Spying saga still haunts Renault chief Ghosn

Early signs suggest that neither ministers nor opposition leaders consider Carlos Ghosn, reputedly France's best-paid business chief, has gone far enough in seeking to resolve an acutely embarrassing debacle.

(FILES) A photo taken on October 1st, 2010 shows French Renault and Japanese Nissan carmakers CEO Carlos Ghosn during a press conference. Investigators questioned three security staff of Renault in the latest twist of a case that started with explosive spying claims. Claims of industrial espionage rocked Renault in January 2011 when three top managers were fired after an internal investigation. Paris' state prosecutor Jean-Claude Marin announced on March 14, 2011 the car maker faced a "fraud intelligence". AFP PHOTO / MIGUEL MEDINA *** Local Caption *** 524594-01-08.jpgShow less

MARSEILLE // Carlos Ghosn, the chief executive of Renault, has been forced to make a humiliating public apology to three executives who were fired as industrial spies after being accused of selling secrets of the company's electric car project.

Mr Ghosn also disclosed that he had paid back his €1.6 million (Dh8.1m) bonus for last year and would not be taking his stock option for this year.

His gesture is designed to demonstrate, not least to a furious French government, which has a 15 per cent stake in Renault, how seriously he takes his personal responsibility in an affair that has battered the giant car maker's reputation.

But early signs suggest that neither ministers nor opposition leaders consider Mr Ghosn, reputedly France's best-paid business chief, has gone far enough in seeking to resolve an acutely embarrassing debacle.

What began as a case of suspected industrial espionage, the proceeds being salted away into bank accounts in Switzerland and Liechtenstein, has turned into a fraud investigation.

Prosecutors now say the affair may have had its origins in an attempted scam involving security staff.

The new allegations have led to the arrest of three other employees. One, Dominique Gevrey, a company security chief and former defence intelligence officer, was detained as he boarded a plane for Guinea in West Africa.

He has been placed under judicial investigation for fraud amid claims on his behalf that he is an innocent victim of Renault "paranoia".

Only three months ago, Mr Ghosn went on France's TF1 channel to say the accusations of spying were supported by "certainties" and "multiple" elements of proof.

But on Monday night, he returned to the same studios for an interview at the end of the peak-time news bulletin in which he offered his personal regrets - naming each in turn - to Michel Balthazard, the head of development projects, and two colleagues, Bertrand Rochette and Matthieu Tenenbaum.

All have been offered reinstatement and Mr Ghosn, who is also the chief executive of Renault's partner Nissan, promised they would each receive compensation.

However, Mr Ghosn said he had rejected an offer of resignation from Patrick Pelata, his number two at Renault and the chief operating officer.

Some observers felt that if at least one senior head had to roll, it would be that of Mr Pelata, who openly accepted the possibility of losing his job as the espionage claims began to unravel. But Mr Pelata will also forego this year's stock option and pay back last year's bonus.

Mr Ghosn said he had insisted on keeping Mr Pelata in the interests of Renault. "I didn't want to add crisis to crisis," he said, adding the company would now review security procedures.

As well as inflicting grave damage on Renault's standing at home and internationally, the controversy caused a diplomatic upset after government sources initially suggested the company was the victim of "economic warfare" linked to China.

In the event, as the three fired executives sat at home waiting for probable arrest, prosecutors and police were able to confirm their protestations of innocence.

No trace of secret bank accounts was found. The security officials questioned by police have refused to identify the source of the original allegations, who was reportedly paid €250,000 for the information.

"We are examining possible fraud," said Jean-Claude Marin, the Paris prosecutor. "It seems Renault was perhaps not the victim of dishonest employees but of possible confidence tricksters."

The car maker said Mr Ghosn and Mr Pelata offered their "sincere apologies and regrets, personally and in the name of Renault, to Messrs Balthazard, Mr Rochette and Tenenbaum, who were wrongly accused".

Lawyers will press for substantial damages to compensate the trio, who suffered the public shame of being accused of betraying a company to which they had collectively given nearly 70 years of service.

Renault, in turn, recognises that making amends will not come cheaply.

The statement, issued after an emergency board meeting, acknowledged "the serious personal harm that they and their families have suffered" and promised to restore their honour in the public eye.

It said Mr Ghosn and Mr Pelata would hold an early meeting with the trio, although it is by no means clear how keen they will be to return to their jobs.

The affair, and the company's spectacular mishandling of it, is a major setback as Renault seeks to alter the terms of its alliance with Nissan and narrow a profitability gap with Volkswagen.

Business analysts have criticised Renault for failing to match the recovery of other international car makers. Following the latest developments in the affair, the Renault share price fell 3 per cent when trading opened yesterday on the French stock exchange.