Kobe Steel expected to be indicted in data fabrication scandal

Kyodo

Kobe Steel Ltd. is expected to be indicted over a data fabrication scandal that rocked the manufacturing industry, as police are set to refer the company to prosecutors possibly next week, sources familiar with the matter said Thursday.

The actions are likely to be taken against the firm for allegedly violating a law preventing unfair competition by systematically misrepresenting the quality of its products for decades.

The police are also considering referring to prosecutors the personnel involved in the alleged fabrication at three manufacturing plants.

While the special investigation team of the Tokyo District Public Prosecutor’s Office is likely to indict Kobe Steel, it will also consider whether or not to prosecute individuals in connection with the data fabrication, according to the sources.

In June, the Metropolitan Police Department and the investigation team searched five company offices, including the Tokyo headquarters of Kobe Steel.

The investigators have examined materials seized in the raid and have questioned personnel concerned.

The steel supplier has admitted to falsifying inspection data for aluminum and copper products, which have been supplied to over 600 companies at home and abroad, and are used in cars, aircraft, space rockets and defense equipment.

The U.S. Justice Department has launched a separate probe into the case and asked Kobe Steel to submit documents linked to the scandal.

According to investigative sources, Kobe Steel has allegedly falsified quality data of products at the Moka Plant in Tochigi Prefecture, Chofu Works in Yamaguchi Prefecture, and Daian Works in Mie Prefecture, to make its products appear as if they met client specifications.

Based on the company’s final report released in March, the steelmaker altered data pertaining to strength and other attributes at 23 domestic and overseas plants, and the fabrication at the Moka Plant dates back to the 1970s or earlier.

Major carmakers, including Toyota Motor Corp. and Honda Motor Co., have said they used Kobe Steel products in their vehicles, but announced earlier this year that the safety of their cars was not affected. Honda also confirmed the safety of its business jet aircraft.

Affected products have also been used by Central Japan Railway Co. for bullet trains and Mitsubishi Heavy Industries Ltd. for Mitsubishi Regional Jet passenger planes. Mitsubishi Heavy also said it did not affect the safety of the planes.

JR Central has decided to start replacing around 1,100 aluminum parts on the bullet trains from February this year as those parts made by Kobe Steel did not meet the strength standard of the railway operator.

Customers in the United States and Canada have filed class-action lawsuits seeking compensation for the use of substandard products manufactured by the company.

Japan Inc. has recently been hit by numerous quality control scandals, also involving major automakers such as Nissan Motor Co. and Subaru Corp., which have damaged the reputation of the country’s manufacturing sector.