Wed, Mar 07, 2018 - Page 10 News List

Kobe Steel CEO quits over fake data

‘REALLY SORRY’:Kobe Steel executives were found to have changed inspection data before shipping their products, a practice that could go as far back as 1970s

AFP, TOKYO

Kobe Steel president and CEO Hiroya Kawasaki, right, bows during a press conference in Tokyo yesterday.

Photo: AP

The head of scandal-hit Japanese steelmaker Kobe Steel yesterday announced his resignation after the firm submitted false strength and quality data for products shipped to hundreds of clients worldwide.

Hiroya Kawasaki’s resignation was a new blow to the reputation of Japan Inc after similar quality-control scandals hit industrial titans ranging from carmaker Nissan to Mitsubishi Materials.

Following a deep and prolonged bow in apology, Kawasaki told reporters: “As I think it’s best to go ahead quickly with reforms under new members, I ... will step down from president on April 1 this year.”

“We have caused trouble to many people. As soon as we can, we would like as many people as possible to think that Kobe Steel has changed,” added Kawasaki, who had been in the job since 2013. “I’m really sorry.”

The firm has not yet named a successor, but pledged to hold a board meeting “in the near future” to select someone to turn the ship around.

A long-awaited report revealed that the scandal was more widespread that first thought, with 163 more clients affected than initially identified.

The document drew the veil on a Web of falsification at various levels of the company, a venerable old firm that once employed Japanese Prime Minister Shinzo Abe.

“We take it very seriously the fact that the misconduct took place at many locations within the Kobe Steel group,” the report said.

The investigation found staff — including in some cases executives — changed inspection data, or made up data, before shipping their products.

Kobe Steel has “deep-seated issues” relating to its corporate culture and compliance, the report said.

“For over 112 years since its founding, the Kobe Steel group has managed its business by valuing the trust of its customers... The recent loss of such trust is truly regrettable,” the report added. “We will go back to our roots ... and commit ourselves to making this moment a true turning point.”

Senior executive Makoto Mizuguchi told reporters it was the firm’s “understanding” that the misconduct stretched back as far as the 1970s.

Kobe Steel vowed to overhaul its compliance procedures and internal structures, ensuring one-third of the board are independent outside directors.

In addition to the resignation, all company directors will have their pay docked by between 10 and 50 percent for a period ranging from one to four months.

The products affected by the scandal included steel wires used in car engines and tires, as well as aluminum used to manufacture Japan’s famous bullet trains.

The firm, founded in 1905, has been at pains to stress there are no safety issues arising from the fake data.

Executives have previously warned of “extraordinary losses” from the scandal, which reportedly affected more than 30 foreign companies, including Boeing Co, Airbus SE and General Motors Co.

Kobe Steel stock has lost about 18 percent since the affair broke in early October last year.

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