Kobe Steel scandal widens to steel products, 500 customers
Data fraud revealed at group company plants in China, Malaysia and Thailand
KENTARO IWAMOTO, Nikkei staff writer
TOKYO -- Kobe Steel's data falsification scandal worsened on Friday, as the steelmaker revealed nine additional fraud cases, this time involving its flagship steel products. Including aluminum and copper products that the company disclosed earlier this week, the falsely certified products were shipped to total of 500 customers.
Among the newly revealed cases were products made by Kobe Steel's group companies in China, Malaysia and Thailand.
At a press conference in Tokyo, CEO Hiroya Kawasaki bowed and offered apologies. The company intends to offer compensation if customers demand it, he said.
The nine cases revealed Friday involve products shipped between April 2007 and August 2017, of which four cases were steel products. The company said no safety issues have come to light so far.
One steel product case, for example, was discovered at a Chinese company. It sold a total of 3,525 tons of steel wire to a customer without the necessary inspections from June 2011 to July this year. The company explained that the oversight was detected due to a personnel change.
According to Kawasaki, the four steel cases had been reported to Kobe Steel's board meeting as improper practice of compliance. However, the company did not disclose them until Friday because it said the problems were resolved between Kobe Steel and its customers.
On Friday, it was also revealed that data fraud occurred at Asian group companies in China, Malaysia and Thailand. Asked why the fraud was conducted in so many various places, Kawasaki only said the company "is still scrutinizing the causes" and did not give a clear answer.
Kobe Steel earlier said it had shipped data-falsified aluminum and copper products to some 270 customers. Including the cases revealed in Friday's announcement, the customers that used the falsified products came to 500.
Kobe Steel declined to disclose customer names, but it has been reported that they include global automakers such as Toyota Motor, Tesla and General Motors, as well as aircraft makers such as Airbus and Boeing.
As more cases of fraud have been disclosed, the financial damage to Kobe Steel is becoming worse. CEO Kawasaki stressed that the fraud cases revealed so far account for about 4% of the company's sales, implying that 96% of its business has been operating properly.
However, the company's share price dropped further Friday, ending 8.7% down from Thursday's closing. Kobe Steel's market value decreased some 40% in just four days this week.
Moreover, the corporate bond market experienced a "Kobe Steel shock," as one analyst put it, after the company's admission earlier this week of the wrongdoing.
On Tuesday, a day after the initial admission, the price of its 10-year debt issued in 2015 plunged to 92.24 yen from the previous week's 101.54 yen, below the issuing price of 100 yen, as investors started to worry about the medium-term impact on the company's operations. Prices fell further the next day, to 88.47 yen.
The credit default swap premium on Kobe Steel's debt -- which reflects the cost of insuring against default -- rose sharply as well.
Kawasaki reiterated Friday that the company will disclose the results of its internal investigation in a month.
Nikkei staff writer Shotaro Tani contributed to this story.