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Jeddah – Yasmine El Tohamy – TOKYO: A former Nissan chief operating officer outlined in a Japanese court Tuesday the pains company officials took to hide star executive Carlos Ghosn’s pay, and how they had worried about his quitting for a rival.
“Carlos Ghosn is a world-class business leader and CEO,” said Toshiyuki Shiga, testifying at the trial of his former colleague Greg Kelly, charged with under-reporting Ghosn’s compensation.
“We heard not only as rumors but as fact that he was getting job offers,” Shiga added.
As No. 2 at the Japanese automaker from 2005-2013, Shiga is the highest ranking Nissan Motor Co. executive to testify at the trial, which began in September. He worked closely with Ghosn after Nissan’s French alliance partner Renault sent him to Japan to help turn the troubled automaker around in 1999. Shiga retired from Nissan in 2019.
The issue of Ghosn’s pay became more of a problem after Japan beefed up its compensation disclosure requirements in 2010. After that, Ghosn handed back about 1 billion yen ($10 million) a year, roughly half of what he’d been getting.
Executives in Japan get far less than their Western counterparts. Shiga testified he felt sorry Ghosn wasn’t collecting his full pay, noting Ghosn was getting job offers paying 2.5 billion yen ($25 million) a year.
Earlier testimony at the Tokyo District Court had gone over the various proposals that Nissan had considered to pay Ghosn, including overseas affiliates, retirement allowances and stock options.
Shiga said Ghosn had total power to decide on the amount and method of his payment. Apart from confirming a post that Kelly had held he did not mention the American’s role in his testimony.
Kelly, a former Nissan executive vice president, has been charged with falsifying securities reports in allegedly under-reporting Ghosn’s compensation by about 9 billion yen ($90 million) over several years. Both he and Ghosn were arrested in November 2018, but Ghosn fled the country in late 2019 while out on bail.
Kelly says he is innocent, and was merely trying to keep Ghosn at Nissan. Ghosn also denies any wrongdoing.
Shiga told the court he faced pressure to ensure auditors would not raise objections to the reporting of Ghosn’s pay and that he viewed that as a failure of the company’s governance. He said he regretted not insisting Ghosn fully disclose his pay.
“Why couldn’t I say, ‘No,’ then? I deeply regret that to this day,” Shiga told the court.
“In my life, that one act has left me with a bitter taste. The memories have faded, but the bitter taste has never gone away.”
Ghosn, a 66-year-old with French, Lebanese and Brazilian citizenship, led Japanese automaker Nissan for two decades. He is wanted on charges of breach of trust, in misusing company assets for personal gain, and violating securities laws in not fully disclosing his compensation. But he is in Lebanon, which has no extradition treaty with Japan.
Nissan as a company has acknowledged guilt in the case.
If convicted, Kelly could face up to 15 years in prison. A verdict is not expected for several months.
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