Former Ghosn Aide’s Trial Ends With Declaration of Innocence

The court said it would issue a verdict on March 3. It will also announce a sentence that day if Mr. Kelly is found guilty. Prosecutors have recommended a two-year prison sentence.

Mr. Kelly was arrested alongside Mr. Ghosn, the former Nissan chief executive and chairman, in November 2018. Both were charged with violating a regulation governing executive pay disclosure.

The pay regulation, which came into effect in 2010, required the disclosure of individual executive pay over an amount equivalent to around $1 million. In response to the new rules, Mr. Ghosn took an approximately 50% pay cut to avoid criticism in Japan and France.

Prosecutors allege that Mr. Kelly, a lawyer by training who held various executive posts at Nissan, conspired with Mr. Ghosn so that the Nissan chief could get the kind of compensation he enjoyed before the pay cut without disclosing it. They argued that Mr. Kelly devised ways to defer Mr. Ghosn’s compensation and disguise it as other payments such as consulting fees.

Mr. Ghosn has proclaimed his innocence alongside Mr. Kelly, but he fled Japan for Lebanon in late 2019 because he said he didn’t believe he would receive a fair trial in Japan.

Prosecutors relied heavily on testimony by a Nissan manager named Toshiaki Ohnuma, who ran the department responsible for handling Mr. Ghosn’s salary payments. They showed at trial a set of spreadsheets Mr. Ohnuma created every year dividing Mr. Ghosn’s pay into two categories: paid and postponed remuneration.

Mr. Ohnuma testified that Mr. Kelly was aware of this division. Prosecutors said that showed Mr. Kelly’s attempts to pay Mr. Ghosn after retirement amounted to a secret deferred compensation scheme that should have been disclosed in regulatory filings.

At Wednesday’s closing argument, Mr. Kelly’s chief defense lawyer, Yoichi Kitamura, said the evidence actually showed Mr. Kelly neither planned nor knew of any such scheme.

“Kelly did not know the amount of unpaid remuneration. He didn’t know the existence of unpaid remuneration,” Mr. Kitamura said.

The defense lawyer said Mr. Ohnuma’s testimony about oral discussions with Mr. Kelly couldn’t be trusted. The star witness signed an agreement with prosecutors to cooperate in return for avoiding prosecution himself.

Mr. Kelly told the court that any arrangement to pay Mr. Ghosn after retirement wouldn’t have represented deferred compensation. Instead, such arrangements would have required the former chief “to provide Nissan with substantial services and commitments including a covenant not to compete for several years,” Mr. Kelly said. He said he “took it for granted that any such possibility must be lawful.”

The defense said that Mr. Kelly’s planned amount of postretirement compensation for Mr. Ghosn didn’t change over nearly a decade, suggesting Mr. Kelly always envisioned a payment for postretirement services. Meanwhile, Mr. Ohnuma’s calculations of what Mr. Ghosn could get after retirement rose every year, suggesting he was adding up unpaid compensation that Mr. Kelly didn’t know about, the defense said.

Prosecutors in Japan win over 99% of cases that go to trial, but Mr. Kelly said outside the court that he wasn’t worried.

“I’m not nervous. I know what happened. Others know what happened. We’ve got documents that show what happened,” he said.

Mr. Kelly expressed frustration with the length of the proceedings, during which he hasn’t been allowed to travel to the U.S. to see his family. He said the basic question at the trial was simple.

“Did somebody pay Carlos or promise Carlos Ghosn to be paid deferred compensation? Or were we planning for the future?” he said. “It takes three and a half years to resolve this. I think that’s a pretty long time.”

The trial has become an irritant in U.S.-Japan relations. Former Chicago Mayor

Rahm Emanuel,

who has been nominated by President Biden as U.S. ambassador to Japan, told the Senate last week that he wanted to make the case a priority if confirmed.

Mr. Emanuel was responding at a Senate hearing to

Sen. Bill Hagerty

(R., Tenn.), a former U.S. ambassador to Japan, who said Mr. Kelly was suffering from unfair and barbaric treatment. Japanese officials have said Mr. Kelly was treated fairly under the law.

Write to Sean McLain at sean.mclain@wsj.com