Renault spy case audit reveals flaws

The board of French carmaker Renault will review an audit on a debunked industrial espionage affair on Monday that reveals serious dysfunctions within the company, French Industry Minister Eric Besson said.

The French state, which owns 15 per cent of Renault, has been embarrassed by the discredited claims that three Renault executives were spying on the carmaker, possibly for a foreign government.

"(The audit) clearly points to serious dysfunctions within the company's management," Besson said, referring to an external audit.

Besson would not identify those responsible for the dysfunctions, adding that they were named in the audit report.

"The audit report says there were serious dysfunctions and that we must draw lessons from it," he added.

Besson's comments come after the Journal Du Dimanche said Chief Operating Officer Patrick Pelata, legal affairs chief Christian Husson, human resources chief Jean-Yves Coudriou and security chief Remi Pagnie might resign at the board meeting.

By 0710 GMT, Renault shares were down 2.7 per cent at €38.82.

"If the board did indeed demand Pelata's resignation, that could be a bad sign for the group," CM-CIC Securities analyst Florent Couvreur said, adding that this would undermine Chief Executive Carlos Ghosn.

Renault has confirmed it would hold an extraordinary board meeting later on Monday related to the debunked spy affair but has declined to comment on the Journal du Dimanche report.

French Finance Minister Christine Lagarde told France Inter radio that the government instructed its two representatives on Renault's board to back the recommendations of the board.

"Rules must be respected. If there were dysfunctions, sanctions must be taken," she said. "It's the board which will do that this afternoon," she said.

A Renault spokeswoman said that Renault may communicate after the board meeting.

Renault, whose alliance partner is Japan's Nissan Motor, fired three executives in January on suspicion of industrial espionage. They denied any wrongdoing from the start and began legal action against the carmaker.

Renault has since apologised to the three falsely accused executives and offered to reinstate and compensate them.