Nissan's Saikawa praises ex-boss Ghosn during trial

TOKYO — The night of Carlos Ghosn's arrest some two years ago, then-Nissan CEO Hiroto Saikawa lashed out at his former boss as the perpetrator of rampant financial misconduct.

Last week in court, Saikawa struck a markedly more charitable tone, showering praise on Ghosn as a "brilliant" business leader who was being shortchanged on a top-dollar salary.

Testifying in the trial of alleged Ghosn enabler Greg Kelly, Saikawa seemed to back elements of Kelly's defense, saying he thought Ghosn deserved the generous retirement packages he signed for the former chairman at Kelly's behest. Saikawa indicated he understood them, at the time, as post-retirement agreements, not as payback for compensation cuts, as alleged by prosecutors.

"For a superior manager like Ghosn at the time, I thought it was normal to prepare a generous retirement package that was in line with U.S. and European standards," Saikawa told the Tokyo District Court. "He was brilliant as a business leader. … I respected him."

Saikawa said he and Kelly both feared Ghosn might jump to a competitor. "We simply could not expect Mr. Ghosn to keep working" for Nissan, he said. "He was indeed an extremely talented manager."

Saikawa described the retirement agreements as drafts that couldn't take effect without a full set of signatures and board approval. Copies of the drafts presented in court show the signatures of Saikawa and Kelly, but the documents lack Ghosn's signature and are left undated.

Even though Saikawa presided over Ghosn's stunning 2018 arrest as CEO of Nissan, his testimony seemed to support arguments made in Kelly's defense. Kelly, a former Nissan director who was a longtime human resources executive, was arrested with Ghosn and charged with helping Ghosn hide tens of millions of dollars in deferred compensation.

Similar to Saikawa, Kelly argues that the agreements the two of them signed were post-retirement plans for future services, not a postponed compensation scheme. And like Saikawa, Kelly argues the agreements were never formalized. Thus, he says, there was nothing to disclose.

Saikawa, who resigned as CEO in September 2019 and left the Japanese automaker in 2020, said there was concern about succession planning for Ghosn's eventual retirement as far back as 2010. Kelly's defense lawyer presented emails showing that Saikawa and Kelly often consulted each other about who, from the next generation of leadership, might step up.

Prosecutors allege Ghosn's underlings began scrambling to hide his pay in 2010, the year Japan changed its corporate reporting rules to require companies to disclose individual executive pay packages of more than ¥100 million ($942,500) a year. Ghosn, they allege, wanted to avoid scrutiny in Japan and France, where public mores frown on large compensation packages. Both Ghosn and Kelly deny the charges.

Ghosn was believed to be making between $14.1 million and $18.9 million a year at Nissan before the change in disclosure rules, Saikawa told the court. But from 2010, Nissan began listing his annual remuneration at levels only about half that amount.

Prosecutors say Nissan was tracking the gap over all those years and planned to pay Ghosn back after retirement. They allege the total reached $87.6 million between 2010 and 2018. Kelly's role, according to prosecutors, was finagling a way to make sure Ghosn recouped it all.

Kelly argues that he knew nothing about any scheme to pay Ghosn postponed compensation. His activities were limited to creating a post- retirement package that would retain Ghosn's services after he stepped down, so that Ghosn would not defect to a competitor.

Kelly and Saikawa worked on three agreements, in 2011, 2013 and 2015, which Saikawa described as updates of essentially the same contract. He said he signed them without deep attention to their details because he trusted Kelly's expertise in the field of human resources.

The agreements included mixes of pension payments, consulting fees or a noncompete contract. After retiring from Nissan, Ghosn would have continued to advise on business strategy, media and public relations, government relations and other "critical business matters," under the contract.

"The renumeration being paid then was low, so to make up for that, we believed we needed a retirement package equivalent to or better than that at U.S. companies," Saikawa said.

"So this agreement, in my understanding, was designed to secure Mr. Ghosn's continuous support after retirement and to keep his motivation until retirement."

Saikawa himself was at one time a suspect in the case, for having signed the draft agreements. But prosecutors didn't indict him because he argued that he viewed the documents as a post-retirement plan and didn't know about any alleged postponed compensation schemes.

Saikawa did not provide evidence or testimony backing prosecutors' claim that Kelly intended to use the retirement plan as a pretext for paying back the postponed remuneration.

He praised Kelly as a consummate professional who was his trusted "friend," but he said he was disappointed to learn of the allegations when Nissan's internal probe reported its findings.

When cross-examined by a Nissan attorney as to whether Saikawa now "understands" that the 2011, 2013 and 2015 agreements were meant to repay Ghosn as part of the deferred compensation plan, Saikawa merely replied, "Yes. I know it now," without elaboration.

"I truly wanted to retain Mr. Ghosn. I thought this package proposal was important in achieving this," Saikawa said. "Personally, I thought Mr. Ghosn should continue as long as possible."