The financial misconduct trial of former Nissan executive Greg Kelly began Tuesday with Kelly saying he committed no crimes and was only trying to keep his star boss Carlos Ghosn from leaving.
The charges being heard at Tokyo District Court center around Kelly’s alleged role in failing to report to Japanese authorities the future compensation of Ghosn, who led Nissan Motor for two decades.
Japanese prosecutors outlined allegations of what they said was a complex and clandestine scheme to pay Ghosn more than the amount the company had reported as compensation. Kelly denied the allegations and said everything that was done was intended to keep Ghosn, whom he called an “extraordinary executive,” at Nissan.
“This was all in the best interests of Nissan,” Kelly said, reading from a statement.
“I deny the allegations. I was not involved in a criminal conspiracy,” said Kelly, whose trial opened on his 64th birthday.
Ghosn was arrested in late 2018 at the same time as Kelly but jumped bail and fled to Lebanon late last year. Since Lebanon has no extradition treaty with Japan, he may never face trial. But Kelly evinced no rancor over being left to face trial himself.
He recounted how in the late 1990s, when Nissan was losing money, the French automaker Renault bought a stake in Nissan and sent in Ghosn to help turn the ailing Japanese car maker around.
The experts believed Nissan was doomed, Kelly said, but “Mr. Ghosn proved the experts wrong. Under Mr. Ghosn, Nissan became very profitable.”
Top management at Nissan fretted they might lose Ghosn, who occasionally complained he could make more money elsewhere even though he was paid more than most Japanese top executives. They researched lawful methods to provide incentives for him to say, consulting with in-house and outside attorneys to try to retain him.
“The evidence will show that I did not break the law,” said Kelly, who has a law degree and was hired by Nissan in the US in 1988.
Kelly’s head defense lawyer Yoichi Kitamura said little apart from: “My client is not guilty.”
Later on in the session, another attorney gave more details about the defense’s position, stressing that some of the alleged schemes to pay Ghosn were considered and not finalized, or never signed by Ghosn. Kelly was not involved in a couple of the schemes, he argued.
Kelly’s wife, Dee, who attended the session, defended her husband outside the courthouse. She said her husband had been going over the evidence for the trial to prepare for the case.
“Greg has done nothing wrong,” Dee Kelly said. “I’m very proud of him. He’s an honorable man.”
Nissan is also facing the same charges in the trial as Kelly but has acknowledged guilt and is not contesting the charges. It is paying a 2.4 billion yen ($22.6 million) fine.
A representative for Nissan told the court the pay schemes did not benefit Nissan and were aimed at Ghosn’s personal gain, but instead damaged investor trust and tarnished the company’s brand.
The prosecutors said that in 2010 Ghosn returned to Nissan 700 million yen (about $6.6 million) that exceeded the amount Nissan would disclose as his compensation. The company considered various ways to pay more compensation to Ghosn, such as paying him through an overseas or outside company, selling him real estate at a discount, giving him a loan that would be forgiven later or increasing his post-retirement compensation.
They said the discussions of how to pay Ghosn more than would be legally disclosed were made “on the premise that he was certain to receive the payments.”
Ghosn has vigorously defended himself, saying he is innocent. The defense has long argued Ghosn’s compensation was never agreed upon, let alone paid.
As is routine in Japanese trials, Tokyo District Prosecutors read from a long opening statement outlining their allegations that Ghosn’s compensation was underreported from 2011-2018 by almost half. They contend these were “false entries,” a violation of the Financial Instruments Law.
Business experts say Japanese executives are often promised pay but with conditions such as the company performance, and they can end up not getting any money, meaning that how such compensation should be reported may be unclear.
Acquittals are extremely rare in Japanese criminal trials, more than 99 percent of which result in convictions. Critics have said the system is unfair. But Japanese officials defend the system as having led to a relatively crime-free society, even saying that only those who are almost certainly guilty are being charged.
The maximum penalty for the charge of falsifying fiscal statements is 10 years in prison. The trial is expected to continue for about a year.
Judge tosses quadriplegic defense in hedge fund manager sexual harassment case
A federal judge has ruled that being a quadriplegic did not necessarily stop a hedge fund manager from sexually harassing his employees.
Influential biotech investor Sam Isaly — who left his $15 billion hedge fund after a scathing report claimed he “perpetuated a toxic culture of sexual harassment” — has had his defamation suit against the publisher tossed.
The 75-year-old Isaly had sued the company behind the scandalous report, Boston Globe Media Partners, for defamation in 2018, claiming that a teenage wrestling injury that left constrained to a wheelchair with assistants to help him perform menial tasks made it impossible for him to have done the horrible deeds described in the report.
