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Ex-Nissan exec Kelly found guilty of underreporting Ghosn pay

TOKYO – Former Nissan Motor Co. executive Greg Kelly and the Japanese automaker were found guilty in Tokyo on Thursday for allowing former CEO Carlos Ghosn to underreport his remuneration.


The Tokyo District Court sentenced the former Nissan representative director to six months in prison, suspended for three years, for falsifying financial documents for fiscal 2017, while acquitting the 65-year-old on most of the other counts.


The court ordered Japan’s third-largest automaker to pay fines of 200 million yen, the same amount that prosecutors had demanded, for submitting inaccurate financial statements for fiscal 2011 through 2017.


Kelly was accused of conspiring with Ghosn in understating his remuneration by around 9 billion yen ($78 million) over eight years through March 2018, violating Japan’s financial instruments and exchange law.


Prosecutors had sought 2 years of imprisonment for Kelly, a U.S. citizen who was Ghosn’s right-hand man.


The court recognized the existence of “unpaid remuneration” for Ghosn, judging it must have been included in the automaker’s financial statements.


The ruling was the first judicial decision on the financial scandal that started to unfold when Ghosn, 67, and Kelly were arrested in Japan in November 2018.


The trial was held in the absence of Ghosn — one-time corporate superstar — after he jumped bail and fled to Lebanon from Tokyo in late 2019. The Middle Eastern nation has no extradition treaty with Japan.


Kelly became the only company executive to face the trial after his former colleagues involved in the scandal struck plea bargains with prosecutors and were not indicted.


As for testimonies made by Toshiaki Onuma, the former head of Nissan’s secretary office, who reached a plea bargain with prosecutors, the court denied the credibility of some of his claims.


“They should be studied cautiously as they are with risks of being in line with the intention of prosecutors,” it said.


The ruling also said that Ghosn conspired with Onuma to falsify financial statements for fiscal 2010 through 2017.


In the trial, which began in September 2020, prosecutors argued that Kelly played a role in coming up with a scheme to compensate Ghosn with deferred payments in addition to his regular pay, an effort to make his salary look smaller than it was to avoid a backlash.


They claimed that a rule introduced in 2010 requiring top executives to disclose annual pay exceeding 100 million yen prompted Ghosn to order his subordinates to seek ways to pay him without making it public.


Kelly has maintained his innocence, saying he just sought legal ways to retain Ghosn even after his retirement so he could continue to provide services for Nissan and that there was no agreement for the alleged deferred payments.


Kelly, who has been staying in Japan with his wife, said in a recent interview with Kyodo News that his life on bail in Japan was “stressful and challenging” and they could not wait to go back to the United States after the ruling.

“We look forward, as we say in English, to make up for lost time with the people we cherish,” he said in the interview.


U.S. Ambassador to Japan Rahm Emanuel released a statement following the ruling, saying, “We are relieved that the legal process has concluded, and Mr. and Mrs. Kelly can return home.”


Ghosn has claimed his arrest was due to a plot by some Nissan executives who wanted to oust him to prevent him from pursuing a merger with alliance partner and largest shareholder Renault SA of France as it would hurt the Japanese company’s independence.


Two Americans who helped Ghosn escape by hiding him in a box and flying him aboard a private jet to Turkey received prison terms of two years and 20 months, respectively, after being found guilty last year in a trial in Japan.

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