Markets

Kobe Steel confirms data tampering in iron powder products, research unit

Kobe Steel confirms data tampering in iron powder products, research unit

Leading Japanese steelmaker Kobe Steel (Kobelco) has admitted that it has discovered falsified data related to the quality of commodities like rolled aluminum, copper and powdered iron ore, pushing hundreds of its customers to examine their supply chains. But one industry source alleges that the quality control problem for steel materials may extend into the offshore sector, and beyond Kobe Steel's products alone. The company has found possible further cases of tampering, the CEO said, including in overseas operations.

The stock dived 22 percent on Tuesday to finish at 1,068 yen ($9.50), its maximum daily loss limit - wiping nearly one billion dollars off the firm's market value.

Shares in Kobe Steel fell by almost 40% in two days, wiping more than $1.5bn (£1.1bn) off its market value after the firm admitted fabricating data about the strength and durability of products it delivered to more than 200 companies.

The country's trade ministry also wants Kobe Steel to provide reasons for the data fabrication and prevention measures within a month, Mr Kawasaki told reporters after meeting with the ministry. It also found one case of falsified data on iron powder products - material used for vehicle parts such as gears - that were shipped to a customer.

"Nothing in our review to date leads us to conclude that this issue presents a safety concern, and we will continue to work diligently with our suppliers to complete our investigation", said a spokesman for the United States company. The government has urged Kobe Steel to clarify the extent of the misconduct.




"We have confirmed that aluminium from Kobe Steel is used in the hoods and doors of some of our vehicles", Nissan said in an email.

The corrosive business practices have raised broader questions over corporate governance in Japan, and cast doubt on the integrity of a manufacturing industry once the envy of the world. In 2015, it was revealed that Toyo Tire & Rubber fabricated data to secure government approval for materials to absorb shocks from earthquakes. They included Toyota Motor Corp, Central Japan Railway, Mitsubishi Heavy Industries, Mazda Motor Corp and Subaru Corp, the companies confirmed.

It's not the first time Kobe Steel has been caught up in falsifying data. And in 2006, Kobe Steel said its Kakogawa steelworks in western Japan falsified soot emissions data over five years.

The crisis at Kobe Steel is the latest in a string of recent scandals at major Japanese companies. The company said it was assessing its options.

Sales at Kobe Steel's aluminum and copper division fell 6.4 percent to 323.3 billion yen ($2.9 billion) in the year to March, and recurring profit dropped by more than a fifth to 12 billion yen.


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