#Espionage

The extraordinary board meeting at Renault has ended. The spy scandal most likely has also ended. CEO Carlos Ghosn remains firmly in charge. Below him, one of the largest revirements in the peacetime of a car company. This is what TTAC has developed from sources in Paris:

It appears that the Renault EV espionage case crazy train has rolled to a halt, as the FT reports that CEO Carlos Ghosn and his right-hand-man Patrick Pélata have apologized to the three executives they accused of spying. According to a Renault press release,

Mr Ghosn and Mr Pélata now plan to meet the executives, promising compensation for “serious prejudice” to their reputations and careers

And according to BusinessWeek, Mr Pélata will likely be offering his resignation today, as

Renault called an emergency board meeting for 4 p.m. local time that may lead to sanctions against managers involved in the case, two people familiar with the matter said. Prosecutors yesterday issued “organized fraud” charges against Dominique Gevrey, the security chief whose internal investigation led to the firing of upstream development chief Michel Balthazard and two other executives.

But, as AN [sub]’s James Treece puts it, Pélata likely won’t stay unemployed for long, as being fired for loyalty is almost a positive in the super-competitive world of high-level auto executives. The mystery now: did Mr Gevrey simply attempt to defraud Renault, or was he part of a coordinated effort to destabilize the French automaker? Gevrey won’t reveal the source of his information about espionage inside Renault, but we may yet learn more about this strange farce if he cracks under investigation.

[UPDATE via AN [sub]: Ghosn and Pélata plan to give up their 2010 bonuses and profits from 2011 stock options after they had to apologize publicly to the three men earlier on Monday, Renault said in a statement.]

The Renault spy farce has taken yet another, this time totally unexpected twist. Presumptive spy catchers at Renault are behind bars. Renault’s security managers Marc Tixador and Dominique Gevrey are being held for questioning at the offices of France’s DCRI domestic intelligence agency which is investigating the matter, a spokeswoman for the Paris prosecutor told Reuters.

The alleged Renault spy case is getting curiouser and curiouser. Renault is in full reverse. Renault CEO Patrick Pelata said information may have been leaked about the costs and economic model of the program, but all technical secrets are safe. “Not the smallest nugget of technical or strategic information on the innovation plan has filtered out of the enterprise.” So what, they are missing a spreadsheet?

We don’t know who gave which state secrets to whom at Renault. But now we know what everybody already suspected: “The Elysee has charged the DCRI (intelligence services) with an investigation. It is following a Chinese lead,” a French government source told Reuters.

If they find a smoking gun in China, then it’s war: Yesterday, France’s industry minister Eric Besson called the scandal “economic warfare.”

Reuters doesn’t know more, but found some highly suspicious activity:

France’s industry minister Eric Besson lashed out at those who may have attempted to steal EV secrets from the French automaker Renault using the language of international relations rather than economics. He tells RTL Radio [via Automotive News Europe [sub]]All I can tell you is that the matter seems serious, that it illustrates once again the risks our companies face in terms of industrial espionage, and economic intelligence, as we call it today. It is an overall risk for French industry. The expression ‘economic warfare’, sometimes extreme, is appropriate and this is something we should monitor in future.
To which ANE helpfully addsFrance 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.But who is behind the alleged “economic warfare”? China is the obvious scapegoat in internet speculation, but thus far there is no proven connection between Renault’s suspended executives and any foreign company or country. The highest-ranking of the suspended execs, Michel Balthazard, was born and educated in France, and has been at Renault since 1980. And, according to French media reports, this may have less to do with foreign attackers than in-house rivalries…

Xiang Dong “Mike” Yu, 49, of Beijing, pleaded guilty in federal court in Detroit to two counts of theft of trade secrets. He will be sentenced in February 23, 2011. He’s looking at anywhere between 5 and 6 years in the slammer. He will also have to pay a fine of $150,000. After serving his sentence, he will be deported from the United States. That’s a lenient sentence, only reached through a plea bargain.

In case you ever want to spy on your employer, here is what not to do: