Fri. Mar 22nd, 2019

The war for power between Nissan and Renault that is behind the fall of Ghosn

La guerra por el poder entre Nissan y Renault que hay detrás de la caída de Ghosn

On November 19, when Carlos Ghosn, then boss of the alliance of Nissan, Renault Y Mitsubishi, he landed with his private jet in Tokyo, the darkest chapter of his life was opened. Accused of giving incomplete information about his income to the regulators, he was placed in provisional prison.

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The Japanese justice had a twenty days maximum period to keep him arrested. But he has been adding new accusations whenever the deadline expires. He did it in December and he did it again in January, perpetuating the situation of Ghosn, arrested in very severe conditions.

The idea of ​​the coup d'etat

While being detained, Nissan revealed an internal investigation in which he claimed that he had diverted funds for personal use. Everything arose because of an internal tip-off.

Today, after more than fifty days in detention, Ghosn is accused of hiding revenues from regulators and violating the manufacturer's confidence by diverting losses of personal investments to the company and using funds for private purposes. Likewise, the press has revealed that it allegedly had family members in the company's salary or that it was bought from Nissan for luxury properties in Paris, Rio de Janeiro or Beirut for Ghosn's enjoyment.

Nissan and Mitsubishi stopped it in just a few days. Renault maintains it as the maximum leader by not having found irregularities in his company. The fall of Ghosn, beyond the plausibility of the facts, which he denies, hides something more. Some point to a full-blown 'coup d'état' to knock him down. A measure to rebalance the distribution of shares in the alliance of the three automakers, to remove power from Renault.

Drawing of Ghosn's appearance before the court, last Tuesday

Drawing of Ghosn's appearance before the court, last Tuesday
(Nobutoshi Katsuyama / AP)

The alliance is born unbalanced

Everything goes back to 1999, when the alliance is created. While the then boss of Renault, Louis Schweitzer, posed that it was a merger by absorption, that is, with some power for the French, from Nissan spoke of a collaboration, an alliance, a pact between equals where nobody sent on anyone.

The shareholding that was closed to consolidate the alliance perpetuated the first idea: Renault would become the owner of 43.3% of Nissan, with the consequent voting rights; and Nissan would take over 15% of Renault, without voting rights. The disparity was the result of the situation in which Nissan was, on the verge of bankruptcy.

Only Renault-Nissan BV, founded in 2002, which exercises corporate governance, was distributed equally.

When closing the alliance Renault took control with 43.3% of Nissan

When closing the alliance Renault took control with 43.3% of Nissan
(Vincent Kessler / Reuters)

The absolute power of Ghosn

In the years that followed the birth of the alliance, the business was better. Nissan, which was bordering on bankruptcy, was shot with the cuts of Ghosn, then its CEO. It was usual the exchange of managers between the two, making decisions jointly, consensually.

But as the years went by, the situation changed. At the outset, when Louis Schweitzer gave the witness to Ghosn in the presidency of Renault, in 2005, the Franco-Brazilian saw his ego grow to disproportionate levels. According to Nissan sources concentrated too much power, collected in an article published by the French
Les Echos
. He was driving two giants and not without some skidding: they accuse him of benefiting Renault -France is Ghosn's adoptive homeland and the French State, owner of 15% of the brand- in the decision-making process such as the assignment of models.

This situation was generating friction in the alliance. In fact, they did not bother the decisions made every day, but some that came from the highest levels, continues Les Echos.

Nissan beats Renault

The other key fact was that with the passing of the years Nissan was growing and growing. So much so that today the Japanese produces more, sells more and gives more benefits than Renault. The distribution of power that has survived for twenty years is meaningless from his point of view. It looks subordinate. On the stock market, while the French one is worth 16,000 million, the other one rises to 60,000 million.

The years passed and the communication and exchange of managers went down. Everything revolved around Ghosn, president of the firms.

Nissan, which in 1999 was on the verge of bankruptcy, today is much bigger than Renault

Nissan, which in 1999 was on the verge of bankruptcy, today is much bigger than Renault
(Jonathan Ernst / Reuters)

In the end, Nissan, much bigger than Renault but with a participation and role in the minor decision-making, reached the limit of his patience. The most daring raise the idea of ​​a 'coup d'etat' to overthrow Ghosn and distribute the power again, with Nissan taking care of Nissan without interference from France. The French media point to Hiroto Saikawa, Ghosn's successor after his arrest, as the man who orchestrated the fall.

For now, it is too early to assess the viability of the theory. But the fact that the case is uncovered by an internal tip, that Nissan has filed a lawsuit against Ghosn after his arrest or that he turned a deaf ear to Renault's proposal to deal with the departure of the French-Brazilian at a shareholders' meeting, which would force to pronounce themselves in public, do nothing but feed rumors.

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