Secret Papers on Ghosn Pay to Be Aired at Trial of Greg Kelly
Internal Nissan investigation found spreadsheets outlining Carlos Ghosn’s annual ‘paid remuneration’ and ‘postponed remuneration’
TOKYO—The trial to settle whether Carlos Ghosn illegally hid millions of dollars in compensation starts in Tokyo next month—but Mr. Ghosn won’t be there to defend himself. Instead, the man in the dock will be an American executive accused of helping him.
The trial’s opening day, Sept. 15, is also the 64th birthday of Greg Kelly, who long worked by Mr. Ghosn’s side at Nissan Motor Co. NSANY 1.01% Mr. Kelly is stuck living in a small Tokyo apartment awaiting trial, while Mr. Ghosn, having escaped to Lebanon in a box smuggled aboard a private jet, enjoys his freedom.
It is nearly two years since Mr. Kelly was arrested after arriving in Japan from his home in Tennessee for what he thought was a Nissan meeting, and it is likely to take at least an additional year until a verdict.
Mr. Kelly said that, given his age, he wants to finish the process as quickly as possible. “I just want to get to my family,” he said in an interview. He has declared his innocence and accused prosecutors of dragging out the case.
The sides have agreed on a tentative schedule that calls for a trial of nearly 10 months, the first three months to be taken up with testimony by a single person, an executive in Nissan’s secretariat named Toshiaki Ohnuma.
An internal Nissan investigation found spreadsheets maintained by Mr. Ohnuma and updated over several years that outlined Mr. Ghosn’s “fixed remuneration” for each year, according to people familiar with the investigation. The spreadsheets divided that amount into two categories, “paid remuneration” and “postponed remuneration.” Mr. Ghosn has said that he kept records of his hypothetical worth, but that Nissan had no obligation to pay him additional money.
Japanese prosecutors argue that Nissan should have reported the full amount, including what the spreadsheets called postponed remuneration, in annual reports filed to regulators. By failing to do so, they allege, Nissan hid a total of ¥9.2 billion ($87 million) in Mr. Ghosn’s compensation over eight years of company filings. The company itself as well as Messrs. Ghosn and Kelly have been criminally charged with violating a section of Japan’s security law involving disclosure.
Of the three defendants, only Mr. Kelly will be in the courtroom arguing his innocence. At the time of his arrest, he held the title of representative director at Nissan, which in Japan means a top corporate officer with the authority to enter into contracts on behalf of the company. He faces up to 10 years in prison if convicted.
Japan has no extradition treaty with Lebanon and no way of getting back Mr. Ghosn, the former Nissan chief executive once hailed as a hero in Japan for rescuing the company. Nissan plans to plead guilty, according to people at the company familiar with its plans. A Nissan spokeswoman declined to comment.
Ghosn helpers facing prison time also include Michael and Peter Taylor, a father-and-son team who aided his escape from Japan in December. They were arrested in Massachusetts in May and are fighting extradition to Japan, saying what they did wasn’t a crime.
Japanese securities law requires companies to disclose deferred compensation in the year that it “becomes certain.” The Kelly defense’s bottom line is simple: Nothing was certain.
Mr. Kelly has said he was aware Mr. Ghosn took a pay cut in 2010, when Japan began requiring the disclosure of individual executive salaries above about $1 million, to avoid a public backlash. Mr. Kelly doesn’t dispute that he discussed how the Nissan boss might legally get additional compensation after retirement.
But Mr. Kelly’s defense will argue that he never saw the spreadsheets in Mr. Ohnuma’s files at the Nissan secretariat, according to his Japanese lawyer, Yoichi Kitamura. According to a summary of the Nissan investigation, Mr. Ohnuma said he believed Mr. Kelly knew of the amounts in the spreadsheets, but the investigation found no written evidence to back that up.
Mr. Kelly’s lawyers say the discussions about payments to Mr. Ghosn had nothing to do with deferred compensation but instead involved the pay Mr. Ghosn might get for keeping an affiliation with Nissan after retiring as chairman.
“When Greg Kelly was arrested, he had notes with him regarding a new proposal to pay Ghosn for future service,” said Mr. Kelly’s U.S. lawyer, James Wareham. “There was no deal prior to November 2018 involving Greg Kelly to pay Carlos Ghosn bupkis.”
In the interview, Mr. Kelly said, “I didn’t do anything wrong.”
Mr. Ghosn ultimately never got any of the money that forms the heart of the criminal charges. He has said any discussions about postponed pay were hypothetical and didn’t have to be reported. Mr. Ohnuma didn’t respond to a request for comment made through Nissan and couldn’t be separately reached.
Mr. Kelly is the first person to face prosecution over Japan’s disclosure law, defense lawyers said.
Last year, Mr. Kelly’s lawyers sought copies of Nissan documents contained in more than 80 boxes held by prosecutors. So far, they have received the contents of eight, and the defense lawyers say they have been told the rest won’t arrive until shortly before the trial begins.
“This conduct is outrageous. It’s prosecutorial misconduct,” said Mr. Wareham, the Kelly lawyer. He said prosecutors told him they needed many months to copy all the documents, but he said companies in the U.S. told him they could have done the job in a matter of days. A spokeswoman for the Tokyo prosecutors’ office declined to comment.
Mr. Kelly’s lawyers said they didn’t plan to seek to delay the start of the trial, because of Mr. Kelly’s eagerness to finish, and would instead examine the boxes while the trial is ongoing. The judge has said he will permit the defense to update the exhibit list during the trial if it finds anything useful to their defense in the boxes.
Mr. Kelly, freed on bail in December 2018 but barred from leaving the country, lives in central Tokyo with his wife, Dee, who obtained a student visa to stay in Japan until the end of the trial.
Mr. Kelly said he believed he could prove his innocence at trial, but even a not-guilty verdict wouldn’t feel much like vindication because of the time it would have taken.
“I’ve already lost,” he said. He pointed to photos of family hung on the wall, including of a baby grandson whom he has never met.
Over the past two years, Mr. Kelly has spent much of his time in his Japanese lawyer’s office poring over an earlier batch of documents handed over by prosecutors. When those documents were scanned, they took up 11 terabytes, said his lawyer, Mr. Wareham.
Now another 80 boxes are coming. “What’s next?” said Dee Kelly. “Do they have something else to drop on us?”