KOBE STEEL SCANDAL MAY AFFECT 500 CUSTOMERS
Steelmaker admits up to 500 customers may be affected
CRISIS-hit Kobe Steel Ltd admitted yesterday that a snowballing falsified data scandal had affected around 500 customers, more than twice as many as initially thought.
It also said its steel division has also falsely labelled products, the latest in a string of revelations confirming widespread cheating at the firm that has engulfed its global customers.
The bombshell admissions by Japan’s third-largest steel maker sent its shares plummeting almost nine per cent to finish at 805 yen (RM30.40), down more than 40 per cent since the start of the week after it admitted falsifying strength and quality data for a string of products — a practice it said might have started a decade ago.
The company had previously admitted to falsifying quality data for products sold to some 200 clients.
“Combined with previously announced clients, it will total about 500 firms,” said Yoshihiko Katsukawa, a senior Kobe Steel executive.
Boeing Co has some of the falsely certified products, said a source, but stressed that the world’s biggest maker of passenger jets did not as yet consider the issue a safety problem.
More than 30 non-Japanese customers, including Daimler AG and Airbus SE, had been affected by the firm’s data fabrication, the Nikkei newspaper reported yesterday.
The company also confirmed another Nikkei report that it found cases of data tampering in its steel wire products.
Nuclear power plant parts are the latest to join the list of affected equipment as Fukushima nuclear operator Tokyo Electric Power said yesterday it had taken delivery of pipes from Kobe Steel that were not checked properly.
Kobe Steel chief executive officer Hiroya Kawasaki insisted that the affected products did not appear to pose a safety risk.
“So far, our review and investigation has shown there has not been any problem that raises concrete doubts about the safety of our products that did not meet specifications,” he said.
Kobe Steel was founded in 1905 and has been a pillar of Japan’s manufacturing sector. Such are its establishment bona fides that Shinzo Abe, the prime minister and scion of a political dynasty, worked at the company decades ago, before entering politics.
But those credentials have been shattered, a point amplified by Kawasaki who said the credibility of the firm “has plunged to zero”.
“The crisis is ongoing so it’s tough to know at this point how big the impact on the company will be and which industries it will affect,” said Hideyuki Suzuki, head of the investment information section at SBI Securities.
“Kobe Steel’s share price will hit bottom once the financial impact on the company becomes clear,” he added.
Meanwhile, even a breakup of the company wouldn’t be enough to salvage value for shareholders, said Alexander Robert Medd, managing director at Bucephalus Research Partnership Ltd.
Jefferies Group LLC said splitting the producer along business lines could be a way for the 100 year-old company to weather the scandal, with Japan’s No. 2 steelmaker, JFE Holdings Inc, touted as a possible buyer of its steel assets. Agencies