Severe embarrassment for France over Renault spying debacle

FRANCE faced severe political embarrassment yesterday after carmaker Renault said the three top executives it sacked for industrial espionage in January might not be spies after all.

Finance Minister Christine Lagarde said the country’s second-biggest autos group must face “all the consequences” now that it thinks it might have been tricked. The scandal has shaken the company to its core, and at one point threatened to trigger a diplomatic spat with China.

Chief operating officer Patrick Pelata said he would “accept the consequences” of the debacle once the inquiry was complete, as he admitted there were reasons to doubt Renault had suffered industrial espionage. A source close to Renault said Pelata would probably have to leave, protecting chief executive Carlos Ghosn, who is also head of partner Nissan Motor. “It’s likely to be Patrick Pelata who forms the shield to protect the CEO,” the source said. “In this story, somebody has to throw themselves on the grenade.”

In January the carmaker lodged a legal complaint over suspicions of spying targeting its high-profile electric vehicle programme, amid fears that information had been passed to a foreign power.

The three sacked executives denied wrongdoing and are already taking legal action against their former employer, which when grouped with its partner Nissan ranks as the world’s third biggest carmaker.

“What counts today is getting to the truth and getting there quickly and if the suspicions were unfounded that justice be done, confidence restored and compensation paid,” Lagarde said.

The case has strained relations between the French government and Renault, as the 15% state-owned carmaker came under fire for not informing authorities of its suspicions soon enough and carrying out its own investigation first.

The affair also threatened a diplomatic spat when news of the sackings broke in January, after a government source said investigators were following up a possible link with China in initial probes before a formal inquiry was launched.

“One shouldn’t shoot without a sight or accuse without proof,” Lagarde said.

Industry Minister Eric Besson issued a statement distancing himself from any blame in the affair.

Besson had said on January 6 in connection with the probe that “the expression ‘economic warfare’, sometimes extreme, is appropriate.”

There was consternation in the company too. “Employees were already very surprised when they learned the names of the people involved,” said a source close to Renault. “Now they are having trouble understanding why there is such a U-turn, and why all the information that was given was not checked.”

Renault’s lawyer, Jean Reinhart, said the French intelligence service was still investigating the existence of bank accounts in Switzerland and Liechtenstein as part of the inquiry. The possible accounts have featured as a key part of the case against the three fired executives.

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