Carlos Ghosn looms large over Japan court case of former Nissan director

2021-05-11 06:54:00 PM

After eight months of testimony, Greg Kelly is set to take the stand on charges of helping Ghosn underreport his earnings when CEO of Nissan

Carlos Ghosn. Picture: REUTERS/MOHAMED AZAKIRTokyo —Carlos Ghosn told prosecutors while being detained in late 2018 that there was no legal obligation for Nissan Motor to pay him any deferred compensation that was relinquished voluntarily, according to statements read aloud in court for the trial of former director Greg Kelly.

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“The reason 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 testimony that Kelly’s lawyer read aloud in the Tokyo district court on Tuesday. Kelly has denied charges of helping Ghosn underreport his remuneration by more than ¥9bn ($83m).

Proceedings against Kelly are about to enter their final phase. After eight months of testimony by current and former executives from the carmaker, experts and other witnesses, Kelly is set to take the stand on Wednesday. Though Ghosn fled Japan at the end of December 2019 to escape from what he called an unjust legal system, his presence has loomed large during the trial.

“As a businessman, I hoped that Nissan, or via the alliance would, legally compensate me,” Ghosn said, in remarks that were translated into Japanese then back into English. “The people around me wanted to find ways to compensate me legally. They wanted me to remain at Nissan.”

Ghosn’s testimony is being brought in as evidence by Kelly’s defence lawyers, as well as by prosecutors and Nissan, which was also charged with misstating Ghosn’s compensation. Though Nissan’s defence lawyers are in court, the company has effectively pleaded no contest.

A small group of insiders worked for months before Ghosn’s arrest to bring a criminal case against himThe arrest of Ghosn and Kelly in November 2018 unleashed a legal and corporate saga with shockwaves that are still being felt. Nissan reported a second year of losses on Tuesday, and forecast that it will only break even in the year to end-March 2022 as a global shortage of automotive chips hurts its ability to capitalise on recovering demand for cars. The carmaker’s alliance with Renault and Mitsubishi Motors has frayed.

Ghosn is now in Beirut and seeking to restore his reputation. Apart from taking interviews, he has also launched a website, published a book and is working on a documentary. Tuesday’s court testimony, however, is a rare glimpse into what the former automotive executive was telling prosecutors while being held in Tokyo. Ghosn, who was detained twice during 2019, spent about 130 days in jail before being released a final time in April of that year.

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“What I disclosed was the amount that I received,” Ghosn told prosecutors while he was detained. “If the deferred compensation is conditional, then my understanding is that it falls within a grey zone. If the conditions aren’t met, then the remuneration isn’t paid. If the amount isn’t disclosed, then it shouldn’t be paid. For compensation that is determined to be payable, then it should be disclosed.”

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 June.Ghosn has been critical of Japan’s legal system, calling it a “system of justice that violates the most basic principles of humanity”. Japan’s government has called the claims baseless, and accused the former executive of spreading false information about the country’s legal system.

The justice ministry has vowed to bring Ghosn back to Japan to face trial, though that’s unlikely given Japan doesn’t have an extradition treaty with Lebanon.The testimony in court didn’t include his assertions, if any, that there was a plot within Nissan to oust him from the company and the alliance. Reporting by Bloomberg News has shown that a small group of insiders worked for months before Ghosn’s arrest to bring a criminal case against him.

Nissan’s own investigation into Ghosn and Kelly also came under internal scrutiny, especially by former global general counsel Ravinder Passi, who questioned the carmaker’s methods and raised concerns about conflicts of interest. Passi was demoted and eventually removed from Nissan late in 2020 for speaking out, saying that the carmaker remains saddled with deep corporate governance issues.

“Nissan had carried out a robust and thorough internal investigation that included external lawyers,” Nissan spokesperson Azusa Momose said. “Based on substantial and convincing evidence found in the investigation, Nissan established that Carlos Ghosn and Greg Kelly intentionally committed serious misconduct and significant violations of corporate ethics. The company contends that the facts surrounding the misconduct will be shown during the court proceedings and the law will take its course.”

After Kelly takes the stand later in the week, testimony will last until early July. Closing arguments are scheduled a few months later, followed by a verdict. By then, three years will have elapsed since Ghosn and Kelly’s arrests. Read more: Business Day »

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