(Feb 4): Former Nissan Motor Co director Greg Kelly’s conviction on charges of helping former chairman Carlos Ghosn under-report his compensation was upheld by a three-judge panel.

The court also dismissed appeals by the defendant and the prosecution after hearing arguments and reviewing evidence following Kelly’s conviction in March 2022. Tuesday’s ruling, which was read out in court in less than an hour, main adjudicator repeatedly said the district court’s decision wasn’t unreasonable or erroneous.

The ruling effectively preserves the status quo for Kelly, and by proxy, Ghosn, and gives Japanese authorities a way to claim some form of prosecutorial victory against the former chairman and chief executive of Nissan and Renault SA. Ghosn, who was arrested in November 2018 on accusations of under-reporting compensation, has denied the charges before and after he fled Japan in late 2019, smuggled in a box for audio equipment.

Prosecutors had also appealed against the initial verdict, seeking to overturn the not-guilty rulings on other charges they brought against the former American executive. Yoichi Kitamura, Kelly’s lawyer, said he will appeal against Tuesday’s decision to a higher court.

“There was no explanation as to why such a result was reached,” Kitamura said of the court’s arguments. “They don’t make any sense.”

When the lower court had found Kelly guilty on one count for a single fiscal year, it cleared the American of the majority of charges for other years and gave him a suspended sentence. The proceedings, which lasted 17 months, essentially served as a substitute trial against Ghosn. Kelly left Japan after the verdict, and hasn’t set foot in the country since.

Kelly’s lawyers had argued that he lacked any motive to overpay Ghosn and wasn’t privy to any plans, discussions or conspiracy to do so. 

Prosecutors had asserted that Kelly should be found guilty on the other counts, saying that the testimony of Toshiaki Onuma, who ran the secretarial office for Nissan’s executives, painted a picture of a coordinated effort to hide Ghosn’s pay. Onuma, a key witness in the trial, testified for the prosecution in return for immunity.

Ghosn and Kelly were arrested on the same day in November 2018, setting off a dramatic chain of events that upended Nissan’s alliance with long-time partner Renault. Nissan’s profits slumped, and the score-settling fuelled an exodus of other top management. 

The turmoil left the Japanese automaker in a weaker position, as it seeks to navigate an industry that’s being disrupted by electrification and autonomous driving. Nissan is now in talks with Honda Motor Co for a combination under a holding company that would effectively bring it under control of a rival carmaker.

Kelly, who formerly oversaw human resources and legal affairs at Nissan, argued there wasn’t an agreement to pay Ghosn, and said there was requirement to disclose any such compensation and that his former boss was never paid. Kelly was acquitted of charges related to Ghosn’s pay before 2017, because he wasn’t aware of the unreported renumeration, the chief judge determined in his trial. 

The verdict from two years ago was a rare partial victory in a country where prosecutors win virtually all court cases. Kelly was left alone to defend himself after Ghosn staged a spectacular escape from Japan, making his way by private jet to Lebanon, where he now resides. 

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