France moved on Tuesday to overturn Carlos Ghosn from head of Renault one day after his arrest in Japan for financial fraud, but tried to defend the alliance of a car maker with Nissan, who was confused by the scandal.
Gosn, one of the most prominent leaders in the automotive industry, was arrested on Monday after "Nissan Motor Co." reported that he was involved in an offense, including the personal use of the company's money and insufficient reporting on how much he earned for years. The Japanese carmaker plans to remove him as president Thursday.
"Carlos Gosn is no longer in a position where he is capable of leading Renault," said French Finance Minister Bruno Le Maire for France Info, calling on Renault's board to meet "in the coming hours" establish a temporary management structure.
The French state owns 15 percent of Renault, which in turn owns 43.4 percent of shares in Nissan in a complex alliance captured by Gosn over nearly 20 years and for which some analysts believe they could collapse without the 64-year-old to manage it.
The Renault Board will meet later on Tuesday, the company's spokesman said. Sources familiar with this issue told Reuters he would discuss the temporary replacement of Ghosn.
"We did not seek Gosn's official departure from the board of directors for a simple reason, which is that we have no proof and we are following the legal procedure," said Le Moore.
He said he would contact his Japanese counterpart on the issue, and that Renault's partnership with Nissan is in the interests of France and Japan, and the two companies.
"Renault is weakened, which makes it even more important to act quickly," Le Moore said.
Close to bankruptcy when Renault bought its stake in 1999, Nissan recovered to be the driving force of an alliance that generates synergies for both companies and allows them to compete with Volkswagen and Toyota names on the global stage.
Renault's shares fell 4.3 percent to 0915 GMT, falling 8.4 percent on Monday. Nissan's shares fell another 5.5 percent, while those of Mitsubishi Motors, the third member of the Alliance, finished almost 7 percent.
Renault's shares fell 11% on Monday.
The Bank of America, Merrill Lynch, reduced its rating for Renault to "neutral" from "buy", while Exane BNP Paribas reduced it to "neutral" from "overcoming."
Le Meir said he had asked the French tax authorities to look at Gosn's matters and found nothing special.
The overthrow of Gosn will raise questions about the alliance he promised to consolidate with deeper connectivity before stepping back from operational leadership.
It comes in difficult times for the industry, with stricter emission regulations, a drop in diesel sales and expensive investment in electric and self-propelled technology.
Gosn's alleged disagreements also raise questions about governing the alliance in which all three partners are made up of single executors.
A manager based in Nisan told Reuters he was worried that decision-making in the Alliance could slow down due to the lack of a unifying figure.
The director, who refused to be identified as he was not allowed to speak to the media, said he was also worried that Gosn's departure could hit sales, as fans of the charismatic leader gave up the company and corporate clients bound by the rules to align, the scandal.
Japan's public broadcaster NHK announced that Nissan paid billions of yen to buy and renovate homes for Ghosn in Rio de Janeiro, Beirut, Paris and Amsterdam, citing unidentified sources.
The properties had no business purpose and were not listed as benefits in the Tokyo Stock Exchange filings, NHK said.
There is no comment from Gosne about the allegations, and Reuters could not contact him for comment. The businessman was born in Brazil, of Lebanese origin, and is a French national.
In the wake of broader political consequences, Hitoshi Kawaguchi, senior vice president of Nissan, who deals with government relations, met on Tuesday with Japan's top government spokeswoman for the media that he has sought good relations between Japan and France.