Renault's Second in Command Steps Down after Spy Fiasco

Renault said on April 19 that its COO will be demoted while three others will be sacked in the wake of an industrial espionage fiasco at the French car-maker's electric vehicles program.

Patrick Pelata's offer to resign as chief operating officer was accepted but he will stay within the company, the firm said, adding that three executives from the group's security service will leave.

Three other top executives will be relieved of their duties while their fate is decided, the company said.

The announcement came after an extraordinary board meeting at Renault to study an audit committee's report on the scandal that saw three senior executives wrongfully accused of selling industrial secrets. An agreement was also reached with regard to compensating the executives falsely accused, Renault said.

The French government, which owns 15% of Renault, had said earlier on April 11 that the executives responsible for the embarrassing debacle should be sacked. Chief executive Carlos Ghosn went on prime-time television last month to apologize "personally and in Renault's name" for the affair, but said he had turned down an offer by Pelata to resign. Ghosn said he and Pelata would forgo their 2010 bonuses and that Renault would review its security procedures and take disciplinary measures against three implicated security employees.

The French car giant in January sacked Michel Balthazard, Bertrand Rochette, and Matthieu Tenenbaum after accusing them of accepting bribes in return for leaking secrets about Renault's electric vehicle program. The government branded the affair "economic warfare" and some pointed the finger at China, drawing an angry denial from Beijing.

But in March the firm apologized to the managers after it emerged police had 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. Investigators later questioned three Renault security managers and one was placed under formal investigation on suspicion of organized fraud.