Greg Kelly, Former Ghosn Aide at Nissan, Gets Six-Month Suspended Sentence

The ruling amounted to a rejection of much of the Japanese prosecutors’ case regarding Mr. Kelly. At the same time, the court generally supported prosecutors’ allegations that Mr. Ghosn failed to report deferred compensation for years on financial statements and intentionally misled shareholders.

Mr. Kelly was given a six-month sentence, which was suspended for three years. The sentence means he won’t serve prison time as long as he maintains good behavior during the three-year period.

Mr. Kelly said he was surprised by the ruling and reiterated that he believes he is innocent. His lawyers said they plan to appeal. Prosecutors said they were considering whether to appeal, calling it regrettable that the court rejected part of their case.

The U.S. ambassador to Japan,

Rahm Emanuel,

and the previous ambassador, Sen.

Bill Hagerty

(R., Tenn.), said they expected Mr. Kelly would be able to fly to the U.S. shortly.

“Greg is coming home,” Mr. Hagerty said.

Prosecutors had sought a two-year sentence for Mr. Kelly.

The chief judge, Kenji Shimotsu, said the court doubted portions of the testimony given by the prosecution’s chief witness, Toshiaki Ohnuma, a Nissan executive who oversaw administrative functions for Mr. Ghosn. Mr. Ohnuma was one of two Nissan executives who signed a cooperation agreement with Tokyo prosecutors to avoid charges, which Judge Shimotsu said might tempt Mr. Ohnuma to adjust his testimony to please prosecutors.

The court also cited the fact that Mr. Ohnuma was an accomplice to Mr. Ghosn and that the charges dealt with actions that happened as long as a decade ago as additional reasons to doubt Mr. Ohnuma’s credibility.

The verdict concludes the first and possibly only trial regarding the charges for which Mr. Ghosn was arrested in late 2018. Mr. Ghosn was supposed to have been a co-defendant alongside Mr. Kelly, but he fled Japan to Lebanon at the end of 2019 by smuggling himself aboard a private jet.

Prosecutors said that for a decade, Mr. Ghosn arranged for himself to receive a portion of his salary after he retired without disclosing it to shareholders.

Mr. Kelly, 65, the former head of Nissan’s CEO office, was accused of helping Mr. Ghosn in the alleged violation of pay-disclosure rules. Both men said they were innocent.

Although he questioned the credibility of the prosecution’s witness and cleared Mr. Kelly of most of the charges, Judge Shimotsu generally concurred with prosecutors’ view of the case regarding Mr. Ghosn. The judge repeatedly cited documents in which Mr. Ghosn recorded what he described as each year’s unpaid remuneration down to the last yen.

The judge said these documents weren’t merely for reference, as Mr. Ghosn argued, but carried legal force because of the authority shareholders had awarded Mr. Ghosn to decide his own compensation. Nissan’s chief was “providing investors with erroneous information,” the judge said, because there was “unpaid remuneration for Ghosn that should have been disclosed.”

Mr. Ghosn’s downfall has left a trail of collateral damage. Many executives associated with him have left Nissan, while the company has cut thousands of jobs at factories around the world as it reversed Mr. Ghosn’s strategy of seeking to make the alliance—led by Nissan and partner

Renault SA

RNO -2.96%

—into the world’s biggest auto maker.

Two of the men who helped Mr. Ghosn escape, former Green Beret Michael Taylor and his son Peter Taylor, were extradited to Japan from the U.S. in March 2021 to face trial. They pleaded guilty and were sentenced in July 2021 to prison terms of two years and a year and eight months, respectively. They are serving their sentences in separate prisons on the outskirts of Tokyo.

Three Turkish nationals—two pilots and a manager of the private jet company that flew Mr. Ghosn out of Japan—were convicted in their home country of migrant smuggling.

Witnesses at the trial described how Mr. Ghosn slashed his pay roughly in half in 2010 after Japan passed a law mandating disclosure of any executive’s compensation if it was above a yen equivalent of around $1 million. They testified he did so out of fear of a public backlash.

Mr. Kelly testified that Mr. Ghosn had been unhappy with earning a smaller paycheck. Mr. Kelly, who at one point oversaw Nissan’s human resources department, said he was tasked with finding a solution.

Those solutions took a variety of forms over the next eight years, none of which came to fruition. Messrs. Kelly and Ghosn argued that this was a key flaw in the prosecutors’ case and said Mr. Ghosn wasn’t obligated to disclose potential compensation plans that weren’t finalized or approved by Nissan’s board.

Write to Sean McLain at [email protected]