The U.S. Justice Department has demanded that Kobe Steel Ltd. provide information related to its faked product data scandal, the embattled steel maker said Tuesday.
Company sources meanwhile revealed that the shady practice may have started more than 10 years ago.
The company said last week that the oldest misconduct it has uncovered so far dates back to 2007. But the sources said irregularities over quality control at Kobe’s plants in Japan could date back more than a decade as the scope of suspected products expands from aluminum and copper to steel, Kobe’s mainstay product.
The data manipulation apparently became institutionalized over the years as managers came and went, the sources said. The practice may have continued with the knowledge of plant managers and quality control personnel, they added.
Kobe’s global review of its business units is likely to show further instances of data falsification, another company executive said, asking not to be named as the information isn’t public.
As the company works to contain the fallout from the scandal, it has briefed analysts that short-term liquidity isn’t an issue as it seeks to generate cash including via asset sales.
Japan’s third-biggest steel maker is also considering the sale of its real estate unit, the executive said. Jefferies Japan Ltd. analyst Thanh Ha Pham said that while the company has enough cash and funding to cover short-term needs, it is looking to raise money by lowering working capital and through asset sales, according to a note that followed a briefing with Kobe’s management Monday.
Last week saw Kobe’s stock collapse 41 percent as investors rushed to punish the latest instance of corporate malfeasance in Japan, following similar misconduct around data at companies such as Mitsubishi Motors Corp. and Asahi Kasei Corp. It has since pared those losses.
The Kobe property unit, Shinko Real Estate Co., had fixed assets of ¥89.9 billion, according to a March filing. The company is considering a number of sales options for the business, which leases and sells real estate, including a full divestment, according to the executive, although he said the sale isn’t linked to the company’s wider problems.
None of the 500 customers that may have been affected by the scandal has raised specific safety concerns or recalled products.
Jefferies’ Pham cited management as saying that customer feedback so far, including from beverage can producers and railway companies, is that no immediate recalls are required and that products involved are not a safety concern.
The units implicated in the crisis make the steel, copper, aluminum and other materials that account for over half the company’s revenue, and its supply chain spans some of the largest auto, train and plane makers, including Ford Motor Co., Boeing Co. and Hitachi Ltd.
Toyota Motor Corp. supplier Denso Corp. said it’s expanding its investigation of materials supplied by Kobe after learning that data falsification applied to products other than aluminum and copper, according to spokesman Shuji Kojima.
Subaru is also checking its products, said spokeswoman Miyuki Asuda.
Tokyo Metro Co. and Seibu Railway Co. are investigating whether Kobe’s aluminum parts are used in their trains, spokesmen for the train operators said separately.
Kobe Steel declined to comment on the details of the analyst meeting Monday. A spokeswoman, who asked not to be named due to policy, said the company is currently investigating past records to determine the cause of the falsifications.
The Ministry of Economy, Trade and Industry, which has asked the company for a report on its investigations including causes and remedies, wasn’t immediately available to comment.
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