CEO of Japan's Kobe Steel says to quit after fake data scandal

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Tokyo (AFP)

The head of scandal-hit Japanese steelmaker Kobe Steel announced his resignation on Tuesday after the firm submitted false strength and quality data for products shipped to hundreds of clients worldwide.

Hiroya Kawasaki's resignation was a new blow to the reputation of Japan Inc after similar quality-control scandals hit industrial titans ranging from carmaker Nissan to Mitsubishi Materials.

Following a deep and prolonged bow in apology, Kawasaki told reporters: "As I think it's best to go ahead quickly with reforms under new members, I ... will step down from president on April 1 this year."

"We have caused trouble to many people. As soon as we can, we would like as many people as possible to think that Kobe Steel has changed," added Kawasaki, who had been in the job since 2013.

"I'm really sorry."

The firm has not yet named a successor.

In a long-awaited report into the scandal, the firm found that staff -- including executives -- changed inspection data, or made up data, before shipping their products.

The company has "deep-seated issues" relating to its corporate culture and compliance, the report admitted.

"For over 112 years since its founding, the Kobe Steel group has managed its business has conducted its business by valuing the trust of its customers ... The recent loss of such trust is truly regrettable," added the report.

The Kobe Steel report said it found 163 new cases of wrongdoing by its group, a venerable old company that once employed Prime Minister Shinzo Abe.

"We will go back to our roots ... and commit ourselves to making this moment a true turning point," said the report.

- 'Extraordinary losses' -

The affected products included steel wires used in car engines and tyres as well as aluminium used to manufacture Japan's famous bullet trains.

The firm, founded in 1905, has been at pains to stress that there are no safety issues arising from the fake data.

Executives have warned of "extraordinary losses" from the scandal, which reportedly affected more than 30 foreign companies, including Boeing, Airbus and General Motors.

Kobe Steel stock has lost some 18 percent since the affair broke in early October last year.

However, Hiroaki Hiwata, strategist at Toyo Securities, said the market might take the resignation as a sign to buy the stock.

"The market would take the stepping down of its chief executive as a positive factor after a set of scandals on expectations that the problem will be cleared up. But we have to keep watching developments" after the change of leadership, Hiwata told AFP.

The scandal was the latest in a string of humiliations for Japanese industry, once a byword for quality and reliability.

Nissan was forced to recall 1.2 million vehicles after admitting in October that staff without proper authorisation had conducted final inspections on some vehicles intended for the domestic market before they were shipped to dealers.

Subaru also recalled nearly 400,000 vehicles from the domestic market after a similar scandal.

Industrial giant Mitsubishi Materials and Toray Industries, one of the world's top carbon-fibre suppliers, admitted late last year that some of their subsidiaries had falsified product data.