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October 11, 2017

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Japan to curb fallout from Kobe Steel’s falsified data

JAPAN’S government sought yesterday to contain the fallout from the disclosure by the nation’s third-biggest steel maker, Kobe Steel Ltd, that it had fabricated data on components used in cars, aircraft and space rockets, sending shock waves through the Japanese manufacturing sector.

Faced with the latest in a series of missteps that have undermined Japan’s reputation for high-quality production, the industry ministry instructed Kobe Steel to assess the safety impact from the scandal.

The company said products used by about 200 companies were certified with falsified data. They included Toyota Motor Corp, Central Japan Railway, Mitsubishi Heavy Industries, Mazda Motor Corp and Subaru Corp, the companies confirmed.

Analysts say the announcement further tarnishes the reputation of Japan’s globe-trotting manufacturers, long celebrated for their high-quality products. It could also undermine confidence in Prime Minister Shinzo Abe’s moves to improve corporate governance as part of his program of Abenomics.

The admission from the steel and aluminum maker follows scandals involving falsified data at household names such as Nissan Motor, Mitsubishi Motors and Takata Corp, which filed for bankruptcy earlier this year.

Toshiba Corp is still battling the fallout of a scandal involving reporting inflated profits.

“Looking back over several years, foreign investors have bought Japanese stocks on expectations for Abenomics, but among the ‘three arrows,’ the growth strategy isn’t functioning,” said Makoto Kikuchi, CEO of Myojo Asset Management.

“While they say they’re strengthening corporate governance, improprieties focused on manufacturing have been popping up. Going forward, this will be a body blow to Japanese shares.”

Toyota called the revelations a “grave issue,” and said it was making checks on where the components were used and what effect they have on products using them.

In a statement on Sunday Kobe Steel said some aluminum and copper products shipped from September 2016 to August 2017 were falsely labeled.

Kobe Steel said the misconduct involved dozens of staff and possibly stretched back 10 years. It apologized and said it had appointed lawyers to investigate.

Aluminum castings, forgings and flat-rolled items, along with copper strips and tubes were among the products affected, the company said in a statement.

“These are improper actions that could shake the foundation of fair trade,” Yasuji Komiyama, director of the industry ministry’s metal industries division, said at a briefing on the revelations.

“We want Kobe Steel to make the utmost effort to restore trust from society,” he said.


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