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Eye on France: More trouble for industrial giants Renault and Airbus
Despite our guarded promises yesterday, there’s more bad news for Carlos Ghosn, the Renault executive embroiled in a legal saga, and still in jail, in Japan. And the European plane-maker Airbus, under the cosh of American anti-fraud investigators, faces possible fines running into the billions, with shares plunging nearly 6 percent in response.
I’m starting to feel sorry for Carlos Ghosn. Yesterday, a Japanese court refused the Tokyo prosecutor’s demand to keep the French super-boss behind bars for another ten days on the original accusations that Ghosn had knowingly under-reported his personal income by about 70 million euros over a period of seven years. The prosecutor appealed against that decision, only to have the appeal rejected.
The prison doors looked like they were opening for Carlos, who could have expected to be freed this morning under strict bail conditions.
Not so fast. Brandishing a bundle of new charges like a bulldog with a bellyache, the prosecutor blind-sided poor old Carlos with fresh allegations. That means the man will face at least 48 hours of questioning, with the possibility of two ten-day extensions of his custody while this new case is investigated.
The latest claims relate to allegations that Ghosn used 14.5 million euros of Nissan funds to cover losses which Ghosn’s personal finances suffered as a result of the 2008 financial crisis.
Le Monde says that a Nissan company did indeed transfer 14.7 million euros to the company which manages Carlos Ghosn’s personal fortune. But those transfers were dated between 2009 and 2014.
Japanese company law has a statute of limitations of seven years, which would let our man off the hook for most of the alleged payments.
Except that the Tokyo prosecutor ain’t reading from the same page. He says the seven-year limit doesn’t apply to Carlos because the businessman spent most of the past decade outside Japan.
You really get the feeling they’re out to broil the man’s backside. And then turn him over and keep cookin’.
Airbus faces serious US sanctions
Today’s French papers are also worried about Airbus, the Franco-German aircraft manufacturer in which the US Department of Justice has started to take an interest.
If you think the Tokyo prosecutor is a tough dude, the gentlemen at the Department of Justice would scare the Spanish Inquisition.
Airbus is no lightweight itself, with annual turnover of the order of 70 billion euros and 130,000 employees.
The problem is that the company is suspected of having made illegal use of undeclared intermediaries to secure certain prodigious foreign contracts, notably in Asia.
How wrong is what Airbus did?
Everybody in the air industry uses intermediaries. That’s accepted by the Organisation for Economic Cooperation and Development. You just have to name them and say how much they are being paid. The idea is to prevent the payment of bribes to people in high places who have no direct interest in the negotiations, but do have the power to make an eventual sale difficult.
The English Serious Fraud Office and the French National Financial Investigator are also on the case, which Airbus has already admitted is substantiated . . . the company did use a few paid third party mediators which it then forget to put in the book. So the US investigators are looking at a sitting duck, and they don’t even have to raise a magnifying glass.
What might happen next?
There are two possibilities, according to Le Monde.
The hopeful scenario is that the boys from Washington will put away their pliers, thumb-screws and gas burner, and join the French and British investigations which are already well advanced.
That would mean a fine of, probably, several billion euros for Airbus. But that they could handle.
The worst-case situation would be for the US suits to drag Airbus before an American criminal court. The European company would presumably lose, since they’ve already confessed to the central charge, and that could result in Airbus being excluded from the international public marketplace for a period of five years. That would leave the field open to the US and Chinese competition, Boeing and Comac, the Chinese Commercial Aircraft Corporation.
Airbus will thus be hoping that the Americans decide to triple-team them, rather than go head-to-head.
To that end the company has sacked dozens of members of its strategy and marketing division, reputed for their “imaginative” approach to difficult contracts. The idea is to show the Americans that the era of playing dirty has been left behind.
Whether that strategy, which has already worked in the case of a similar Department of Justice investigation involving Rolls-Royce, the English motor maker, remains to be seen.
Come on guys, be nice! It's Christmas!