TOKYO — A Tokyo court has found the former Nissan executive Greg Kelly guilty of playing a role in helping former boss Carlos Ghosn allegedly hide more than $80 million in deferred compensation, but cleared him on the bulk of the allegations in a closely watched trial.
After more than three years of prosecution, Kelly, 65, was given a six-month suspended sentence by chief judge Kenji Shimotsu. The Tennessee human resources executive and attorney, arrested while on a November 2018 business trip to Japan, may soon be free to return home.
Kelly, dressed in a grey suit, white shirt and red tie, stood impassively with his hands clasped before him as the judge read out the verdict before a packed courtroom. But afterward, in a written statement, Kelly said he was "very surprised and shocked" by the judgment.
"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. "I am innocent on all counts."
Kelly's lawyers said the American was "completely innocent" and would appeal the decision.
Security was heavy for the hearing with gallery observers screened by metal detectors and guards. Kelly's wife, Dee, sat in the front-row seat she has occupied for more than a year as the trial unfolded, busily taking notes on the consecutively translated explanations from the bench.
The three-judge panel found Kelly guilty of violating financial-disclosure laws regarding Ghosn's payment in only one of the eight fiscal years under scrutiny from 2010 to 2018, and it cleared the American defendant on other allegations.
Kelly was sentenced to six months in prison, but the execution of the sentence was suspended for three years, meaning Kelly can remain a free man, pending good behavior.
Prosecutors, who sought two years in prison, said it was regrettable the court did not accept most of their allegations against Kelly and indicated they might consider an appeal.
The court upheld the notion that Ghosn conspired to hide deferred compensation from regulators and investors over the period, saying the actions undermined Japan's disclosure system. "The case not only shocked the business community but society at large," he said.
But Shimotsu rejected most of the counts against Kelly, saying that a key witness linking Kelly to the alleged postponed compensation was not reliable. This was partly because the witness, a Nissan manager, had taken a plea bargain with prosecutors to avoid prosecution.
"There is considerable room for him to make statements that conform to the prosecutors' wishes," Shimotsu said of the witness, calling his testimony "not credible."
The judge also fined Nissan Motor Co., as a corporate entity, 200 million yen ($1.73 million) for its responsibility in filing falsified securities reports that failed to account for Ghosn's full remuneration. Shimotsu said Nissan bore heavy responsibility for fostering a dysfunctional corporate governance system that allowed Ghosn to get away with financial misconduct.
With a suspended sentence, Kelly may return to the U.S., even if prosecutors decide to appeal the acquittal, Kelly's defense attorney Yoichi Kitamura said.
U.S. Ambassador to Japan Rahm Emanuel welcomed the end of the lengthy trial.
"We are relieved that the legal process has concluded, and Mr. and Mrs. Kelly can return home," he said in a statement. "While this has been a long three years for the Kelly family, this chapter has come to an end. He and Dee can begin their next chapter in Tennessee."
In a video call from Lebanon, Ghosn said after the verdict that he was relieved for Kelly and his family: “I pray that he will be able to overcome this huge emotional, psychological, financial impact inflicted on him by the hostage justice system of Japan.
“He’s obviously an innocent man,” Ghosn said.
The decision, read out in Tokyo District Court on Thursday, has been a lightning rod of corporate and diplomatic maneuvering.
But working against Kelly was a justice system that boasts a 99 percent conviction rate.
Shimotsu said Kelly's "responsibility cannot be underestimated." But the chief judge said there were circumstances that warranted a suspended sentence. For starters, his misconduct occurred in only one fiscal year, it was not aimed at enriching himself and he played a far lesser role in the falsified financial reports than either Ghosn or another figure, Toshiaki Ohnuma, the Nissan official who administered Ghosn's pay and struck a plea bargain to avoid prosecution.
Kelly was initially jailed for more than a month before being released late Christmas Day in 2018. Since winning bail, he has lived in a cramped Tokyo apartment with his wife just across the moat from Japan's Imperial Palace. Under the terms of his bail, Kelly was grounded in Japan. His wife had to enroll in a Japanese language school for a visa that enables her to stay by his side.
Emanuel pledged during his October confirmation hearing as ambassador to make Kelly's case a "top priority." After arriving to take up the post in January, the diplomat called Kelly to talk with the American defendant and his wife.