Ghosn’s Former Aide Pleads Not Guilty as Trial Starts in Japan

(Bloomberg) -- Former Nissan Motor Co. director Greg Kelly pleaded not guilty to charges of helping former Chairman Carlos Ghosn hide millions in compensation, vowing to prove his innocence in a trial that’s starting almost two years after their arrests in Japan and in the absence of the main suspect.

“I deny the allegations,” said Kelly, when asked by the judges at the outset whether he had anything to say. “I was not involved in a criminal conspiracy.”

Kelly, who wore a dark grey suit, white shirt with a red striped tie and used an ear-piece for translation, also told the court in Tokyo all his actions were intended to keep Ghosn employed at Nissan. He recounted how in the late 1990s, when the carmaker was losing money, Renault SA bought a stake in Nissan and sent in Ghosn.

“Mr. Ghosn was an extraordinary executive,” said Kelly, who appeared solemn and calm throughout the proceedings. Like everyone in the court, he also wore a face mask. Even though all the experts found that Nissan was doomed, “Mr. Ghosn proved the experts wrong. Under Mr. Ghosn’s leadership, Nissan became very profitable,” he said.

Ghosn’s name was mentioned hundreds of times by the prosecution and lawyers for Kelly and Nissan as they delivered opening statements, underscoring the former auto executive’s absence from a case that has fascinated the corporate world since the pair’s November 2018 arrest. Ghosn staged a dramatic escape from Japan at the end of 2019, claiming that he wouldn’t be able to get a fair trial there.

“Greg Kelly is clearly a victim of the Japanese hostage justice system,” a publicist for Ghosn said in a statement. “Mr. Ghosn’s thoughts and prayers go out to him and his family.”

Kelly is now left as the sole individual defendant. The U.S. citizen, who turned 64 on the first day of proceedings, has been charged by Japanese prosecutors for allegedly helping understate Ghosn’s compensation by about 9 billion yen ($85 million) over eight years. Kelly could face as long as a decade in prison if convicted.

Kelly also gave more details about Nissan’s business situation in Tuesday morning’s court session, saying the automaker was only selling around 2.5 million cars globally per year before Ghosn arrived and after he took over, it was selling around 5.6 million in 2017.

No Successor

He added that everyone at Nissan was worried they would lose Ghosn and they wanted to retain him. Nissan was looking for lawful methods to do this, so executives consulted with outside and in-house attorneys on the matter, Kelly said.

“The evidence will show that I did not break the law,” Kelly said. Kelly’s head defense lawyer, Yoichi Kitamura, said little apart from: “My client is not guilty.”

Proceedings are scheduled to last through July of next year, with a verdict by the panel of three judges anticipated in the fall. Kelly’s family and attorneys have questioned his ability to get a fair trial without his ex-boss’s testimony and criticized the slow pace of judicial proceedings in Japan.

Ministry of Justice officials have said Kelly will get a fair hearing and maintain Japan’s jurisprudence is on par with other industrialized nations. After Ghosn fled the country at the end of December, the justice minister and government officials defended their system, saying that it was just and helped to keep the country’s crime rate low.

The trial opened in a large courtroom on the ground floor of the Tokyo District Court, located in a part of the city that’s home to government ministries and agencies. About a third of the roughly 100 seats were taken up by the media; the rest of the seats, which were spaced out due to social distancing measures, were about half full.

Happy Birthday

Also at the court was Kelly’s wife Dee, who arrived around 10 a.m. local time. She spoke with reporters after the morning session outside and said she felt tense and apprehensive.

“It’s disappointing that Mr. Ghosn isn’t here, but he had to do what’s right for him,” she said. “Today is Greg’s birthday; probably not a great day to start this,” she said, adding that their grandson had called to sing happy birthday.

Dee Kelly reiterated that Kelly has had no contact with Ghosn.

In a memo to employees ahead of the trial, Nissan Chief Executive Officer Makoto Uchida said that an internal investigation showed there was “serious misconduct and violation of corporate ethics deliberately committed by the defendants.”

Nissan added in a later statement Tuesday that the company has “strengthened its governance structure by making it more independent and transparent.” Nissan has also “distributed authority so that internal controls will operate better and has strengthened its internal audit function.”

Bloomberg reported last month that people within Nissan were concerned whether the company’s probe was tainted by conflicts of interest and were removed from the investigation for raising questions.

Ghosn, who is now in Lebanon after escaping Japan in a private jet, was also indicted on breach of trust charges for allegedly funneling the automaker’s money in the Middle East to accounts that he controlled. Ghosn has said that he was a victim of a plot orchestrated by Nissan insider Hari Nada and others to remove him and prevent Nissan from deepening its ties with Renault, its two-decade partner in a global automaking alliance.

The circumstances of the trial, from Ghosn’s dramatic escape to the toll it has taken on the automaker, are unusual in a country where dour court proceedings and a 99% conviction rate are the norm. The automaker itself is also a defendant in the trial, but is in the odd position of fully admitting to the charges and cooperating with prosecutors.

Kelly won’t take the stand until May, but will have a front-row seat as a parade of witnesses — mostly his former Nissan colleagues, possibly including CEO Uchida — are called to testify.

Tuesday’s afternoon session began with prosecutors continuing to read out their opening statement. Kelly, hands steepled, sat listening and occasionally took notes.

Kelly’s attorneys have said they’ve been constrained by strict limits on their access to case documents, such as a court mandate restricting them to computers without internet access at his Japanese lawyer’s office in Tokyo. What’s more, the prosecution produced 84 additional boxes of material a year ago, but so far have handed just half a dozen of them to the defense.

“It’s as unfair a playing field as I’ve ever seen,” James Wareham, a Washington-based attorney who’s representing Kelly in the U.S., said before the start of proceedings. “There’s no way he can get a fair trial in Japan.”

©2020 Bloomberg L.P.