Ghosn Loyalists On Nissan's Board Could Block His Dismissal

Though he has been in custody of Tokyo prosecutors since his arrest on Monday, Carlos Ghosn is fighting for his future as one of the world's most respected industrial captains of industry. And from the looks of it, he may have more leverage than many investors initially assumed.

Following reports last night that Renault wouldn't dismiss Ghosn as CEO - at least not yet - Bloomberg reported Wednesday morning that some Nissan board members are resisting CEO Hirohito Saikawa's push to oust Ghosn as chairman. The board is expected to decide Ghosn's fate during a board meeting on Thursday. The Nissan board members' objections sound similar to those voiced by the France's Finance Minister Bruno Le Maire, who said Tuesday that the French government would wait until it learns more about the charges that Ghosn is facing before it decides whether to take action. Despite the fact that the investigation into Ghosn was said to have been initiated internally, board members say they have been given too little information about Ghosn's alleged financial improprieties.


As CNN reported, Renault's board stopped elevated COO Thierry Bollore temporarily, but said it couldn't comment further about its plans until it learns more about the allegations against Ghosn from Japanese authorities.

The company said in a statement that it would elevate chief operating officer Thierry Bolloré on an interim basis, giving him the same powers that Ghosn enjoys as CEO. It said independent director Philippe Lagayette would chair board meetings "during this period."


"At this stage, the Board is unable to comment on the evidence seemingly gathered against Mr. Ghosn by Nissan and the Japanese judicial authorities," Renault said in its statement, adding it was asking Nissan to share all information related to the investigation into Ghosn.

As rumors that Ghosn was ousted in a palace coup percolate, and Saikawa has insisted that Ghosn would soon be ousted, it appears that several Renault loyalists who serve on Nissan's board (the French automaker owns 43% of Nissan) could be Ghosn's saving grace.

But one of Nissan’s directors told Bloomberg News that not enough information had been provided about the investigation for them to be able to decide how to vote on Thursday. Securing a unanimous decision to oust Ghosn as chair will likely be difficult because Nissan directors that used to work at Renault may not back the dismissal until the allegations against Ghosn are made clear, according to people familiar with board members’ deliberations.

The director and other people Bloomberg News spoke to asked not to be named, citing company policy.

The board’s decision Thursday will do little to clear the allegations against Ghosn and Kelly that are still being pursued by the Tokyo prosecutor’s office. The men will be detained for a further 10 days, Japanese broadcaster NHK said on Wednesday.

A Nissan spokesman didn’t comment specifically on the board deliberations.

"The directors are meeting tomorrow and a proposal will be made to the board to remove the directorships of Mr Ghosn and Mr Kelly," the spokesman said.

Nissan’s board includes Ghosn, Saikawa and Kelly, as well as two external board members. Votes at Thursday's meeting will be cast one-by-one on an anonymized basis. The outcome will be determined by a simple majority. This means there must be four votes in favor for the motion to oust Ghosn and Kelly to pass. No new directors will be named between Wednesday and Thursday's meeting.

Ghosn famously rankled the Japanese establishment when he arrived at Nissan in 1999 and implemented radical changes that disrespected Japan's deep-seated respect for seniority. He also imposed painful cost cuts that further horrified the Japanese press. So the notion that Ghosn loyalists might take the view that his imprisonment - which has been extended by 10 days as prosecutors finalize the filing of charges - is more about vengeance than justice. If he avoids being ousted, we imagine investors could take this as a positive for Nissan and Renault shares, which were hammered after the news broke.

But if he does manage to hang on, he's facing a long legal fight to clear his name and avoid a possible prison sentence.