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Electronics

Scandal-hit Mitsubishi Electric supplied train equipment for NY, London

Air conditioners that potentially underwent fake inspections delivered to 15 countries

A New York commuter train: The city's subway received about 2,200 rail cars from Kawasaki Heavy Industries, a key client for Mitsubishi Electric.

TOKYO -- Rail cars equipped with Mitsubishi Electric air conditioners have been shipped to about 15 countries, as the quality control scandal engulfing the Tokyo-based industrial group threatens to bring greater scrutiny in the U.S. and elsewhere.

Mitsubishi Electric last week admitted to falsifying inspection data for air conditioners and air compressors at the company's Nagasaki plant. Roughly 84,600 air conditioner units shipped from the facility between 1985 and 2020, with 68,800 units going to domestic clients and 15,800 sent overseas.

The plant also shipped about 1,500 air compressors domestically over 15 years. The company is still investigating how much of this equipment failed to undergo proper inspections and aims to announce its findings in September.

Mitsubishi Electric generally supplies air conditioners to rolling stock makers, which then sell the finished cars to rail operators. Cars equipped with Mitsubishi Electric-made units ultimately went to about 15 countries, including for subway systems in New York and London, the company said.

But the manufacturer cheated for years on quality checks covering air conditioners and air compressors at the plant, such as by using different methods and conditions than agreed upon with clients, or by copying data from different tests. Misconduct on air conditioner units in particular dates to at least 1985.

Mitsubishi Electric, which previously sold air conditioners to seven rail stock makers overseas, said it will inform those makers if it discovers violations to their contracts during the investigation.

Kawasaki Heavy Industries, a major buyer of Mitsubishi Electric air conditioners, has delivered roughly 2,200 subway cars to New York City Transit over the years. The company said it was investigating the matter with Mitsubishi Electric and could not comment, but that generally speaking, it could consider renovations and other responses based on client demands if product components underwent improper testing.

Experts also warn of potential lawsuits in the U.S. and other overseas markets.

"This situation is similar to the quality scandal involving Kobe Steel, in which the company was investigated not only in Japan but in the U.S. as well," said Akira Inoue, a partner at Baker McKenzie and an expert on American corporate law.

Quality issues could lead to fraud allegations in the U.S. Depending on the terms of relevant contracts, both Mitsubishi Electric and Kawasaki Heavy could face investigations in the country.

"If the issue is deemed a safety risk, it could catch the attention of the U.S. Justice Department and lead to an investigation," said Masahisa Ikeda, a partner at U.S.-based law firm Shearman & Sterling.

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