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IHI admits to 211 faulty checks, months after internal report

Problem at Japanese machinery maker was kept buried until ministry probe

General Electric engines were among those involved in IHI's improper inspections.   © Reuters

TOKYO -- Japanese heavy machinery maker IHI said Friday that 211 cases of faulty inspections of aircraft engines were uncovered by an ongoing transport ministry investigation, nearly a year after a whistle-blower report at a Tokyo facility.

Two-thirds of the problematic inspections related to engine maintenance, with components making up the other third. Of the more than 200 engines inspected by IHI over two years, problems were found with checks of 13 engines from General Electric and International Aero Engines. Inspectors lacked the necessary credentials in 208 cases, and the other three involved departures from the prescribed procedures.

The revelation comes as Japanese automakers labor to regain trust after similar issues. After a string of faulty checks surfaced at Nissan Motor and other manufacturers in 2017, IHI reviewed its quality-management operations, yet failed to uncover any wrongdoing.

Last April, an internal report warned of improper inspection practices at IHI's Mizuho works in Tokyo. The plant leadership spoke to workers, but failed to confirm the problem. President Tsugio Mitsuoka reportedly was not notified of the situation at the time. Finally in January, when the transport ministry conducted on-site investigation at IHI, the company acknowledged the transgressions.

"We apologize from the bottom of our hearts to all stakeholders," Mitsuoka said at a news conference Friday in Tokyo.

This is not IHI's first major scandal. Its aircraft engine maintenance segment was found in 2004 to have falsified data, leading to an improvement order from the transport ministry. And in 2007, IHI was forced to retroactively slash the previous fiscal year's earnings due to losses in the plant engineering business, prompting the Tokyo Stock Exchange to issue its first-ever "security on alert" designation and putting the company on the brink of delisting.

Asked about the management team's responsibility, Mitsuoka said his priority is to get the matter under control and regain trust while taking steps to prevent a recurrence. He added that an advisory committee made up mainly of outside directors will discuss any changes to the leadership, including Mitsuoka's post.

With the ministry investigation still continuing and IHI labeling its Friday statement as an interim report, more dirt could be revealed. Failing to quickly address the issue would erode IHI's earnings, as dozens of engines are being held at the Mizuho works, which has suspended service.

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