Carlos Ghosn Was ‘Retention Risk,’ Nissan’s Kelly Says at Trial
(Bloomberg) -- Former Nissan Motor Co. Director Greg Kelly testified in court in Tokyo for the first time, saying he considered Carlos Ghosn a flight risk after the ex-chairman voluntarily reduced his own pay, and that he looked for legal ways to keep him at the automaker.
“I and other executives believed that after Mr. Ghosn reduced his salary, well below that of other global executives, that Mr. Ghosn was a retention risk,” Kelly said in response to questions by his defense counsel. He denied that there was a conspiracy to inflate the executive’s pay.
Kelly, 64, was arrested the same day as Ghosn in November 2018 and has been in Japan ever since, seeking to prove his innocence against charges of helping Ghosn underreport his remuneration by more than 9 billion yen ($83 million).
Much has happened in the 900-plus days since the two were detained. Ghosn made a spectacular escape from Japan at the end of 2019, making his way by private jet to Lebanon. Nissan’s profits tumbled and its alliance with Renault SA and Mitsubishi Motors Corp. has frayed. Details emerged showing that a small group of insiders worked for months before Ghosn’s arrest to bring a criminal case against him.
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Kelly’s testimony at the Tokyo District Court on Wednesday started the final phase of proceedings in a trial that began eight months ago. During that time, Kelly has sat quietly as current and former Nissan executives, experts and other witnesses took the stand. Flanked by his lawyers and taking notes, he occasionally leans to one of them to ask questions.
His wife Dee attends most days, unless she needs to be at the Japanese school where she enrolled in order to obtain a student visa to be with her husband. Proceedings are slow, because every question and answer is translated into English or Japanese.
On Wednesday, Kelly was at the witness stand, dressed in a dark gray suit with a red tie, going over his background and responsibilities at Nissan in a courtroom filled with more than the usual number of people, including 17 journalists and over two dozen in the gallery.
“We have to operate within the laws of the companies where you do business,” Kelly said of the nature of his work. “We sought to achieve growth and profitability within the countries where we do business.”
Kelly explained that he knew Ghosn had reduced his pay, and sought ways to keep him at Nissan. “We wanted to find ways to retain Mr. Ghosn at Nissan because that would have been valuable for Nissan,” Kelly said.
On Tuesday, Kelly’s defense attorney read aloud in court Ghosn’s statements to prosecutors while he was detained in late 2018. The former Nissan chairman said he deferred his compensation voluntarily, and understood that there was no legal obligation for the automaker to pay him if it chose not to.
“The reason why I reduced my compensation was due to public opinion, and to keep up the motivation of Nissan employees,” Ghosn told prosecutors at the time, according to the testimony read by Kelly’s lawyer.
Kelly was one of Nissan’s most powerful executives, overseeing human resources, legal affairs and other matters before giving up some of his duties in 2015 while remaining on the board. Hari Nada, who was promoted by Kelly and eventually took on parts of his job, was one of the key insiders who orchestrated Ghosn and Kelly’s downfall, reporting by Bloomberg News has shown. It was Nada who sent a private jet to bring Kelly to Japan on the same day as Ghosn, to be detained.
The arrests triggered shock waves that still reverberate today. Nissan’s profits slumped to a decade low, and score-settling fueled an exodus of other top executives. The turmoil left the company in a weaker position as it seeks to navigate an industry that’s being disrupted by a shift to electric vehicles and self-driving cars.
Although Nissan was also charged with misstating Ghosn’s compensation, the company has effectively pleaded no contest, saying that Ghosn and Kelly “intentionally committed serious misconduct and significant violations of corporate ethics.”
“Nissan had carried out a robust and thorough internal investigation that included external lawyers,” spokeswoman Azusa Momose said in an emailed statement. “The facts surrounding the misconduct will be shown during the court proceedings and the law will take its course.”
Ghosn, who looms large over court proceedings, is in Beirut and seeking to restore his reputation. Apart from taking interviews, he has started a website, published a book and is working on a documentary. Michael and Peter Taylor, two Americans who were extradited to Japan to face charges of helping Ghosn flee the country, will have their first hearing in Tokyo next month.
Kelly’s testimony is scheduled to last through early July, followed by closing arguments a few months later. A verdict could come late this year or early 2022. By then, three years would have elapsed since Ghosn and Kelly’s arrests.
“This entire case was fabricated by rogue Nissan employees, with significant assistance from Japanese government officials, and before an ‘investigation’ even began,” James Wareham, Kelly’s U.S.-based lawyer, wrote in an email. “Why? For the sole purpose or preventing Carlos Ghosn from merging Renault and Nissan. The fact that Greg Kelly is in Tokyo today is deplorable and an embarrassment to Japan and its broken criminal ‘justice’ system.”
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