Renault CEO under pressure after lieutenant quits

Reuters

By Helen Massy-Beresford and Gilles Guillaume

PARIS (Reuters) - The departure of Renault's number two executive over a spying-turned-fraud debacle heaps pressure on CEO Carlos Ghosn at a crucial moment in the carmaker's latest strategic initiative.

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Chief Operating Officer (COO) Patrick Pelata resigned on Monday, taking the flak for an embarrassing fiasco in which Renault fired three employees suspected of leaking information on electric vehicles who turned out to have done nothing wrong.

Pelata offered to resign in March, when Renault admitted it had been tricked, but Ghosen refused to accept.

The management turnabout highlights the scale of government involvement in decision-making at Renault, which is 15-percent state-owned, and raises doubts about how it is run.

By 1221 GMT Renault shares were down 3.3 percent to 37.72 euros, the second-biggest faller on the CAC-40 <.FCHI> index.

The French carmaker's long-awaited new six-year strategic plan, revealed in February, disappointed investors who were hoping for concrete steps to revamp the financial structure of the 12-year alliance and squeeze more value from it.

FILLING THE VOID

The implementation of the plan -- which prioritizes international growth in a bid to boost profitability -- will be key if Ghosn wants to win kudos from shareholders.

Renault is also taking a big gamble as it readies the launch of the first of the electric cars it hopes will make it a mass-market leader in the burgeoning technology later this year.

Ghosn will now face those challenges without his key ally.

And while Pelata will not leave immediately, it is not immediately obvious who will replace him.

Pelata will stay with the Renault-Nissan alliance.

"The Ghosn-Pelata double-act has worked well until now ... so it could be difficult to quickly find a replacement, which is a real problem," CM-CIC analysts wrote in a research note.

Ghosn and Pelata met at university and had perfected their complementary roles over many years of cooperation, with Ghosn handling strategy and Pelata implementation.

"Without Pelata at the helm, this plan could be disrupted, even delayed by six months to a year," wrote the CM-CIC analysts.

The clumsy handling of the affair and its consequences also raises questions about Renault's management.

"This decision (Pelata's exit) seems symptomatic of the group's management methods and of the involvement of the state in the group's internal affairs," the CM-CIC analysts wrote.

"On the other hand, we wanted there to be sanctions. There were investigations, the chain of responsibility was determined, measures have been taken and we take note of them," he added. (Editing by David Cowell and Erica Billingham)

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