Greg Kelly, Nissan’s former human resources (HR) chief, has been found guilty of helping to under-report the pay of Carlos Ghosn, then the automaker’s CEO.
He was given a six-month sentence that has been suspended for three years, meaning he is free to leave Japan and return to the US in the near future.
Kelly’s case was overseen by a panel of three judges. According to Reuters, chief judge Kenji Shimotsu said, “the court finds the existence of unpaid remuneration”, the non-disclosure of which amounted to “false” reporting.
Prosecutors alleged Kelly, Toshiaki Ohnuma – the Nissan employee in charge of Ghosn’s renumeration package – and Ghosn conspired to hide ¥9.3 billion ($111 million) of the CEO’s pay between 2010 and 2018.
This money was to be paid to Ghosn for consulting services after he retired from the automaker, but details about this plan were never included in Nissan’s official accounts.
Kelly admitted Ghosn agreed to have his Nissan pay cut in half when new financial disclosure rules came into effect in Japan in 2010.
This scheme was apparently agreed upon because Ghosn feared criticism he would receive back in France if his true salary was known. Kelly said Ghosn’s salary was inflated in this matter to ensure he didn’t take a job at a rival automaker.
At the time Ghosn was head of the Renault-Nissan Alliance, and served as the CEO of both firms.
Greg Kelly
It should be noted, both Kelly and Ghosn settled a case with the US Securities and Exchange Commission (SEC) over this matter.
Ghosn paid a US$1 million ($1.4 million) fine and was barred from being a director at any public company for ten years. Kelly settled for a US$100,000 fine, and was banned from holding a board role for five years. He was also suspended from appearing before the SEC as a lawyer for five years.
As part of their deals with the SEC, neither Kelly or Ghosn were forced to admit guilt.
Lawyers for the former HR boss argued in court Ghosn’s post-retirement consultant deal was never finalised, so therefore there was nothing to disclose in Nissan’s financial statements.
The panel said it could only find evidence that Kelly was guilty for one of eight years of false reporting. His six month suspended sentence was considerably less than the two years prosecutors had asked for, and the 15 years permitted under law.
While Shimotsu (via Automotive News) said Kelly’s “responsibility cannot be underestimated”, he cited a number of reasons for handing out a shorter suspended sentence.
Kelly, he said, did not seek to enrich himself, was only guilty for one year of under-reporting, and played a smaller role in the affair than Ohnuma.
Ohnuma struck a plea deal with prosecutors to avoid charges. This, Shimotsu argued, made his testimony “not credible” as he had incentive to “make statements that conform to the prosecutors’ wishes”.
As part of today’s ruling Nissan was fined ¥200 million ($2.4 million) for filing falsified financial statements. Shimotsu blamed the company for having a poor corporate governance system, which allowed Ghosn to hide the true size of his pay packet.
Kelly’s lawyers said their client was “completely innocent” and plan to appeal the verdict. Prosecutors are also said to be planning an appeal.
Carlos Ghosn
“He’s obviously an innocent man”, Ghosn told Automotive News in a call from his residence in Lebanon.
“I pray that he will be able to overcome this huge emotional, psychological, financial impact inflicted on him by the hostage justice system of Japan.”
Both Kelly and Carlos Ghosn were dramatically arrested in November 2018 after arriving in Tokyo for a Nissan board meeting. Ghosn was charged with under-reporting his pay, temporarily transferring investment losses to Nissan, and a shady deal with a Middle Eastern importer that reportedly netted him US$5 million ($6.9 million).
Ghosn fled home detention at the end of 2019 and was smuggled aboard a private jet bound for Turkey in an instrument case. He then transferred to a plane headed for Beirut, Lebanon, where he currently resides.
Born in Brazil to Lebanese parents, Ghosn holds citizenship in both of these countries, as well as France, where studied and began is automotive career.
As there’s no extradition treaty between Lebanon and Japan, it’s likely Ghosn will remain at large but trapped within his ancestral homeland.
Kelly spent most of the last four years free on bail in Japan, living with his wife in a small apartment overlooking the Imperial Palace.
