TOKYO -- Court hearings began on Tuesday morning in the trial of former Nissan executive Greg Kelly over alleged underreporting of remuneration paid to Carlos Ghosn, the automaker's 66-year-old former chairman.
The 64-year-old Kelly was charged with violating the Financial Instruments and Exchange Act by making false statements in Nissan's annual securities reports.
In the hearing at the Tokyo District Court -- the opening salvo in the case against Ghosn -- Kelly pleaded not guilty. The defendant read a statement that said in part: "I deny the allegations that have been made by the prosecutors. I was not involved in a criminal conspiracy."
The case has drawn global attention, despite Ghosn not being at the trial after fleeing to Lebanon last year. The amount paid to Ghosn was allegedly underreported by 9.1 billion yen ($85.8 million) over eight years.
Nissan was also charged as a corporation for violating the Financial Instruments and Exchange Act, to which the automaker pleaded guilty in Tuesday's hearing.
The biggest issue in the trial is whether money classified as "unpaid remuneration" actually exists.
The defense team for Kelly, a former representative director, claims the remuneration in question was not executive compensation, as it was planned to reward Ghosn for his services to Nissan after his retirement.
Kelly's defense maintains that even if there was an obligation to report the alleged remuneration, he cannot be held criminally responsible simply because of not reporting payment.
Two Nissan whistleblowers -- a former head of the company's secretary's office and a former company executive who is a foreign national -- previously reached plea bargains with the Special Investigation Department of the Tokyo District Public Prosecutor's Office.
But Kelly's defense team is poised to question the deals, claiming that the circumstances of how it was negotiated are unclear.
Prosecutors point out that the information disclosure system concerning executive remuneration of 100 million yen or more, which was introduced from the fiscal year ended March 2010, triggered an investigation leading to the scandal.
Ghosn had received more than 1 billion yen in annual remuneration, an amount he wanted to remain private, which lead him to allegedly order Kelly and other aides to find ways to avoid reporting part of the money.
According to the indictment, Kelly conspired with Ghosn to understate Ghosn's executive remuneration by a total of 9.1 billion yen in Nissan's annual securities reports from the fiscal year ended March 2011 to March 2018.
The Tokyo District Court plans 76 hearings until July 2021, including the first one on Tuesday.
More than 10 people -- including former Nissan President Hiroto Saikawa as well as the two Nissan executives who reached a plea bargain -- are expected to testify. No dates have been set yet for closing arguments or a ruling.
The first hearing is taking place in the largest room of the Tokyo District Court. It begins with Kelly's arraignment, in which the presiding judge questions the defendant.
Kelly, who is a licensed U.S. attorney, joined Nissan through the company's North America unit and became an executive managing officer in 2008. As an aide to Ghosn, Kelly was put in charge of the CEO office, the secretariat and the legal affairs office. He was promoted to representative director in 2012.
Kelly retained that position after he returned to the U.S. in 2015 until he was arrested in November 2018.
Since being released on bail in late December 2018, Kelly has been preparing for trial in the hope of finishing it as soon as possible due to a chronic health issue involving his neck.
He has already appeared for the pretrial arrangement proceeding, which was held behind closed doors. Reports say he grew visibly irritated over the slow pace of the proceedings.
Ghosn, who prosecutors allege to be the lead figure in the case, fled Japan by hiding in a box that was subsequently loaded onto a private jet and flown to Lebanon via Turkey. According to sources close to the situation, Kelly appeared surprised at the news of Ghosn's escape, saying he was not aware of it.
At a Beirut news conference he called in early January, Ghosn said Kelly was criminally charged because he refused to participate in what Ghosn described as a "suspicious" plea-bargaining agreement, unlike the two other Nissan executives who did.