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Mitsubishi Electric CEO Sugiyama quits over fake inspections

Outgoing chief admits 'systemic wrongdoing' going back decades at industrial group

Takeshi Sugiyama said he was "keenly aware of my responsibility for damaging trust" during a press conference in Tokyo on July 2.  (Photo by Arisa Moriyma)

TOKYO -- Mitsubishi Electric President and CEO Takeshi Sugiyama said he will resign after revelations that the company used a computer program to fake inspection results for industrial equipment going back as far as the 1980s.

"I am keenly aware of my responsibility for damaging trust," Sugiyama said in a news conference on Friday, describing the cheating uncovered by an internal probe as "systematic wrongdoing." The company will look to choose a replacement this month.

The news conference followed two days of revelations of faked inspection data, first for air-conditioning equipment and then air compressors used in train brakes.

The quality scandal deals a blow to the reputation of an industrial group that produced Japan's first integrated circuit chip in the 1960s and today supplies technology for products including factory robots, military radar and satellites. Mitsubishi Electric holds a roughly 60% Japanese market share in electrical equipment for rolling stock.

Japan's minister for economy, trade and industry, Hiroshi Kajiyama, told reporters at separate news conference the revelations were "very unfortunate" and could "do great damage to the trust in Japanese manufacturing."

Shares of Mitsubishi Electric, a Nikkei Stock Average component, rose 2.61% Friday, closing at 1,554.50 yen.

About 84,600 air conditioners and 1,500 air compressors may have been involved in the falsified tests. Mitsubishi Electric has said it believes the safety of the products was not compromised.

A survey of 160 employees at a factory in Nagasaki Prefecture, where the improper inspections were carried out, revealed that senior managers in the quality control and design departments were aware of what was going on.

The company has reviewed its quality control measures three times since the 2016 fiscal year. Inspections in 2018 and 2019 were conducted by an internal team, but did not uncover the falsifications.

Mitsubishi Electric said that this time it will set up an investigation committee chaired by an outside lawyer, which will cooperate with the audit committee to clarify the situation and create measures to prevent such issues from recurring.

The result of the investigation and measures for inappropriate inspections of air conditioners for railway rolling stock will be announced in September.

When asked about issues with the company's culture, Sugiyama said: "We weren't able to learn from what happened, and departments couldn't work together effectively." 

Though the company discovered the faked inspections June 14 in an internal investigation and reported the problem to the industry ministry shortly thereafter, it did not inform shareholders at its annual general meeting Tuesday.

The board "concluded that it would not be appropriate to cause unease by talking about it" before it had been properly investigated, Sugiyama said.

"We should have done better."

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