Former Nissan Motor Co. executive Greg Kelly should spend two years in prison for his alleged role in helping hide former Nissan chief Carlos Ghosn’s pay from the public, Japanese prosecutors told a Tokyo court on Wednesday.

       Messrs. Ghosn and Kelly “worked to conceal income through 2018," said prosecutor Yukio Kawasaki. “The failure of governance is a deep problem for such a socially significant company."

       The sentencing request came during prosecutors’ closing arguments in the case at Tokyo District Court. Mr. Kelly says he is innocent, and the court’s three-judge panel is expected to issue a verdict next year. If he is found guilty, the court would also decide his sentence.

       Mr. Kelly, 65 years old, was charged with violating a regulation governing public disclosure of executive salaries. Under the law, the maximum sentence in Mr. Kelly’s case would be 15 years, but prosecutors said two years would be appropriate.

       Mr. Kawasaki said prosecutors would have sought a longer sentence but took into account that Mr. Kelly has already been in Japan for nearly three years since his arrest. His trial began a year ago

       Nissan was also charged as a company and isn’t disputing the allegations. Prosecutors recommended that Nissan pay a fine equivalent to about $1.8 million.

       The disclosure regulation, which went into effect in 2010, required companies to disclose the pay of any executive making more than around $1 million in the year the pay was determined. Prosecutors have alleged that Mr. Ghosn, chief executive and later chairman of Nissan, arranged with help from Mr. Kelly for around half of his compensation each year to be deferred until after his retirement.

       During the trial, which began in September 2020, prosecutors presented documents and testimony from a Nissan employee named Toshiaki Ohnuma. Each year, Mr. Ohnuma created a document dividing Mr. Ghosn’s pay into two categories: paid and postponed remuneration. Prosecutors allege Mr. Kelly knew about the postponed remuneration and should have made sure Nissan included it in the company’s annual securities filings.

       “Kelly had a critical and essential role in these events. He was essential in carrying out these acts, and had Ghosn’s trust," said Mr. Kawasaki, the prosecutor.

       Mr. Kelly has said he never saw a document labeled postponed remuneration or any such calculations at all until June 2018, when Mr. Ohnuma presented him with a figure calculated by Mr. Ghosn.

       Mr. Kelly said he was working on potential methods to pay Mr. Ghosn after retirement to keep the executive from going to work elsewhere, but he said nothing was fixed and nothing needed to be reported publicly.

       Mr. Kelly has also testified that the total amount of postretirement pay he was planning for Mr. Ghosn stayed the same between 2011 and 2018—roughly $90 million to $100 million. Defense lawyers say that contradicts the prosecutors’ arguments, because if Mr. Ghosn’s proposed postretirement pay was meant to reflect deferred compensation for each year’s work as an executive, the figure should have grown every year, not stayed the same.

       MINT PREMIUM See All

       Premium Why fortified food is no magic bullet

       Premium Invesco fires fresh salvo as it takes Zee to NCLT

       Premium Snapchat makes a quiet comeback in India

       Premium Near-term risks in higher education could spell trouble for jobs revival

       Mr. Ghosn, who is living in Lebanon after escaping Japan in December 2019, has said the documents referring to postponed compensation were simply a way to record what he was worth to Nissan and weren’t binding. He says he is innocent and fled because he couldn’t get a fair trial.

       Both sides in the trial agree that Mr. Ghosn cut his compensation by about half when the disclosure regulation went into effect because he feared a backlash from the public and the French government, which is the largest shareholder in Nissan’s alliance partner, Renault SA. The sides also agree that Mr. Ghosn never received any of the money described in the documents as postponed remuneration.

       Mr. Kelly’s U.S.-based attorney, Jamie Wareham of Fried, Frank, Harris, Shriver & Jacobson LLP, has called the Japanese case a sham and said the charges were motivated by the desire of Nissan executives and government officials to prevent a merger between Nissan and Renault.

       This story has been published from a wire agency feed without modifications to the text

       Subscribe to Mint Newsletters

       * Enter a valid email

       * Thank you for subscribing to our newsletter.

       Never miss a story! Stay connected and informed with Mint. Download our App Now!!