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Nissan's Ghosn crisis

Experts said pay reporting unnecessary, Ghosn aide says

Jailed Kelly claims he has proof in writing of outside legal advice

Greg Kelly, left, is said to have orchestrated the fund misuse on Carlos Ghosn's behalf. (Kelly photo courtesy of Nissan; Ghosn photo by Reuters)

TOKYO -- Outside experts assured then-Nissan Motor Chairman Carlos Ghosn and his deputies in writing that there was no need to list deferred compensation in financial reports, a former Nissan executive reportedly has told prosecutors.

Greg Kelly, under arrest along with his ex-boss on charges of helping to underreport Ghosn's pay, told prosecutors that he handled the compensation disclosure by seeking counsel from outside law firms and Japan's Financial Services Agency, according to sources familiar with the matter.

Kelly has denied wrongdoing, saying he acted on the advice of outside professionals and that they provided their responses in writing, the sources said.

Investigators say Ghosn, in his capacity as Nissan chairman, underreported his annual compensation of about 2 billion yen ($18 million) by not listing a deferred payment of 1 billion yen a year in financial filings.

While acknowledging that he considered paying advisory fees to Ghosn after his eventual retirement from the company, Kelly denied these fees were intended as deferring payments.

Kelly is believed to be insisting that these fees were designed as compensation for an advisory role Ghosn was expected to play in the future to maintain his ties with Nissan.

Ghosn denies the allegations of underreporting his pay, according to sources. Kelly, who worked as an attorney in the U.S., is believed to have assured Ghosn that the reporting procedures were entirely legal.

Ghosn and Kelly were arrested on suspicion of underreporting Ghosn’s compensation by about 5 billion yen in Nissan’s earnings reports for five years through March 2015, in violation of the Financial Instruments and Exchange Act.

Prosecutors appear to have obtained documents showing the deferred amounts and contend that Ghosn’s compensation should have been recorded when the amounts to be paid were determined.

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