “stay behind us to support Nissan to put a brake on France whenever necessary”.

Renault’s new chairman, Jean-Dominique Senard, is seeking to move past Japanese fears that Renault wants to dominate the partnership. He said this week the alliance needed to be re-balanced “in spirit” and that the alliance’s cross-shareholding didn’t “reflect the reality” of their relations.

Evercore ISI analysts took it a step further, saying in a note that Renault should sell down its stake in Nissan to restore trust.

On Friday, the Tokyo District Court extended Mr Ghosn's detention until April 22 as prosecutors continue grilling him.

Authorities must then either press formal charges, release him or re-arrest him if they believe he has additional allegations to answer.

Prosecutors are looking into allegations that Mr Ghosnsiphoned off some $5 million from funds transferred from Nissan to a dealership overseas, and spent the money on a luxury superyacht.

Mr Ghosn has not been formally charged over these allegations, AFP said.

But the tycoon does already face three separate charges. Two of these relate to millions of dollars in salary believed to have been concealed from shareholders. The third charge is that he sought to shift personal investment losses to company books.

Mr Ghosn denies all allegations.

Updated: April 17, 2019 04:56 PM

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