Renault Chief Operating Officer Patrick Pelata resigned on Monday, taking the flak for the embarrassing fiasco that started as a probe into suspected industrial espionage case and ended as a fraud case.

France's Renault fired three executives in January, saying its high-profile electric vehicle project had been targeted by an international spy network, but later had to admit it was tricked, the men did nothing wrong and there was no spying.

Renault, which is 15 percent owned by the French state, accepted Pelata's resignation at an extraordinary board meeting on Monday to discuss the findings of an audit into the scandal, the carmaker said on Monday.

Morgan Stanley analyst Stuart Pearson said Pelata's departure was a loss to Renault, although investors would not be surprised, and the fact that Carlos Ghosn was staying on as Chief Executive would limit the impact on shares.

Ghosn is also Chief Executive of Renault's Japanese alliance partner Nissan Motor Co Ltd <7201.T>.

Pelata as COO did a solid job of guiding Renault through the last few years, Pearson said, adding that his departure could hamper the new strategic plan Renault unveiled in February.

It does call into question the execution of the strategic plan that has only just been announced - Pelata would have been a key architect of that. It's not immediately obvious who could replace him.

Renault shares closed down 2.2 percent before Renault confirmed Pelata's resignation, although it said Pelata would be given another unspecified role within the Renault-Nissan alliance.

A number of other senior executives would also leave the company, or be suspended from their current roles pending discussions about their future, Renault said.

SERIOUS DYSFUNCTIONS

French Finance Minister Christine Lagarde earlier told France Inter radio that any procedural violations that were found would have to be punished. Rules must be respected, she said.

Industry Minister Eric Besson also told LCI television earlier that the audit pointed to serious dysfunctions within the company's management.

Pelata had long been seen as the likely candidate to take the fall for the debacle.

He tendered his resignation about a month ago, when Renault apologized to three executives it had wrongly fired over the espionage case in January and said it would compensate and offer to reinstate them.

Ghosn refused to accept his number two's departure at the time, saying he didn't want to add one crisis to another.

Instead, he and Pelata pledged to forgo their 2010 bonuses and profits from 2011 stock options.

Renault also said on Monday it had reached an agreement in principle with the three wrongly fired executives, without giving further details.

A source close to the company told Reuters that Ghosn and Pelata's bonus and stock option concessions should be enough to cover the compensation paid to the three men.

Pelata, who was Ghosn's right-hand man, holds engineering degrees from two of France's top engineering schools as well as a PhD in socio-economics.

He joined Renault in 1984 as a workshop manager at the Flins plant near Paris, and rose swiftly through the ranks, becoming a member of the Renault management committee in 1998.

In 1999, Pelata, a judo enthusiast who also has a pilot's license, went to work for Nissan in Tokyo.

Pelata met Ghosn at university, but their different styles belie their long history.

Pelata, with his sharp suits and rectangular-framed glasses, is soft spoken, while Ghosn's oratorical style shows he relishes the reputation as a car industry guru that he earned by transforming Nissan from a money-loser into a success story.

(Reporting by Gilles Guillaume, Dominique Vidalon, Marc Angrand, James Regan, Helen Massy-Beresford and Noelle Mennella; Writing by Helen Massy-Beresford; Editing by Christian Plumb, Jane Merriman and Mike Nesbit)

Morgan Stanley