NSANY Nissan Motor Company Ltd (PK)

By Phred Dvorak and Peter Landers 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (December 26, 2018).

TOKYO -- Former Nissan Motor Co. representative director Greg Kelly was released on bail Tuesday, breaking Japanese prosecutors' monthlong hold over one of the defendants in their case against former Nissan Chairman Carlos Ghosn.

A Tokyo court on Tuesday set a Yen70 million ($636,000) bail for Mr. Kelly and granted his request to be released, rejecting an appeal of that decision by prosecutors.

The court also set conditions on Mr. Kelly's release, barring him from traveling outside Japan and forbidding him from meeting with people involved in the case against him.

Mr. Kelly, who had been planning to have spinal surgery in the U.S. before he was arrested last month, is scheduled to get treatment in Japan, according to his Japanese lawyer.

In a statement, Mr. Kelly said he was innocent of the charges against him, and that he looked forward to winning back his honor in court and returning to his family, which lives in the U.S., as soon as he can. He said his time in jail was difficult because of his medical condition and he wanted to see a doctor immediately.

For Mr. Kelly, a 30-year Nissan veteran and top aide to Mr. Ghosn, the Christmas release ends a five-week detention -- largely isolated from outsiders aside from lawyers and consular officials.

Known inside Nissan as a troubleshooter who was fiercely loyal to Mr. Ghosn, Mr. Kelly was one of a handful of Americans to rise to a top executive position at the Japanese auto maker. At various points Mr. Kelly was in charge of corporate communications, personnel and the legal department.

Most recently, Mr. Kelly was one of only three Nissan representative directors -- board members with the power to sign documents for the company -- along with Mr. Ghosn and Chief Executive Hiroto Saikawa. Nissan stripped Messrs. Ghosn and Kelly of that representative status on Nov. 22, although both remain directors.

Mr. Kelly's detention began Nov. 19, when Messrs. Kelly and Ghosn were arrested on suspicion of conspiring to understate Mr. Ghosn's pay on company filings. The pair were subsequently charged. Mr. Ghosn has also said he did nothing wrong, according to his lawyer.

That charge is part of a broader attempt by Japanese prosecutors and Nissan to show that Mr. Ghosn took advantage of his position at the top of Nissan to benefit himself.

Prosecutors have grilled Messrs. Ghosn and Kelly since their arrest, according to prosecutors, a common practice in Japan aimed at producing a confession. Detainees who are arrested by prosecutors can only be held 22 days at most without a chance at bail. Prosecutors arrested the pair again on a similar accusation when that first period ended, restarting the detention clock.

When a Tokyo court on Dec. 20 refused to extend that detention for the full 22 days, prosecutors moved to arrest Mr. Ghosn again on suspicion that he shifted personal losses to Nissan. If proven, that could constitute "special breach of trust," a criminal violation under Japanese company law used when executives abuse their positions for personal gain.

Mr. Ghosn remains in jail without possibility of bail until Jan. 1, and his detention could be extended 10 more days after that. Mr. Ghosn's lawyer has said his client maintains his innocence and hopes to restore his honor at trial.

But Mr. Kelly wasn't rearrested, setting the stage for Tuesday's release on bail.

Messrs. Kelly and Ghosn still face months of litigation. The pair may still be indicted on the suspicion of underreporting Mr. Ghosn's compensation that sparked their second arrest.

Write to Phred Dvorak at phred.dvorak@wsj.com and Peter Landers at peter.landers@wsj.com

(END) Dow Jones Newswires

December 26, 2018 02:47 ET (07:47 GMT)

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