Kobe Steel says senior executives knew about data tampering

[December 21, 2017]  By Osamu Tsukimori

TOKYO (Reuters) - Kobe Steel Ltd <5406.T>, at the centre of a data-falsification scandal that has shaken Japan's manufacturing industry, admitted for the first time that executives were aware of the cheating, and reassigned three senior officials.

Japan's No.3 steelmaker, which supplies the manufacturers of cars, planes and trains across the world, has said about 500 customers had received products with falsified specifications, throwing global supply chains into turmoil.

Outside investigators appointed by Kobe to look into the malpractice have found that senior officials in the company's copper and aluminium business knew of some of the cheating.

"Based on this information, as of today, we have reassigned these three executives," the company said, adding it would decide on any punishments after the probe was completed.

The three were senior officials in the company's aluminium and copper business, where most of the cheating occurred.

Kobe Steel "takes it very seriously that current executive officers were aware of this," Executive Vice President Naoto Umehara told reporters at a media briefing.

Kobe also said the investigation would be completed by around the end of February, two months later than expected.

The 112-year-old company has had Japanese government-sanctioned seals of quality revoked on many of its products and is also the subject of a U.S. Justice Department inquiry.

Kobe Steel Executive Vice President Naoto Umehara attends a news conference in Tokyo, Japan December 21, 2017. REUTERS/Kim Kyung-Hoon

Kobe Steel has been in touch with the U.S. Justice Department multiple times since an initial contact through lawyers, Yoshitsugu Nishimura, a manager of public relations, said at the briefing. He declined to provide further details.

No safety issues have so far been identified from the data cheating, which mainly involves falsely certifying the strength and durability of products.

CEO Hiroya Kawasaki said in November that his "ultimate management responsibility" will be decided after the outside investigators complete their report on the case.

A series of compliance failings by Japanese companies have surfaced in the past few months.

Scandals have involved among others, Nissan Motor <7201.T> and key product suppliers to global manufacturers, Mitsubishi Materials Corp <5711.T> and Toray Industries <3402.T>.

(Reporting by Osamu Tsukimori; Additional reporting by Ritsuko Ando; Writing by Aaron Sheldrick; Editing by Himani Sarkar and Tom Hogue)

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