Mitsubishi Electric Corp. has admitted it overcharged on defense- and space-projects ordered by the Defense Ministry, the Cabinet Satellite Intelligence Center and the Japan Aerospace Exploration Agency.
The ministry and the center said they will not in principle sign project contracts with the electrical machinery manufacturer until the situation is fully investigated and the company repays the amounts it overcharged them.
JAXA also said it has banned the company from bidding for projects.
Mitsubishi Electric has not revealed how much it overcharged.
The company said it overcharged the Defense Ministry for designing a medium-range surface-to-air missile and also inflated fees for a Cabinet Satellite Intelligence Center project on intelligence satellites that was subcontracted to JAXA. Mitsubishi Electric padded personnel costs for both projects.
Chief Cabinet Secretary Osamu Fujimura called the incident “truly regrettable.” At a news conference Friday, he urged Mitsubishi Electric to “conduct a thorough investigation and respond stringently.”
The Defense Ministry said the company fudged data related to its work process on the missile project, for which the ministry placed an order worth around ¥33.6 billion in fiscal 2009. The missiles are deployed in the Tokyo metropolitan area for air defense.
According to sources, a person related to Mitsubishi Electric blew the whistle last fall and the revelation was passed along to the Defense Ministry and JAXA.
The ministry conducted a probe of the company’s plant in Kamakura, Kanagawa Prefecture, that develops and makes equipment for the ministry and also manufactures satellites.
During the probe, which included interviewing employees and scrutinizing documents on the work process, the ministry discovered that the work hours and number of employees did not reflect real-life conditions, the ministry said.
In response to the probe, Mitsubishi Electric admitted it had gouged the government. The ministry is still investigating the scale of the overcharging and when it began, the sources said.
The government plans to recover the amount it was overcharged by the company and will press Mitsubishi Electric to implement measures to prevent a recurrence, Fujimura said.
Starting in 2002, the company has won orders for several intelligence satellites The satellites cost around ¥30 billion to ¥40 billion each.