Former Nissan Executive Pleads Not Guilty, Defends Ghosn

Matt Posky
by Matt Posky

Greg Kelly, the American businessman and former Nissan board member that was arrested with ex-chairman Carlos Ghosn almost two years ago, has pleaded not guilty to the financial misconduct charges leveled against him in Japan. While he was supposed to stand trial with Mr. Ghosn, Carlos escaped his captors with the help of at least one U.S. Army Special Forces veteran and a lot of careful planning at the end of 2019. Kelly is accused of helping the former chairman hide millions of dollars in deferred compensation.

During the trial, he defended Ghosn by saying he was an outstanding automotive executive who helped save Nissan in its darkest hour. He also hinted that the firm should have done everything in its power to retain him, adding that his role was to find legal ways of keeping Ghosn from jumping ship to a rival company. While that included financial incentives, Kelly asserted during the trial that Nissan’s attorneys were always consulted before decisions were made and that no illegal actions were taken. “I informed Mr. Ghosn what could be done legally and what could not be done legally,” he told the court. “I believe the evidence will show that I did not violate the [financial] disclosure regulations.”

Meanwhile, the prosecution is alleging that Kelly came up with ways to hide payments after Japan introduced new compensation rules in 2010 that forced high-earning executives to report their pay. But they’re convinced that Ghosn had already been paid too much before the laws came into effect and was forced to hide the money or face stiff penalties.

According to Automotive News, Kelly said this isn’t what happened. He claims that Ghosn reduced his pay in response to the updated rules but that Nissan had gotten worried they might lose him as his pay was no longer commensurate with other high-ranking automotive executives. As a result, Kelly said he worked with Nissan to find other ways of keeping Carlos from leaving the company and only acted within the confines of the law.

“This was all in the best interests of Nissan,” he said. “I was not involved in a criminal conspiracy.”

What actually happened remains unclear. We know that Ghosn had been criticized for years for pulling down one of the largest salaries of anybody working in Japan. Hiding tens of millions of dollars in compensation kind of makes sense. Ghosn was also viewed as the savior of Nissan, as he was the one who championed the merger with France’s Renault. During the late 1990s, the Japanese automaker was on the verge of going under until Ghosn and his high-volume strategy turned things around. It’s not out of the question for Nissan to do what it thought was necessary to keep him around.

While Carlos’ work seems much less appreciated these days, as he’s often been scapegoated as the cause of the brand’s current hardships, Kelly said the company desperately wanted to keep him on board between 2010 and 2017. He also stated that former CEO Hiroto Saikawa, other Nissan executives, and attorneys (both from and outside the company) discussed possible ways of compensating Ghosn during that time. Interestingly, Saikawa stepped down from the company in 2019 after admitting he was also “improperly overpaid.”

Despite credible accusations that there was a factional war taking place within the Renault-Nissan-Mitsubishi Alliance near the time of the arrests, it hasn’t been mentioned in the trial. However, Ghosn has commented on it both before and after his escape to Lebanon. While he had already stepped down as CEO of Nissan by 2017, he planned to remain chairman of the alliance and CEO of both Renault and Mitsubishi until his retirement. Before then, he wanted to solidify the industrial partnership via a merger — something that went over poorly in Asia. Japanese shareholders and a substantial number of Nissan employees already believed Renault had far too much influence and didn’t want to deepen ties.

He believes Nissan crafted a case specifically for the purpose of removing him from power and has claimed the Japanese justice system is easily corrupted and extremely biased against foreigners. Ghosn had repeatedly stated he did not expect to receive a fair trial in Japan, adding that it has a suspiciously high conviction rate under the best of circumstances. While Nissan’s internal investigation did find the money “hiding” in Renault-Nissan BV (a Netherlands based joint venture controlled by Ghosn) and a bunch of properties given to the former CEO for the assumed purpose of being flipped for profit, there’s also looming evidence that Nissan was acting specifically to discredit leadership as part of an industrial coup.

But Nissan isn’t the one on trial here. Kelly is and he’ll have to prove that Ghosn’s post-retirement compensation is above board, along with the other assets acquired through Nissan. His lawyers have maintained that Kelly was not involved in making any illicit financial arrangements ( with proof of other signatories on the applicable documents) and that the amount of the compensation earmarked for Mr. Ghosn was never fixed — with no agreement ever finalized and nothing paid.

As the trial is scheduled to last until July 2021, he’ll have plenty of time to plead his case. But it’s assumed that the court will not treat him favorably and may even set out to make an example of him now that the person they really wanted has fled beyond their grasp.

[Image: Plamen Galabov/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Inside Looking Out Inside Looking Out on Sep 15, 2020

    "Or perhaps Donald Trump could step in and lean on the Japanese govt. a bit." Trump stands alright. It is Biden who has problem standing on his feet (but not on his knees) and needs help from Japanese govt.

  • DOHC 106 DOHC 106 on Sep 15, 2020

    The Japanese court is going to make an example of Mr. Kelly whether he is guilty or not. He is already older, stressed, and supposedly has health issues too. Definitely a position I hope never to be in whether here or abroad and never in Japan.

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