Ghosn was target of Japan case against Greg Kelly

TOKYO — Former Nissan boss Carlos Ghosn never took the stand or had a lawyer in the room in the Tokyo criminal trial of his former lieutenant, human resources chief Greg Kelly.

In fact, Ghosn was 5,000 miles away from Japan, and last week's verdict technically wasn't even about him.

But Ghosn was nonetheless the center of attention of the trial, where a Tokyo judge last week convicted Kelly of helping Ghosn skirt the law by hiding deferred compensation.

Chief judge Kenji Shimotsu said it plainly in his ruling: "This case is about Ghosn."

In handing Kelly a six-month suspended sentence and fining Nissan 200 million yen ($1.73 million), the judge seemed mostly intent on issuing a proxy judgment on Ghosn in absentia.

"This case was motivated by Ghosn's personal greed," Shimotsu declared, blasting the indicted former high-flying chairman as "selfish and arrogant" and his tenure at the helm of Nissan a "dictatorship."

Ghosn, who led Nissan Motor Co. as chairman and also created and ran the Renault-Nissan-Mitsubishi alliance, jumped bail in Japan and fled to Lebanon to evade what he called an unfair justice system. After the Kelly verdict, he wasted little time in firing back.

In a video call with Automotive News, Ghosn said the judge's comments only highlighted the baked-in bias of the Japanese legal system.

"I'm supposed to be in front of a judge, not another prosecutor," Ghosn said. "This is a face-saving verdict," he said of Kelly's conviction, "but nevertheless predictable and obvious if you find yourself in the hostage justice system in Japan. The only uncertainty is what kind of excuse you will find to make him appear guilty.

"In Japan, when the prosecutor puts his eyes on you, you're guilty. And then you have to prove your innocence," Ghosn said, taking issue with Japan's vaunted 99 percent conviction rate.

In handing down his long-awaited ruling last week, more than three years after Ghosn's arrest in 2018, the judge also took aim at Nissan itself. Shimotsu blamed the automaker's "dysfunctional corporate governance" for enabling the misconduct to begin, saying "this is nothing more than the consequences of its own deeds."

Defendant Kelly, a former Nissan director, was relegated to a relative footnote in Shimotsu's concluding comments.

In fact, Kelly's conviction was for his activity during only one of the eight fiscal years under scrutiny by prosecutors. The court actually ruled Kelly not guilty on all counts in the remaining seven years, deciding there was no hard evidence linking him to alleged misconduct. But, Shimotsu maintained, that's not to say there weren't crimes those other years.

The judge repeatedly blasted Ghosn for conspiring to conceal deferred compensation with another Nissan official, the general manager of the Secretariat office that handles the automaker's executive pay. Prosecutors claimed that over the eight years in question, Ghosn instructed that official, Toshiaki Ohnuma, to set aside about half of the chairman's remuneration and not disclose it in Nissan's financial filings.

The plan, prosecutors claimed, was to sidestep reporting rules and quietly comp Ghosn the shortfall at a later date — an alleged sum totaling about ¥9 billion ($78 million) over eight years.

Ohnuma was told to keep it a "tightly guarded secret" because Ghosn feared that if the true scale of his generous pay were revealed publicly, he would face a backlash in France, where he also chaired Renault.

In outlining this scheme, Shimotsu did not hesitate to declare Ghosn's culpability. "There exists unpaid remuneration for Ghosn that should have been disclosed," he said.

"This crime is one of the most malicious of its kind," he continued. "The case not only shocked the business community but society at large." And because of the false information disclosed in Nissan's securities reports, he said, "there was a high risk of investors making wrong business decisions."

Kelly, 65, was the only defendant hauled before a judge in the lengthy trial, which began in September 2020. Kelly was arrested on the same day as Ghosn and has been prohibited from leaving Japan ever since by the terms of his $610,000 bail.

By contrast, Ghosn, who turns 68 this week, stunned the world in December 2019 when he escaped to his ancestral homeland of Lebanon, where he is still living but grounded from international travel by an Interpol red notice.

Ghosn's made-for-Hollywood escape entailed racing cross-country on Japan's bullet train, being packed into an oversized musical equipment trunk and then spirited onto a private jet by a team of operatives led by a former U.S. Army Green Beret.

Kelly was cleared on most counts because the judge found that Ohnuma, the key witness linking Kelly to the alleged postponed compensation, was not reliable. This was partly because Ohnuma, who kept records on Ghosn's pay, had taken a plea bargain with prosecutors to win immunity.

"There is considerable room for him to make statements that conform to the prosecutors' wishes," Shimotsu said of Ohnuma, calling his testimony "not credible."

Ghosn last week said he finds it ironic that the judge seemed to believe Ohnuma on Ghosn's conduct: "How can he say I concocted all this with Ohnuma, even though he raised suspicion about Ohnuma saying he is aligned too much with the prosecutor?"

"How can you say from one side that he plotted with me, and from the other side that he aligned with the prosecutor?" Ghosn asked.

Kelly managed to duck a worst-case scenario by being tagged with only one count and given a six-month prison sentence suspended for three years. That means he can stay out of jail, pending good behavior over the three-year period. But under the suspended sentence, Kelly should be able to return to the U.S. and be reunited with family, his lawyers said.

The U.S. Embassy in Japan even issued a press release welcoming the verdict, a rare move in an individual case.

But afterward, Kelly said he was still "very surprised and shocked" by the judgment. His lawyers said Kelly was "completely innocent" and would appeal the decision for full vindication.

"I had consistently worked with the best interests of Nissan in mind, and in no case was I involved in any illegal act," Kelly said in a statement. "I am innocent on all counts."

Ghosn said the fine against Nissan was a slap on the wrist for the company, compared with the criminal penalties wielded against himself and Kelly. Still, he was relieved for Kelly and his family.

"I pray he will be able to overcome this huge emotional, psychological, financial impact inflicted on him by the hostage justice system of Japan," he said. "He's obviously an innocent man."

Naoto Okamura contributed to this report.