Ghosn was planning Renault Nissan merger before arrest – report

Prior to his sensational arrest earlier this week, Carlos Ghosn was reportedly working on a merger between Renault and Nissan.

Sources close to Nissan's board have told the Financial Times Ghosn was attempting to engineer a merger in order to make the partnership between the two companies "irreversible".

The idea of a merger was staunchly opposed by many members of Nissan's board of directors. With Nissan responsible for much of the alliance's profit, these board members were up in arms about "any reorganisation that entrenched their second-tier status".

They were also reluctant about granting the French company access to Nissan's vast cash reserves, last reported to total ¥1.2 trillion ($14.7 billion).

The merger proposal was expected to arrive "within months", and its imminent appearance was reportedly driving a wedge between Ghosn and Hiroto Saikawa, his hand-picked successor as Nissan CEO.

Saikawa took over from Ghosn as CEO in 2017, and the two were said to have previously enjoyed a warm relationship. Although Ghosn stepped back from day-to-day running of Nissan, he remained as chief executive of Renault and the alliance, as well as chairman of Mitsubishi Motors.

In a press conference earlier this week, Saikawa was surprisingly brutal in his assessment of Ghosn's time as CEO. He has called for Ghosn's sacking after alleging he severely underreported his salary, and misused corporate funds and expenses.

Under questioning from local media, Saikawa denied Ghosn's arrest was part of a board room "coup d'etat".

Reports in the Japanese media yesterday indicated Nissan's funds were used to pay for the purchase and renovation of four luxury homes for Ghosn's personal rent-free use.

Interestingly, Renault's board has adopted a more cautious approach than its Japanese counterpart, appointing chief operating officer Thierry Bolloré as interim CEO.

In a statement the French automaker said it was "unable to comment on the evidence seemingly gathered against Mr Ghosn", and that it has sent a request to Nissan "on the basis of the principles of transparence, trust and mutual respect set forth in the Alliance Charter, to provide all information in their possession arising from the internal investigations related to Mr Ghosn"

According to the Financial Times Ghosn was unaware he was under internal investigation, and was surprised when prosecutors stepped on board the company's private jet after it landed at Tokyo's Haneda airport on Monday.

Renault, Nissan and Mitsubishi are locked together in a complex alliance, which sees the automakers work together on common platforms and drivetrains, as well as sharing factories and supplier bases.

As a consequence of Renault's rescue of Nissan in 1999, Renault owns 44 per cent of Nissan, giving the French company significant control via voting rights and a number of board seats.

Nissan in turn has a 15 per cent stake in Renault, but no voting rights or board seats, and little direct influence.

Thanks to Mitsubishi's fuel economy reporting scandal in 2017, Nissan now owns 34 per cent of Mitsubishi Motors. Under Japanese law this allows Nissan to control the smaller automaker.

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