Investigators probe quality data fabrication by Kobe Steel, criminal charges could ensue

Updated 2018-04-26 11:40:02 Xinhua

Japanese investigators on Wednesday began a probe into a protracted data-fabrication scandal by Kobe Steel Ltd., that authorities believe might have violated an unfair competition law, which could result in criminal charges.

By misrepresenting inspection data and providing false information about the strength and durability of its products, authorities believe the firm, Japan's third-largest steelmaker, may be criminally liable and could face criminal charges.

"We deeply apologize for causing great trouble to the people involved" and the company will "sincerely respond to the probe and cooperate with the authorities," Kobe Steel said in a statement.

The scandal-mired steelmaker said in October last year that it had found cases of improprieties regarding inspection data that failed to meet industry inspection standards.

The results of an internal probe initially found that products sold that had their inspection data fabricated were shipped to hundreds of companies.

Japan's quality control authorities subsequently revoked certification for some copper products of a Kobe Steel subsidiary and the Japanese government said it had tasked industrial standards-approved bodies to carry out inspections at Kobe Steel Ltd.'s plants in an effort to deal with the company's wide-reaching falsified inspection data scandal.

Kobe Steel Ltd. had initially admitted to falsifying inspection data on a number of its products, including aluminum, copper, steel powder and special steel products.

It came to light that the embattled steel maker's own investigations had, additionally, revealed cover-ups and more incidents of data falsification thereafter.

Companies ranging from automakers and airplane manufacturers, to defense equipment and Shinkansen bullet train makers, have been affected by the scandal.

Kobe Steel said that its products, with falsified data about their strength and durability, had been sold to around 600 companies.

Investigations first revealed that Kobe Steel knowingly shipped at least 20,000 tons of aluminum and copper products with fabricated inspection data. The products were sent to around 200 companies.

The scandal-plagued firm also admitted that an internal probe had revealed that 140 tons of iron powder shipped in fiscal 2016 did not meet customer specifications.

It also said that one of its subsidiaries, Kobelco Research Institute, had falsified data related to the production method of liquid crystal displays, DVDs and other electronic equipment.

In Japan, major railway operators Central Japan Railway and West Japan Railway have stated that their Shinkansen bullet trains contained aluminum parts sourced from Kobe Steel that did not meet industry standards.

Beyond automakers and trains, Kobe Steel has also been implicated in fabricating data for aerospace and defense-related products.

Along with domestic firms such as Toyota Motor Corp., Nissan Motor Co., Honda Motor Co. and major Japanese railway operators, the scandal has also affected overseas companies including General Motors Co., Ford Motor Co., Airbus and Boeing Co.

These companies have been undertaking investigations to see if their products have been adversely affected by Kobe Steel's erroneous data-related practices.

As a result of this, the U.S. Department of Justice ordered Kobe Steel to handover documents relevant to the data falsification scandal, and a number of the firm's overseas clients have filed class-action civil lawsuits against Kobe Steel for providing products that were not up to industry specifications.

Based on the company's latest findings following the conclusion of a probe and a report released in March, Kobe Steel said in order to make it look like their products met their clients' specifications, they deliberately falsified the strength and other data pertaining to the products.

The company admitted that more than 40 employees were involved in the falsification practice, which the firm said had been endemic in the company since the 1970s.

Kobe Steel was founded in 1905 and has been a bastion of Japan's manufacturing sector.

The revelations of the data fabrication scandal, however, have cast doubts over corporate governance in the manufacturing industry and beyond in Japan, and cast serious aspersions over Japan's once stellar reputation for precision manufacturing, industry experts here said.

Last year saw a slew of scandals related to Japanese manufacturers, including Mitsubishi Materials Corp.'s subsidiaries who were found to have falsified quality data for products used in multiple industries, including in equipment used by Japan's Self-Defense Forces (SDF), which compounded growing concerns about quality control in Japan's manufacturing sector.

Uncertified safety checks were also found to have been routinely carried out by automakers Nissan Motor Co. and Subaru Corp., which led to extensive recalls.

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