Renault, Nissan, Mitsubishi defuse tension and outline “new start” for alliance

Renault, Nissan, Mitsubishi defuse tension and outline “new start” for alliance

YOKOHAMA, Japan – In a big step toward rapprochement, the heads of Renault, Nissan and Mitsubishi announced a new power-sharing agreement on Tuesday that charts a “new start” for an auto alliance rattled by the indictment of its former Chairman Carlos Ghosn.

The executives defused much of the tension that has threatened to derail the world’s largest auto group. Renault, which has a controlling stake in Nissan, said it would not seek to appoint Nissan’s chairman.

In their first joint address since Ghosn’s Nov. 19 arrest, Renault CEO Thierry Bollore, Nissan CEO Hiroto Saikawa and Mitsubishi CEO Osamu Masuko announced a new four-member Alliance Operating Board to oversee all operations at the 20-year-old partnership.

The board will include the three CEOs and be chaired by Renault Chairman Jean-Dominique Senard, who took the helm of Renault in January following Ghosn’s resignation. Senard also attended the news conference on Tuesday at Nissan’s global headquarters here south of Tokyo.

“We are hereby committing to a ‘new start’ for the alliance,” the companies said in a memo of understanding about the reworked organization. The new board structure aims to preserve the autonomy of each company while improving the speed and agility of joint operations.

The companies said the new arrangement would have no impact on the existence of the Revised Alliance Master Agreement that outlines relations between the companies. It would also not impact the cross-shareholding structure. Both will both remain unchanged.

Definitive agreements will be signed in conjunction with the anniversary of the alliance.

“The structure we are deploying before you is now the best way forward,” Senard said. “We have now reached a level of maturity that tells us that we need to go to a further step, a new step, what we could call today a new start to the alliance.”

The move struck a strong chord of unity following a period of upheaval.

Renault initially recoiled in distrust at Nissan’s abrupt turn against Ghosn, amid speculation about a boardroom coup by Japanese executives. Nissan, meanwhile, has struggled to shore up internal corporate governance amid concern that Renault wants a full merger of the companies.

Reports said some Nissan executives had been unhappy with Ghosn’s push for a deeper tie-up with Renault, which was seen as possibly including a full merger. Smaller Renault bought 43 percent of Nissan ahead of the 1999 rescue. Nissan holds a 15 percent, non-voting stake in Renault, whose top shareholder is the French government.

Senard sidestepped questions asking him to comment on the indictments of financial misconduct leveled against Ghosn, saying the former chairman is innocent until proven guilty.

Ghosn, who was released on bail March 6, faces three indictments in Japan and faces up to 10 years in prison if found guilty. He denies the charges and trial is likely still months away.

“As long as there is no judgment on these facts, we cannot utter a word,” Senard said.

Final arbiter

The new board will be the final arbiter on alliance business, superseding other alliance entities, including joint ventures set up between the partners in the Netherlands: Renault-Nissan BV and Nissan-Mitsubishi BV. Those joint ventures have become a focal point of investigation following allegations of financial misconduct by Ghosn during his time at Nissan.

In January, Nissan and Mitsubishi said Ghosn received about 7.82 million euros ($8.9 million) in allegedly improper compensation last year from Nissan-Mitsubishi BV, their 50-50 venture.

NMBV was established to reward employees who find synergies by giving them a share of the savings. But Nissan and Mitsubishi claim Ghosn used it to authorize large payouts to himself.

Mitsubishi’s Masuko said Mitsubishi and Nissan would discuss what to do with NMBV. But he said he cannot imagine it continuing in its current form.

Both sides may wind down the entity, a source familiar with the matter said.

In a related move, Nissan and Renault are considering scaling back the profile of their 50-50 Netherlands-based joint venture, Renault-Nissan BV, or RNBV, the person said.

The Alliance Operating Board will replace the governance functions of RNBV, but that entity will continue to exist as a kind of backup to the board.

Renault and Nissan launched an investigation of RNBV last month, following the indictment of Ghosn in Japan on three charges of alleged financial misconduct at Nissan.

The probe of RNBV was expected to be completed by mid-March.

Reuters contributed to this report

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