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Renault says spy scandal put assets at risk

A scandal over suspected industrial espionage put Renault's assets at risk and the company suspended three executives.

Reuters, Friday 7 Jan 2011
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A scandal over suspected industrial espionage at Renault deepened on Thursday as the French carmaker warned company assets were at risk and France's industry minister called the matter serious.

Renault suspended three executives on Monday, including a member of its management committee, after an "ethical alert" was sent to the group's compliance committee in August.

Renault's general counsel and compliance officer said on Thursday the matter concerned people in "extremely strategic" positions.

"The investigation, which lasted several months, enabled us to identify a body of converging evidence demonstrating that three Group employees have committed misconduct that infringes Renault's ethics, consciously and deliberately endangering the company's assets," Christian Husson, General Counsel and Compliance Officer of Renault said in a statement.

"We are examining all legal options, which will inevitably result in legal action, but at this point, Renault will make no further comments," he added.

A source told Reuters on Wednesday the company is worried its flagship electric vehicle program, in which Renault with its partner Nissan is investing 4 billion euros ($5.3 billion), might be threatened.

Renault's new strategic plan, due to be unveiled in February, is expected to focus strongly on electric vehicles, as well as synergies with Nissan and emerging market growth.

French industry minister Eric Besson told journalists he believed the matter was related to electric vehicles, adding he had taken early steps to step up protection.

"I have asked the economy ministry administration ... to strengthen the requirements for protection of companies that ask for state aid and financial contributions for innovation," he said.

Besson earlier told RTL radio the matter was serious: "It illustrates once again the risks our companies face in terms of industrial espionage and economic intelligence, as we call it today." The French state owns a 15 percent stake in Renault.

INVESTIGATION CONTINUES

Renault said it would protect the identities of the three suspended to comply with labor laws. French media named three individuals, none of whom has a high profile among investors or in the media. They could not be contacted by Reuters.

They could be dismissed soon if they are found to have leaked information, two sources told Reuters.

"The internal investigation is continuing, but a decision should be made in the coming days," said one source close to the company. "In nine out of 10 cases, suspension (without pay) of this kind, is followed by a dismissal," he said.

A second source close to the company said: "Suspension of this kind (without pay) never lasts very long. I think unfortunately in the days to come, next week, action will be taken, if action is to be taken."

He added: "For the moment they have been accused, they have not been judged, they are suspected."

One executive in the corporate intelligence-gathering industry, who spoke on condition of anonymity, said: "It's really difficult to say it's a case of corporate espionage ... It can be carelessness." He cited a hypothetical example of an enthusiastic employee giving away too much information about his job on an online forum.

While information has always been passed and leaked, inadvertently or on purpose, the rise of the Internet and social media means corporate spies or careless employees are now more likely to be found out, he added.

Renault's competitor PSA Peugeot Citroen is "extremely vigilant" about the risks of industrial espionage, Chief Executive Philippe Varin said. Varin said the group was renewing its own ethics code, but this was not in response to Renault's suspensions.

Industry Minister Besson said: "It is an overall risk for French industry. The expression 'economic warfare', sometimes extreme, is appropriate here and this is something we should monitor in future."

France has for some years been worried about potential attacks on its industrial secrets and even has a "school of economic warfare" aimed at rooting out economic subversion.

Since the 1990s, governments have also promoted the art of "economic intelligence" as a legal means of anticipating threats or stealing a march on trade rivals.

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