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Electronics

Mitsubishi Electric used fake-data program in years of deception

Lack of consequences perpetuates insular corporate culture

Mitsubishi Electric's use of falsified data is only the latest in a series of quality-related scandals for the company. (Photo by Yuta Fukushima)

TOKYO -- Mitsubishi Electric used a computer program to generate the falsified data for rail equipment going as far back as the 1980s, highlighting a long record of malfeasance at a company where quality control scandals have brought few consequences.

"This series of instances of misconduct -- some regarding products involved in safety -- is a problem," Chief Cabinet Secretary Katsunobu Kato told reporters Thursday. His comment followed two days of news about faked inspection data revealed by Mitsubishi Electric, first for air-conditioning equipment and then air compressors used in train brakes.

The program in question required source data collected through methods determined in advance by the office. Mitsubishi Electric used the program to automatically fill in reports on inspections specified by customers for products such as air conditioners. For air compressors, the company reused old data instead of conducting new tests on each part after design changes, as is normally required.

This signals systemic involvement in the deception -- further evidence of deep-rooted issues after three years of quality control problems involving products from rubber to semiconductors. Yet the company is seen as responding with a slap on the wrist.

It came to light last year that Mitsubishi Electric had shipped car radio receivers to the European Union that failed to meet local standards. The penalties were limited to executives in the auto equipment division voluntarily returning 5% of their compensation for one month -- a measure that did not include President Takeshi Sugiyama and was not announced publicly.

"Even when there aren't safety concerns, the going rate is around 10% for three months," said attorney Nobuyoshi Shibuya, an expert on corporate misconduct. "Mitsubishi Electric's 5% to 10% for one month is a bare minimum and raises questions as to whether they're taking it seriously."

Such a tepid response has helped preserve a corporate culture where workers prioritize their own divisions over the company as a whole and its customers.

When Mitsubishi Electric recruits engineers, it typically decides the facility where they will work in advance based on their fields of expertise. Employees rarely set foot outside their initially assigned area, which promotes an insular mindset and leads people to put the interests of their own department first.

The company's executive compensation structure also feeds into the problem.

Sugiyama was paid 200 million yen ($1.8 million) in fiscal 2020, with other executive officers receiving around 100 million yen, or roughly $900,000. This across-the-board high pay helps keep divisions from competing with each other, but also discourages officials from speaking up about areas outside their purview, a former employee said.

When companies mishandle quality scandals, their management can be shaken to its core. After Volkswagen was discovered in 2015 to have installed software in vehicles to cheat emissions tests, CEO Martin Winterkorn was forced to resign.

Mitsubishi Electric has formed a committee to look into the quality control problems again, and it will include an outside attorney.

"If we don't take this opportunity to give it everything we've got, we won't be able to fulfill our social responsibilities," an executive said.

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