March 14 (Bloomberg) -- Renault SA Chief Executive Officer Carlos Ghosn gave up his bonus and turned down second-in-command Patrick Pelata’s resignation after the company admitted wrongfully accusing senior managers of spying.
The French carmaker also announced disciplinary action against three of its security officers and pledged compensation and reinstatement for upstream development chief Michel Balthazard and two other executives fired on suspicion of selling company secrets.
Pelata’s resignation was rejected “in the interests of Renault,” the CEO said on TF1 television. “I didn’t want to add crisis to crisis.” Ghosn, Pelata and other executives involved in the case will return 2010 bonuses and receive no stock options this year, the company said after an emergency board meeting.
The carmaker retracted its espionage claims today after Paris Chief Prosecutor Jean-Claude Marin said they had been discredited by police. Pelata had pledged earlier this month that managers would be held accountable “all the way up to me” if the three were cleared.
“The situation at the company is such that they feel they can’t take out their major players but they had to make some kind of face-saving gesture,” said Alan Baum, an analyst at industry consultant Baum & Associates in West Bloomfield, Michigan.
Renault fell 2.58 euros, or 6.3 percent, to close at 38.18 euros in Paris before the board meeting ended. The shares have dropped 12 percent this year, valuing the automaker at 11.3 billion euros ($15.8 billion).
Balthazard, his subordinate Bertrand Rochette and deputy electric-car program chief Matthieu Tenenbaum were fired in January after a company investigation concluded they had received payments from Chinese companies via foreign accounts.
The case against them was based on verbal information obtained by security manager Dominique Gevrey from an undisclosed source, for which Renault had paid more than 300,000 euros, the prosecutor said today.
“We were able to rule out the claims presented in Renault’s complaint within a very short period,” Marin said at a press conference, a day after Gevrey was jailed to face charges of “organized fraud.”
No Banks Accounts
Cooperation from the Swiss and Liechtenstein authorities rapidly established that the alleged bank accounts did not exist, Marin said. Gevrey, a former French intelligence agent who still refuses to say where he got the information, was arrested March 11 at Paris Charles de Gaulle airport as he prepared to board a flight to Africa, he said.
“The attitude he is taking is that of a professional protecting his source -- if any such source exists,” Marin told reporters.
Gevrey’s attorney did not return calls or messages left at his office outside of regular office hours.
In its statement, the carmaker announced closer supervision of its security officials and a governance review designed to “restore Renault’s image and trust in the company and its leaders.”
Renault employees expected sanctions against “those responsible for these mess-ups,” the carmaker’s CFDT union said in an open letter to Ghosn earlier this month, while the main CGT union said the affair had “dealt a blow to the credibility of Ghosn and Pelata, who were both directly involved.”
The departure of Ghosn’s No.2 would have left Renault “without an operating manager” and no obvious successor, Philippe Houchois, a London-based analyst with UBS, said before the announcement. The carmaker “hasn’t done a very good job of managing succession, and Pelata is one of the few people who can hold his own against Ghosn when necessary,” he said.
Renault did not name the security officials facing disciplinary action or specify which other executives would return their bonuses. Those involved in the investigation included Odile Desforges, director of engineering and quality, Laurence Dors, the company’s general secretary, human resources manager Jean-Yves Coudriou and Legal Director Christian Husson.
Ghosn has also come under pressure over the mishandled investigation after an earlier TF1 appearance in January, when he insisted there were “multiple” findings to support the espionage claims.
In an earlier statement today, the CEO issued a personal apology to the fired executives and promised reparations to “restore their honor in the eyes of the world, taking account of the serious prejudice they and their families have suffered.”
Balthazard, a former management committee member, may seek damages exceeding Ghosn’s 9.2 million-euro combined salary from Renault and Japanese affiliate Nissan Motor Co. “Nobody would be shocked if he left with eight, nine or 10 million euros,” Balthazard’s lawyer Xavier Thouvenin said in an interview.
Tenenbaum will also be seeking “substantial material compensation,” his attorney Thibault de Montbrial said in an interview broadcast on i-Tele.
“He was pushed out with no explanation, a criminal complaint was filed against him, he was accused before the world of being a spy and then CEO Ghosn told 10 million TV viewers that he had proof,” de Montbrial said. “We’ll talk about all that, and I’m sure we’ll reach an agreement.”
The unfolding fraud case acquired a fourth potential victim today as the prosecution was joined by Philippe Clogenson, a former Renault marketing manager dismissed in 2009 over accusations that he received bribes. Clogenson’s formal filing, announced by his lawyer Eric Moutet in an interview today, opens the way for a possible damages award in the event of a conviction.
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