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Lack of automation let Kobe Steel manually manipulate inspection certificate process, official says

JIJI

Some Kobe Steel Ltd. plants lack systems that automatically input product inspection data from measuring devices to produce inspection certificates, it was learned Saturday.

The creation of inspection certificates “was not fully automated at our factories, leaving room for doing something irregular,” a senior Kobe Steel official said.

Workers at some plants have been writing down measurements by hand and manipulating the data before entering it into the computer systems.

Believing that the manual input process has become a hotbed for data falsification, the steel maker plans to ensure that automated systems are used to handle inspection data.

On Oct. 8, Kobe Steel announced that data on its aluminum and copper products had been falsified. The scandal has since spread to its mainstay steel products. The company is trying to grasp the scale of the misconduct, mainly by checking documents kept at factories and questioning former and current employees.

The company suspects that various falsification methods were in place at its factories, though no how-to documentation that could provide evidence has been found so far, sources said.

The firm inspects products before shipment to see whether they meet clients’ standards. Substandard products are shipped anyway in a practice known as tokusai, if clients agree to it. But consent for tokusai was not obtained from some clients.

“At some factories, products with falsified data were also treated as tokusai,” another Kobe Steel executive said.

The firm is working to compile an additional investigative report by the end of the month to comply with a request from the Ministry of Economy, Trade and Industry. It is also scrambling to wrap up the investigation and finalize preventive measures by mid-November.

The scandal could affect thousands of clients at other Kobe Steel group firms.

According to Tokyo Shoko Research Ltd., seven domestic Kobe Steel firms, including the parent, together have a total of 3,143 corporate clients.

The six others are Kobelco & Materials Copper Tube Ltd., Kobelco Research Institute Inc., Nippon Koshuha Steel Co., Shinko Metal Products Co., Shinko Aluminum Wire Co. and Shinko Wire Stainless Co.

The seven sold their products directly to 583 companies — including 129 in Tokyo, 97 in Osaka Prefecture, 76 in Hyogo and 30 in Kanagawa — and indirectly to 2,689 businesses.

In total, Kobe Steel and 27 group firms, including its consolidated subsidiaries listed in the parent’s financial statements, have 10,942 corporate clients.