Kobe Steel scandal widens to 500 firms


The data falsification scandal dogging Kobe Steel Ltd., Japan’s third largest steel maker, expanded Friday as the company revealed more instances of misconduct, including having shipped steel wire and copper products that were untested or did not meet specifications. The company has now confirmed that about 500 customers of Kobe Steel have been affected by the scandal.

It is unclear how many more cases of data falsification will emerge and how much it will financially damage the firm, Kobe Steel Chairman and President Hiroya Kawasaki said during a hastily arranged news conference in Tokyo.

“We are investigating all our business sections … as we were told by the industry ministry, we’d like to complete the investigation as soon as possible,” Kawasaki said.

Kawasaki said Kobe Steel has nearly finished an investigation into its aluminum business and is now probing other sections, such as steel, power and machinery.

At the news conference, the steel maker said it had discovered nine more cases in which the firm had shipped 2,621 tons of copper products over the past year and 8,374 tons of steel products over the past decade.

The scandal has hit Kobe Steel’s stock price hard, ending Friday at ¥805 on the Tokyo Stock Exchange — a 41 percent plunge in just a week.

Kobe Steel’s misconduct has shocked Japan’s business community as its products are used in a wide variety of industries, ranging from parts for shinkansen, cars and aircraft to liquid crystal displays.

Asked whether Kobe Steel plans to financially help affected companies in the supply chain, Kawasaki said, “We have not received specific figures from our customers. We’ll have to talk to them but we are of course ready to shoulder costs.”

The scandal came to light Sunday when Kobe Steel revealed that it had shipped 19,300 tons of aluminum and 2,200 tons of copper products as well as 19,400 pieces of aluminum forging and casting products between September 2016 and August this year.

On Wednesday, Kobe Steel said it had provided steel powder and sputtering target materials, which are used to make items such as LCDs and DVDs, to its customers without the quality inspections it had promised.

Kobe Steel said the misconduct traces as far back as 10 years at its factories where employees falsified inspection data, such as the strength of the products, when customer specifications were not met.

Kobe Steel said it recognized the data fabrication in late August, but did not make it public until it was told to do so by the Economy, Trade and Industry Ministry.

Initially, the firm said that close to 200 companies were impacted but the number jumped to 500 Friday after further investigation.

Kobe Steel is refusing to disclose any client names, but some have voiced concerns.

Central Japan Railway Co., known as JR Tokai, said the aluminum used for its shinkansen trains was found to have not met Japanese Industrial Standards.

“It is deeply regrettable that the products that did not meet the standard were provided,” JR Tokai President Koei Tsuge said, adding that the railway operator has confirmed that the products used do not affect train safety.

Automaker behemoths such as Toyota Motor Corp. have also been affected.

The country’s biggest automaker said Kobe Steel’s aluminum products are used for some car parts, including hoods.

Information from Kyodo added

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