Renault dysfunctional management style must change

April 11, 2011

, PARIS, Apr 11 – French ministers said Monday it was up to Renault to decide if its chief executive stays on after an industrial espionage scandal but that the carmaker\’s "dysfunctional" management style had to change.

Their comments came as the partly state-owned firm was about to hold an extraordinary board meeting later Monday to examine an audit committee\’s report on the scandal that centred on wrongful accusations of spying.

"The audit report shows that there were serious dysfunctions and that lessons must be learned," Industry Minister Eric Besson told LCI news channel, without providing details of the report that has not been made public.

The scandal "reveals a management system and a governance style that cannot continue," he said, adding that it was up to Renault\’s board to decide if chief executive Carlos Ghosn should resign.

Ghosn will present a reorganization project to the board during Monday\’s meeting, Besson said.

A report Sunday in French newspaper Journal Du Dimanche said Renault\’s chief operating officer Patrick Pelata, legal affairs chief Christian Husson and its human resources and security chiefs may resign after Monday\’s meeting.

Finance Minister Christine Lagarde also said that the report showed that the company\’s management style was "dysfunctional" and revealed the need both for a "revision of the governance rules and for sanctions."

Lagarde told France Inter radio she had instructed state representatives on the board to support the recommendations of the audit report. The French state owns 15 percent of the company.

The French car giant sacked three managers in January, saying publicly it had proof they had been selling secrets on the electric technology which is expected to change the car industry.

The French government branded the affair "economic warfare" and some pointed the finger at China, drawing an angry denial from Beijing.

But last month, the firm apologised to the managers after it emerged police found no trace of bank accounts the accused men were alleged to have held and that the source of the spying allegations may have been a fraudster.

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