Kobe Steel to report on causes of data cheating, CEO to speak_Business_Asia Pacific Daily

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Kobe Steel to report on causes of data cheating, CEO to speak

Business2017-11-10

Kobe Steel Ltd (5406.T) said it would announce on Friday the results of an internal investigation into the causes of a data-cheating scandal that has rocked the Japanese steelmaker and affected hundreds of its customers globally. Japan’s third-biggest steelmaker said it would release the internal report, which includes countermeasures to prevent a recurrence, at 4:30 p.m. (0730 GMT). The 112-year-old company admitted last month that workers had tampered with product specifications for at least a decade, causing global automakers, aircraft manufacturers and other companies to check whether the safety or performance of their products had been compromised. No safety issues have so far been identified from the data cheating, which mainly involves falsely certifying the strength and durability of products. Kobe Steel was ordered by the Ministry of Economy, Trade and Industry (METI) last month to provide by around Nov. 12 a detailed explanation of the data cheating and say what steps it would take to prevent future abuses. Chief Executive Officer (CEO) Hiroya Kawasaki submitted the internal report to Akihiro Tada, director general of METI’s manufacturing industries bureau, on Friday and will hold a news conference at 5:00 p.m. (0800 GMT), after releasing the report publicly. “Clarifying your company’s thinking on the causes of this incident is a meaningful step towards restoring trust,” Tada told Kawasaki as he arrived to deliver the report. “I look forward to getting a proper explanation.” But the explanations may not be conclusive as the company has since appointed a trio of outside investigators who are due to report back by the end of the year. Kobe Steel’s internal probe also may not address questions of responsibility, as sources have told Reuters Kawasaki and other executives will decide whether to resign for the scandal happening on their watch only after the external report. “Given the magnitude of the scandal, we expect upper management to get the boot,” Thanh Ha Pham, an analyst at Jefferies in Tokyo, wrote in a note on Friday, without saying when that might happen. Kobe Steel, now the subject of a U.S. Justice Department inquiry as well, has had a Japanese government-sanctioned seal of quality revoked on some of its products and lost customers. As of Tuesday, the company said 470 out of 525 affected customers found no safety issues or their products were deemed safe by Kobe Steel, up from 443 on Oct. 31. The company has said it cannot yet fully state what impact the tampering will have on its finances. Last week, it pulled its forecast for its first annual profit in three years for the 12 months through next March. Kobe Steel’s shares have fallen by nearly a fifth since it revealed the data fabrication a month ago. The company's shares rose nearly 2 percent on Friday, while the Nikkei 225 .N225 fell 0.8 percent. (REUTERS)

Kobe Steel Ltd (5406.T) said it would announce on Friday the results of an internal investigation into the causes of a data-cheating scandal that has rocked the Japanese steelmaker and affected hundreds of its customers globally.

Japan’s third-biggest steelmaker said it would release the internal report, which includes countermeasures to prevent a recurrence, at 4:30 p.m. (0730 GMT).

The 112-year-old company admitted last month that workers had tampered with product specifications for at least a decade, causing global automakers, aircraft manufacturers and other companies to check whether the safety or performance of their products had been compromised.

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

Kobe Steel was ordered by the Ministry of Economy, Trade and Industry (METI) last month to provide by around Nov. 12 a detailed explanation of the data cheating and say what steps it would take to prevent future abuses.

Chief Executive Officer (CEO) Hiroya Kawasaki submitted the internal report to Akihiro Tada, director general of METI’s manufacturing industries bureau, on Friday and will hold a news conference at 5:00 p.m. (0800 GMT), after releasing the report publicly.

“Clarifying your company’s thinking on the causes of this incident is a meaningful step towards restoring trust,” Tada told Kawasaki as he arrived to deliver the report. “I look forward to getting a proper explanation.”

But the explanations may not be conclusive as the company has since appointed a trio of outside investigators who are due to report back by the end of the year.

Kobe Steel’s internal probe also may not address questions of responsibility, as sources have told Reuters Kawasaki and other executives will decide whether to resign for the scandal happening on their watch only after the external report.

“Given the magnitude of the scandal, we expect upper management to get the boot,” Thanh Ha Pham, an analyst at Jefferies in Tokyo, wrote in a note on Friday, without saying when that might happen.

Kobe Steel, now the subject of a U.S. Justice Department inquiry as well, has had a Japanese government-sanctioned seal of quality revoked on some of its products and lost customers.

As of Tuesday, the company said 470 out of 525 affected customers found no safety issues or their products were deemed safe by Kobe Steel, up from 443 on Oct. 31.

The company has said it cannot yet fully state what impact the tampering will have on its finances. Last week, it pulled its forecast for its first annual profit in three years for the 12 months through next March.

Kobe Steel’s shares have fallen by nearly a fifth since it revealed the data fabrication a month ago.

The company's shares rose nearly 2 percent on Friday, while the Nikkei 225 .N225 fell 0.8 percent.

(REUTERS)

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