Business / Corporate

Top executives at Hitachi Chemical handed pay cuts in wake of quality inspection scandal

JIJI

Hitachi Chemical Co. said Thursday that its top leaders will be given up to a 50 percent pay cut for three months from December to take the blame for a series of product quality inspection frauds.

The most severe punishment will be handed down to President Hisashi Maruyama and Chairman Kazuyuki Tanaka, while 11 executive officers will take a three-month pay cut of 20 to 30 percent, according to the core subsidiary of Hitachi Ltd.

Executive Vice President Yoshihiro Nomura will be demoted to senior vice president because he was aware of the misconduct, while Executive Officer Masanobu Habiro resigned for his involvement in falsifying inspection data.

In a report released the same day, an in-house special investigation committee said that the improper inspections affected some 30 products, more than half of all products in the company’s lineup.

The affected products included lead storage batteries, semiconductor materials, automotive parts, display materials and print wiring boards.

The report also said that the affected products were delivered to a total of 2,329 client companies.

“We want to solve the mess ourselves,” Maruyama told a news conference, expressing his wish to stay on. Meanwhile, Tanaka resigned from the board of Hitachi.

Inspection frauds were committed at all of the company’s seven domestic plants. The practice began in the 1970s.

At a plant in Mie Prefecture the misconduct continued even after the scandal came to light in June this year.

At a factory in Saitama Prefecture product development staff, not only inspection personnel, were involved in data manipulation. Its plant manager covered up the misconduct.

Overconfidence in the company’s products and flaws in corporate systems were cited as causes of the fraud.

As a preventive measure, the report called for the creation of a product quality headquarters to be led by a chief quality officer.

Maruyama said he reported the outcome of the probe to Hitachi Chairman Hiroaki Nakanishi, who is also chairman of Keidanren, the country’s biggest business lobby.