Prosecutors Seek Two Years in Prison for Former Ghosn Aide

Mr. Kelly, 65 years old, was charged with violating a regulation governing public disclosure of executive salaries. Although he could in theory be sentenced to as long as 15 years in prison under the law, prosecutors said two years would be an appropriate sentence.

The 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.

Mr. Kelly has said he never saw the calculations about postponed remuneration until June 2018. He 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.

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.

Messrs. Ghosn and Kelly were arrested in Japan in November 2018 and charged together. Mr. Ghosn fled to Lebanon in December 2019 before the trial began. He says he is innocent and fled because he couldn’t get a fair trial. 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.

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.

Write to Sean McLain at [email protected]