Published: Tue, October 10, 2017
Finance | By Loren Pratt

Metals Scandal Forged Over a Decade Rocks Japan Inc. to Core

Metals Scandal Forged Over a Decade Rocks Japan Inc. to Core

The stock dived 22 percent to finish at 1,068 yen ($9.50), its maximum daily loss limit - wiping nearly a billion dollars off the firm's market value.

It follows Takata misleading auto makers about the safety of its airbags, and Nissan's auto recall last week after regulators discovered unauthorised inspectors had approved vehicle quality. Kawasaki Heavy Industries and Mitsubishi Heavy Industries (MHI) supply parts to Boeing including for its 777 Dreamliner.

Honda said doors and hoods are affected, while Subaru said vehicles and aircraft are affected.

According to Boeing Co, which sources many parts from Subaru, there was nothing to date that raises any safety concerns. Kobe Steel said it had no evidence of any safety concerns as a result of the fraudulent certification.

Kobe Steel has said the impact of the data falsification on its earnings is still unknown.

While the scam is reported to have involved numerous employees and gone on for as long as a decade, Kobe said its investigations so far had shown the misrepresentation specifically affected certain copper and aluminium products shipped in September and August.

Toyota said the affected material had been used in the hoods and rear doors of cars made in Japan. "We recognise that this breach of compliance principles on the part of a supplier is a grave issue".


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.

Mitsubishi Heavy Industries said Kobe Steel products were used on its Mitsubishi Regional Jet and rockets, including the H-2A rocket launched on Tuesday morning to put a navigation satellite into orbit.

Kobe Steel, one of Japan's oldest industrial companies, was founded more than a century ago.

Kobe Steel's aluminium and copper operations account for about 20% of total sales, according to data for the quarter ended June 30. "If the aluminum business doesn't work out well", said Takeshi Irisawa, an analyst at Tachibana Securities Co., "I question where the company can make money", given the mainstay steel business remains one of low profitability.

"This is a serious matter that shakes the foundation of fair commercial transactions", said Yasuji Komiyama, director of the metal industries division of Japan's Industry Ministry.

It's another scandal that threatens to undermine confidence in Japanese manufacturing.

Data related to the products' strength and durability. Toyo Tire & Rubber Co. officials were referred to prosecutors in March after the company's 2015 admission it falsified data on rubber for earthquake-proofing buildings.

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