Former Nissan executive Kelly found guilty of helping Ghosn hide income

Greg Kelly, who was charged with underreporting the pay of his boss Carlos Ghosn, can travel home to the US after a Tokyo court gave a six-month suspended sentence

Former Nissan Motor executive Greg Kelly speaks during an interview in Tokyo. He was charged with underreporting the pay of his boss Carlos Ghosn but will be able to travel home to the US after a Tokyo court handed him a six-month suspended sentence. Kyodo News via AP
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Former Nissan Motor director Greg Kelly was found guilty of helping 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.

While Mr Kelly was acquitted of charges related to his actions between 2010 to 2016, he was found guilty of those relating to fiscal 2017, when discounted stock options were paid to Mr Ghosn, creating a difference in reported compensation of about 750 million yen ($6.5 million).

In a move that’s likely to be welcomed by the US, chief judge Kenji Shimotsu suspended the American’s sentence for three years in the ruling on Thursday, bringing to a close 17 months of trial proceedings that essentially served as a proxy for trying former Nissan leader Mr Ghosn. The two auto executives were arrested in Tokyo on the same day in November 2018 and charged with various financial misconduct offenses.

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

Nissan's former chairman Carlos Ghosn speaks during an interview in Lebanon. Greg Kelly a former executive at the Japanese car maker was charged with financial wrongdoing in under-reporting the compensation of Mr Ghosn, his former boss. AP

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

Nissan, also a defendant in the case, was ordered to pay a 200 million yen 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.

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

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

The two Americans who helped Mr Ghosn flee from Japan were convicted and are now serving time in Japan. Nissan’s former global general counsel said he was dismissed from the company after questioning the subsequent internal investigation into Mr Ghosn’s alleged conduct, the carmaker’s corporate governance and the conduct of others within the company.

Hari Nada, the Nissan senior vice president who was promoted by Mr Kelly and eventually took on parts of his job, was one of the key insiders who orchestrated Mr Ghosn and Mr Kelly’s downfall, reporting by Bloomberg News has shown. Prosecutors had implicated Mr Nada in the alleged financial misconduct, but granted him immunity in exchange for his co-operation.

It was Mr Nada who sent a private jet to bring Mr Kelly to Japan on the same day as Mr Ghosn, and they were arrested shortly after arrival.

Updated: March 03, 2022, 5:07 AM