TOKYO — The Japanese government has accused Greg Kelly of helping his former boss at Nissan, Carlos Ghosn, hide tens of millions of dollars of pay from regulators.
But when Mr. Kelly appeared in court on the opening day of his trial in Tokyo on Tuesday, nearly two years after the American citizen was lured to Japan and arrested, he faced the charges alone. And proving his innocence in the Japanese judicial system will be no easy task.
Mr. Ghosn escaped Japan to Lebanon late last year, fleeing what he described as a rigged justice system that would have never given him a fair hearing. Mr. Kelly — who celebrated his 64th birthday in court on Tuesday — is now fighting that same system by himself. Prosecutors in Japan enjoy a conviction rate of more than 99 percent. Mr. Kelly’s lawyers say he has not even seen all the evidence yet.
Addressing the court on Tuesday morning, Mr. Kelly said he was not guilty of the charges against him and that any discussions he had around Mr. Ghosn’s pay were premised on being legal and for Nissan’s benefit, according to Japanese news media.
“I was not involved in a criminal conspiracy,” he told the judges as the trial began.
Lawyers for Nissan, which is also on trial for its role in the alleged plan, said it would not contest the charges against it.
The stakes are high not just for Mr. Kelly, but the Japanese justice system as well. Prosecutors have faced strong criticism from foreign politicians and businesspeople as well as from Japanese legal reformers over the treatment of Mr. Ghosn and Mr. Kelly after their arrests in November 2018 on suspicion of hiding the true level of Mr. Ghosn’s compensation from Japanese regulators.
Mr. Kelly’s trial could be the prosecutors’ best chance to show that the charges are legitimate. A failure to do so could have substantial consequences for the country’s international reputation.
In an hours long presentation on Tuesday, prosecutors outlined their case against Mr. Kelly, the Japanese news media reported. The prosecutors said they intended to demonstrate that Mr. Kelly had conspired with Mr. Ghosn and other Nissan executives to defer millions of dollars of Mr. Ghosn’s compensation until after his retirement. That pay, the prosecutors contend, should have been reported to regulators.
Mr. Ghosn and Mr. Kelly say the money was never paid nor even guaranteed.
Mr. Ghosn was thousands of miles away when the trial began, but his presence loomed large. The executive famously turned around Nissan, a storied Japanese auto brand bleeding red ink, and built an alliance with Renault of France and Mitsubishi of Japan that became the world’s largest car empire. His arrest shook corporate Japan and the global automotive industry alike.
Already a household name in Japan when he was arrested, Mr. Ghosn added to his notoriety by hiring private security contractors to lead a daring escape in late December from his home in Tokyo to Lebanon, where he is a citizen and safe from extradition.
While Mr. Kelly’s story lacks some of the drama of his former boss’s international escapade, his attorney, James Wareham, says it too illuminates the inherent difficulty of beating Japan’s justice system at its own game.
In the months leading up to his trial, Mr. Kelly has spent most of his waking hours poring over boxes of documents related to the prosecution’s case against him, according to Mr. Wareham. Even as his trial began, prosecutors had yet to hand over more than 70 other boxes, the lawyer added. The sheer quantity of documents, amounting to more than a billion pages, has already overwhelmed the team of attorneys hired to examine them on Mr. Kelly’s behalf.
“It is not just odd and usual,” Mr. Wareham said. “It’s barbaric.”
He spoke by phone from the United States. Because of the coronavirus, Japan has placed strict entry restrictions on foreigners, effectively stopping Mr. Wareham from attending Mr. Kelly’s trial. Mr. Kelly is also represented by a team of Japanese attorneys who will present his defense to the court.
The prosecutors’ office declined to comment on Mr. Kelly’s case.
Japan’s ministry of justice has disputed statements by Mr. Ghosn and Mr. Kelly that the system is unfair, arguing that its design ensures “basic individual human rights” and that the men have been treated as well as they would have been in any other wealthy, democratic nation.
Nevertheless, in March, three Republican senators from Mississippi and Tennessee, where Mr. Kelly worked for Nissan, wrote an op-ed expressing concerns about the prosecutors’ treatment of the former executive. They said it had raised “serious questions about whether non-Japanese executives can comfortably work in Japan under its legal system.” Mr. Kelly spent $220,000 this year lobbying American lawmakers about his case.
Mr. Kelly began working at Nissan in 1988. By the time of his arrest, he was a director at the company and a trusted adviser to Mr. Ghosn.
Mr. Kelly’s troubles started in November 2018, when he was summoned to Japan by Nissan executives to attend a meeting of the company’s board of directors. He initially wanted to skip the meeting because he had planned to undergo spinal surgery two weeks later, but he got on a flight after he was assured he would be back in time for Thanksgiving. When the plane landed, Japanese prosecutors were waiting for him.
They detained him for more than 30 days, interrogating him for hours without a lawyer present. He stayed in jail until Christmas Day, when he was released on bail. He is now living in a Tokyo apartment with his wife, Dee Kelly. Ms. Kelly was unable to get a spousal visa to join him. Instead, she enrolled in a Japanese language school and came to the country on a student visa.
Mr. Kelly is not expected to take the stand until next year. His defense team intends to argue that the discussions about Mr. Ghosn’s compensation never resulted in an actual payment or even a commitment to pay him, Mr. Wareham, his attorney, said. In other words, the reason nothing was reported to regulators was there was nothing to report.
Mr. Ghosn, who was also charged with breach of trust and using Nissan funds for his own personal enrichment, has repeatedly said that he is innocent. He has alleged that his arrest was the result of a corporate coup engineered by executives at Nissan determined to prevent a merger between the automaker and its French partner Renault. Nissan, which has also been charged but is cooperating with prosecutors, has denied that claim, saying that the investigation was solely motivated by concerns about executive wrongdoing.
Mr. Kelly’s defense team also subscribes to a version of Mr. Ghosn’s allegations.
“The case has nothing to do with guilt or innocence,” Mr. Wareham said. “It has everything to do with a corporate coup and efforts to allow Japanese citizens to lie and to entrap, all for the benefit of keeping Nissan Japanese. That’s what the whole case is about.”
Two of the Nissan employees Mr. Ghosn and Mr. Kelly believe were at the heart of that coup received cooperation agreements from prosecutors in exchange for providing evidence against the men and testifying at trial. They continue to work at Nissan, where one of them served as head of the legal department until October.
In a statement following the trial, the company said that its own internal investigation had “established that Carlos Ghosn and Greg Kelly intentionally committed serious misconduct and significant violations of corporate ethics.”
“The facts surrounding the misconduct will be shown during the court proceedings and the law will take its course,” it added.
At the trial Tuesday, the prosecutors and Mr. Kelly, too, made remarks to the tribunal of judges who will decide the case’s outcome, according to NHK, the Japanese public broadcaster. Jury trials are the exception, not the rule, in Japan.
The entire proceeding is expected to take at least ten months, assuming no further delays from the pandemic or other unforeseen circumstances. The court plans to hold four hearings in September.
“It’s finally starting after 21 months,” Mr. Kelly’s son, Kevin, said in a phone call from his home in the U.S. “I think he’d rather just be heading home, but at least it’s going.”
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