Japanese steel firm faked data for metal used in planes, cars

Investors looked set to bail out of Kobe Steel Ltd on Tuesday, after Japan’s third-biggest steelmaker revealed it had fabricated data to show its products met customer specifications in the latest scandal to rock corporate Japan.

Kobe Steel said on Sunday that about 4% of the aluminium and copper products that it shipped from September 2016 to August 2017 were falsely labelled as meeting the specifications requested by customers. The misconduct involved dozens of staff and possibly stretched back 10 years, the company said.

The admission from the steel and aluminium maker follows similar scandals at Japanese firms, including Nissan Motor, Mitsubishi Motors and Takata Corp. Toshiba Corp is still battling the fallout of a scandal involving inflated profits.

“The impact on financials is unclear, but could be substantial depending on request(s) for replacement/recall,” Jefferies analyst Thanh Ha Pham said in a note. “Handling the situation is key to avoid long-term reputation damage.”

UACJ, Japan’s biggest aluminium maker, may be a beneficiary of the scandal, he said.

Shares of Kobe, on the other hand, looked set to plunge as sell orders outpaced bids by a factor of roughly 20 to one in early afternoon trade. The Tokyo bourse was closed for a national holiday on Monday. On Friday, the shares rose 2% to 1,368 yen.

Products with falsified data were shipped to about 200 companies, the company said at the weekend.

Aluminium castings, forgings and flat-rolled items, along with copper strips and tubes were among the products affected, the company said in a statement.

Companies, including Toyota Motor Corp, Central Japan Railway, Mitsubishi Heavy Industries, Mazda Motor Corp and Subaru Corp were among those using products covered by the admission from Kobe Steel, according to media reports and statements.

Japan’s transport ministry has called for automakers to make safety checks of components from Kobe.

A Kobe spokesman told Reuters the firm is working with customers to check for any issues. “To our knowledge it has not affected any customer’s products at this stage,” he said.