But Manhattan federal judge Laura Taylor Swain rejected the notion that Isaly’s condition prevented him from carrying out the alleged abuses, including “routinely subjecting young female assistants to pornography in the workplace, lewd jokes, and pervasive sexist comments.”
Isaly left OrbiMed in December 2017, a week after the article emerged in health care news site STATNews, citing five people who worked for Isaly between 2000 and 2015, including one male investment professional.
Isaly’s former assistant, Delilah Burke, told STATNews that she once found a “flesh-colored vibrator” sitting inside Isaly’s briefcase after he asked her to retrieve some files. Isaly then erupted in laughter, the report said.
“The vibrator thing is when I quit,” Burk told the publication. “It was just, ‘You’re disgusting. I’m leaving. This is it.’’
Isaly also liked to “sprinkle his to-do lists … with dirty jokes and cryptic setups that would expose Burke to something lewd on the internet,” including asking her to look up “kit kat shuffle,’’ a euphemism for masturbation, the report said.
Isaly, who has denied the allegations, claimed the reporter failed to adequately investigate whether his disability made it impossible for him to have done the things described.
But Judge Swain determined that the only real allegation against that required Isaly to use his hands was the pair of breast implants he allegedly palpated “like stress balls during idle conversation.”
On that topic, Swain noted that Isaly “discussed feeling the texture of such implants” in am extensive interview with STATNews, and that the reporter on the story had observed Isaly using his hands to eat with a fork.
Isaly’s lawyers say he intends to appeal the ruling. “The article didn’t just fail to tell its readers that Mr. Isaly is a quadriplegic,” said the statement by lawyers with Carter Ledyard & Milburn LLP. “It falsely suggested that Mr. Isaly’s only disability involved being ‘paralyzed’ and without ‘the use of his legs’ when in fact his disability is substantially greater and prevents him from doing many of the acts of which he has been falsely accused.”
WeWork sells control of China business to private equity firm
WeWork has sold a majority stake in its China business to a private-equity firm in the troubled office-sharing startup’s latest effort to cut costs.
The deal announced Thursday will hand control of the unit to Trustbridge Partners, which led a new $200 million investment for WeWork China. Trustbridge operating partner Michael Jiang will lead the unit as acting CEO, WeWork said.
WeWork will keep a minority stake in the Chinese business and collect an annual fee for the WeWork brand, the company said.
“Having watched the execution of WeWork in Greater China over the past few years, and the growing need for flexibility accelerated by the pandemic, Trustbridge firmly believes the demand that WeWork provides will only continue to increase,” Feng Ge, managing partner at Shanghai-based Trustbridge, said in a statement.
WeWork has moved aggressively to slash costs and focus on its core office-rental business since a series of scandals involving ex-CEO Adam Neumann derailed its plans for an initial public offering last year.
The New York-based company said last month that it had almost cut its cash burn rate in half and snagged a new $1.1 billion financing commitment from Japanese investment giant SoftBank, its biggest financial backer.
WeWork has more than 800 office locations around the world, including 103 buildings across China, according to its website. Its Chinese tenants include tech giants Tencent and Alibaba, according to CNBC.
With Post wires
Novavax stock soars after start of coronavirus vaccine trial
Novavax’s stock price surged Friday after the biotech firm started a key late-stage trial of its experimental coronavirus vaccine.
Shares in the Maryland-based company soared nearly 11 percent to $113.56 following its Thursday announcement that it kicked off the Phase 3 study in the United Kingdom, which is battling a surge in COVID-19 infections.
The trial aimed at proving whether Novavax’s vaccine is safe and effective will enroll up to 10,000 people over the next four to six weeks, the company said. The participants will range in age from 18 to 84 years old, with half getting two shots of the vaccine, known as NVX-CoV2373, and the other half receiving a placebo.
“With a high level of [coronavirus] transmission observed and expected to continue in the UK, we are optimistic that this pivotal Phase 3 clinical trial will enroll quickly and provide a near-term view of NVX-CoV2373’s efficacy,” Dr. Gregory M. Glenn, Novavax’s president of research and development, said in a statement.
Data from the trial will support Novavax’s applications for regulatory approval in the UK, the European Union and other countries, Glenn added. Novavax said it plans to publish the study’s full protocol in the coming days.
Phase 3 trials are currently underway in the US and Europe for four other potential coronavirus vaccines, including candidates from AstraZeneca, Pfizer, Moderna and Johnson & Johnson.
Pfizer and Moderna have said they could know by October or November whether their vaccines work, but US officials don’t expect a shot to be widely available until next year.
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