Former Nissan Motor Co. executive Greg Kelly was given a six-month suspended prison sentence on Thursday for helping former CEO Carlos Ghosn underreport his remuneration for fiscal 2017, but a Tokyo court acquitted him on all other counts over its financial reports covering the previous seven years.

The Tokyo District Court found the former Nissan representative director guilty, handing him the sentence, suspended for three years, for falsifying the automaker's financial report for the year ended in March 2018.

Former Nissan Motor Co. executive Greg Kelly (L) arrives at the Tokyo District Court on March 3, 2022. (Pool photo)(Kyodo)

The ruling, seen as an effective defeat for prosecutors, has set the stage for the American lawyer to return home from Japan after he was arrested more than three years ago. The prosecutors had sought a two-year prison term for Kelly, who was Ghosn's right-hand man.

Kelly will appeal the suspended sentence, with his team of lawyers saying he is "completely innocent." In a statement in Japanese, Kelly said he was "shocked" to hear the ruling and "cannot understand" why the court convicted him on one of the counts.

"I have consistently acted in the best interests of Nissan and there is no fact at all that I have been involved in an unlawful act," he said.

The prosecutors said it is regrettable the court rejected part of their argument and that they will consider whether to appeal after reviewing the ruling.

The Associated Press reported Ghosn called the judgement a "save-face verdict" for the prosecutors and other Nissan executives that he accuses of colluding against him, Kelly and all shareholders.

"I am relieved for Greg and his family," Ghosn said in a Zoom call with a small group of reporters, according to the report.

Combined supplied photos of Carlos Ghosn (L) and Greg Kelly. (Kyodo)

The court ordered Japan's third-largest automaker to pay fines of 200 million yen ($1.7 million), the same amount that prosecutors had demanded, for submitting inaccurate financial statements for fiscal 2011 through 2017 to regulators.

Kelly, 65, was accused of conspiring with Ghosn in understating his remuneration by around 9 billion yen over eight years through March 2018, violating Japan's financial instruments and exchange law.

Kelly has denied any wrongdoing, while Nissan admitted to failing to declare the former auto tycoon's remuneration in its financial documents.

The court recognized the existence of "unpaid remuneration" for Ghosn, a key point of dispute in the trial, judging it must have been disclosed.

However, the court concluded there was not enough evidence to establish that Kelly was aware of such deferred payments for the period from fiscal 2010 to 2016.

"The chief culprit in this case is former Chairman Ghosn," the ruling said, noting that Kelly did not benefit directly from his involvement.

The ruling was the first judicial decision in the high-profile financial scandal that started to unfold when Ghosn, 67, and Kelly were arrested in Japan in November 2018. Since then, Ghosn has also insisted on his innocence and criticized Japan's judicial system.

The trial was held in the absence of Ghosn after he jumped bail and fled to Lebanon from Tokyo in late 2019. The Middle Eastern nation has no extradition treaty with Japan.

Kelly became the only company executive to face trial after his former colleagues involved in the scandal struck plea bargains with prosecutors and were not indicted.

The district court denied the credibility of some of the testimony made by Toshiaki Onuma, a former head of Nissan's secretary office, who reached a plea bargain with prosecutors. Onuma, 63, has claimed he and Kelly had considered ways to compensate Ghosn together.

"(Onuma's claims) should be studied cautiously as they risk being in line with the intention of prosecutors," it said.

The ruling also said Ghosn conspired with Onuma to falsify financial statements for fiscal 2010 through 2017.

In the trial, which began in September 2020, prosecutors argued that Kelly played a role in coming up with a scheme to compensate Ghosn with deferred payments in addition to his regular pay, an effort to make his salary look smaller than it was to avoid a backlash.

They claimed that a rule introduced in 2010 requiring top executives to disclose annual pay exceeding 100 million yen prompted Ghosn to order his subordinates to seek ways to pay him without making it public.

Kelly has maintained his innocence, saying he just sought legal ways to retain Ghosn even after his retirement so he could continue to provide services for Nissan and that there was no agreement for the alleged deferred payments.

Kelly, who was required to remain in Japan but was joined by his wife, said in a recent interview with Kyodo News that his life while out on bail was "stressful and challenging." They plan to go back to the United States after the ruling "to make up for lost time with the people we cherish," he said.

U.S. Ambassador to Japan Rahm Emanuel released a statement following the ruling, saying, "We are relieved that the legal process has concluded, and Mr. and Mrs. Kelly can return home."

Ghosn has claimed his arrest was due to a plot by some Nissan executives who wanted to oust him to prevent him from pursuing a merger with alliance partner and largest shareholder Renault SA of France as it would hurt the Japanese company's independence.

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Ghosn criticizes Japan's prosecution system as discriminatory