TOKYO: A Tokyo court gave a suspended sentence to Greg Kelly, a former American executive at Nissan Motor charged with underreporting his boss Carlos Ghosn's pay.
The verdict announced on Thursday of a 6-month sentence suspended for three years will allow Kelly to return to the US even if prosecutors appeal. Kelly was arrested in November 2018 at the same time as Ghosn, a former Nissan chairman and head of the Renault-Nissan-Mitsubishi alliance.
Both have insisted they are innocent, arguing that the money at the center of the charges was never paid or decided on.
The trial at Tokyo District Court began in September 2020, with Ghosn absent after he jumped bail in late 2019, hiding in a box for music instruments on a private jet. He fled to Lebanon, which has no extradition treaty with Japan, and has been writing books and making movies about his experiences.
Chief judge Kenji Shimotsu slammed Ghosn, saying the compensation arrangement was "conducted solely out of his personal greed". "There is absolutely no room for extenuating circumstances in his motive," he said.
In trying to undercut the intent of disclosure rules, it was one of the "most malicious cases". Prosecutors had asked that Kelly be sentenced to two years in prison. They alleged Ghosn, Kelly and Nissan Motor Co. underreported Ghosn's compensation by 9 billion yen (USD 78 million) in filings over eight years through 2018.
The court found Kelly not guilty of some counts and guilty of charges for one year only, the 2017 fiscal year. Kelly and his legal team, headed by Yoichi Kitamura, had argued during the trial that Kelly was searching for legal ways to pay Ghosn to stop him from leaving for a competitor.
Shimotsu said in the ruling that some financial reports contained false information, but that the testimony from a key witness, a Nissan executive who reported directly to Ghosn, was the most important but was not entirely reliable because he had a plea bargain. "His credibility deserves special attention. There was a danger that as an accomplice he would seek to shift responsibility to Ghosn," Shimotsu said.
He said that the court found that Ghosn and Ohnuma were aware they were reporting false information and "conspired together" to do so. During the trial, the prosecution presented as evidence various documents calculating Ghosn's so-called "deferred compensation".
Nissan pled guilty and paid a 200 million yen (USD 1.7 million) fine. Ghosn was a superstar at Nissan, which he headed for nearly 20 years. French alliance partner Renault SA sent him to lead a turnaround of its near-bankrupt alliance partner.
His downfall was sudden, with Nissan officials who had been close to him accusing him of amassing power for personal gain and planning a merger of Nissan with Renault. Renault owns 43 per cent of Nissan, while Nissan, which makes the Leaf electric car and Infiniti luxury models, owns 15 per cent of Renault.
Nissan, based in the port city of Yokohama, owns 34 per cent of smaller Japanese automaker Tokyo-based Mitsubishi Motor. The French government owns 15 per cent of Renault. Japanese executives tend to be paid far less than their American counterparts, an important factor in the trial.
Disclosure of high executive pay became required in Japan in 2010, and what was disclosed for Ghosn, at about USD 9.5 million even without the deferred compensation, had raised eyebrows.
Kelly has been out on bail and living with his wife in a Tokyo apartment. US Ambassador to Japan Rahm Emanuel recently expressed support for Kelly, saying he hoped Kelly could soon be reunited with his grandchildren in the US.
"I am now here as a representative of the United States, and Mr. Kelly is a citizen of the United States, and this comes with the obligations as the ambassador of the United States to advocate on his behalf," Emanuel said.
Kelly was hired by Nissan's US division in 1988, more than a decade before Ghosn arrived at Nissan, and became a representative director in 2012, the first American on Nissan's board. He worked mostly in legal counsel and human resources.
Separately, two Americans extradited from the US to Japan on charges of smuggling Ghosn out of Japan were found guilty in July 2021. Michael Taylor was sentenced to two years in prison, while his son Peter was sentenced to one year and eight months.
The conviction rate in Japanese criminal trials exceeds 99 per cent.