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Kobe Steel pays high price for 'silo' management

Even senior managers were unaware of what other divisions were doing

Kobe Steel's silo-like management system overseen by President and CEO Hiroya Kawasaki, seen here finishing a news conference on Oct. 13 in Tokyo, may have been an incubator for wrongdoing.

TOKYO -- In the wake of unfolding scandal over Kobe Steel's falsification of product data, many industry-watchers point out that the firm's rigid, vertical, silo-like administrative system -- which allowed divisions like steel, and aluminum and copper, to operate outside management oversight -- became an incubator for wrongdoing. The damage caused was already apparent in the company's earnings for most recent fiscal year ending March 2017.

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