Former Nissan exec Greg Kelly found guilty of underreporting Carlos Ghosn's pay

· The Japan Times
Greg Kelly, a former Nissan Motor Co. executive, arrives at the Tokyo District Court on Thursday. He was found guilty of helping ex-CEO Carlos Ghosn underreport his compensation. | POOL / VIA BLOOMBERG

Former Nissan Motor Co. director Greg Kelly has been found guilty of helping ex-CEO Carlos Ghosn underreport his compensation, with a Tokyo court giving him a six-month suspended sentence in a decision that draws a line under one of the most shocking corporate takedowns of the past decade.

In a move that’s likely to be welcomed by the U.S., chief Judge Kenji Shimotsu suspended the American’s sentence for three years in his ruling Thursday.

The ruling, seen as an effective defeat for prosecutors, paves the way for the American lawyer to return home from Japan after he was arrested in Tokyo in November 2018 on the same day as Ghosn.

The judge said Ghosn received both paid and unpaid compensation, and the grand total should have been reported. Kelly was acquitted of charges relating to Ghosn’s pay between fiscal 2010 and 2016, with Shimotsu saying he wasn’t aware of the unreported remuneration. However, the court found that in fiscal 2017 Kelly was aware that Ghosn’s total pay wasn’t reported. Ghosn that year received discounted stock options that created a difference in reported compensation of about ¥750 million.

The failure to report Ghosn’s total pay amounted to "false” reporting in Nissan’s financial statements, the judge said. The court also found that Ghosn and Toshiaki Onuma, who ran the secretarial office for Nissan’s executives and testified for the prosecution in return for immunity, were aware their actions amounted to false reporting and they conspired together to carry out their actions.

After the hearing, Kelly said he was "extremely surprised and shocked" by the verdict, which his lawyers said they would appeal. "I have consistently acted by prioritizing the best interests of Nissan, and I absolutely did not take part in illegal activities," Kelly said in a Japanese-language written statement.

"While the court gave a not-guilty verdict on the greater part of the allegations, I do not understand why it found me guilty for that one year," he said. "I am innocent of all charges."

Nissan, also a defendant in the case, was ordered to pay a ¥200 million fine by the three-judge panel at the Tokyo District Court. Lawyers for Nissan, which didn’t dispute the charge of financial misconduct, outlined the harm done to the company, both financially and to its reputation, and sought leniency.

Wearing a dark suit and red striped tie, Kelly sat quietly in his usual seat between his lawyers and took notes as the judge read details of his decision. His wife was seated nearby.

Kelly has been in Japan since his detention in 2018 and has been joined in Tokyo by his wife, who had to enroll in Japanese lessons to secure a visa to stay in the country.

The verdict means he should now be able to leave Japan for the first time in three years, which was welcomed by U.S. Ambassador to Japan Rahm Emanuel. "We are relieved that the legal process has concluded, and Mr. and Mrs. Kelly can return home," he said in a statement.

"While this has been a long three years for the Kelly family, this chapter has come to an end," Emanuel added, offering no comment on the guilty verdict itself.

Kelly, 65, was left alone to defend himself after Ghosn staged a spectacular escape from Japan at the end of 2019, making his way by private jet to Lebanon, where he now resides. Kelly, who formerly oversaw human resources and legal affairs at Nissan, has argued that there was no case against him because there wasn’t an agreement to pay Ghosn, as well as no requirement to disclose any such compensation. He also said that his former boss was never paid.

Prosecutors had sought a sentence of two years in prison, arguing that Kelly had a central role in helping Ghosn hide remuneration of more than ¥9 billion ($77.8 million). They argued that Kelly had a critical and essential role in coming up with measures to avoid disclosure of income and finding other ways to pay Ghosn.

Former Nissan Motor Co. Chairman Carlos Ghosn attends a news conference in Lebanon in September 2020. Some have viewed Greg Kelly as little more than a scapegoat in a case that centered around Ghosn. | AFP-JIJI

Kelly and his team of lawyers argued that the former director had no motive to hide any compensation for Ghosn and no knowledge of any plans to repay Ghosn for reduced income. Kelly testified in May of last year that he considered Ghosn a flight risk but looked only at legal ways to keep him at Nissan.

The arrests of Ghosn and Kelly triggered shock waves that reverberated through Nissan and its global carmaking alliance with Renault SA and Mitsubishi Motors Corp. Nissan’s profits slumped to a decade low, and score-settling fueled an exodus of other top executives. The turmoil has left the company in a weaker position as it seeks to navigate an industry that’s being disrupted by a shift toward new-energy vehicles and self-driving cars.

Some have viewed Kelly as little more than a scapegoat in a case that centered around Ghosn.

"Kelly was arrested with the expectation that he could be 'turned' to testify against Ghosn," said Stephen Givens, a business lawyer in Tokyo who has followed the case. "When Ghosn escaped to Beirut, the prosecutors were left with a weak, free-standing case against Kelly," he said.

For his part, Ghosn, who faced several additional financial misconduct charges, has insisted he and Kelly are innocent and that Japanese prosecutors worked to help Nissan push him out in a "palace coup."

"If he's guilty, many Japanese should also be in prison," he said from Beirut during an online news conference in December.

There has been other fallout from the case, with two Americans who helped Ghosn flee the country extradited from the U.S. to Japan and sentenced last year to between 20 months and two years in prison.

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