TOKYO: Kobe Steel’s CEO said on Thursday the firm’s data-fabrication may have spread beyond Japan, as he was ordered by the government to report on how the misconduct occurred and address safety concerns that have sparked a scare along global supply chains.
Hiroya Kawasaki told reporters the cheating scandal has left Kobe Steel’s credibility at “zero,” underscoring the deepening crisis at the steelmaker and the sweep of quality problems besetting Japan’s once-vaunted manufacturing sector.
“The credibility of Kobe Steel has plunged to zero. We will make efforts to regain trust as soon as possible,” Kawasaki, 63, told reporters after meeting government officials.
A senior government official said managers at Kobe Steel were involved in fabricating data on products used in planes, trains and automobiles, but Kawasaki said his current priority is to deal with safety checks with its clients. The official did not elaborate.
The company has found possible further cases of tampering, the CEO said, including in overseas operations.
The Ministry of Economy, Trade and Industry ordered Kobe Steel to report on the results of safety checks within about two weeks and the reasons for the tampering, along with prevention measures in under a month.
Shares in Kobe Steel stabilised on Thursday after investors, worried about the financial impact and potential legal fallout, wiped about $1.6 billion off its market value in two days.
The shares were up 0.9 per cent by around 04:24 GMT, compared with an 0.5 per cent gain in the Nikkei 225.
The cost of insuring against default on Kobe Steel’s debt has risen sharply this week as the scandal unfolded. Five-year credit default swaps were at 57 basis points on October 5 and last traded at 305 basis points on Wednesday. They were indicated at between 200 and 260 basis points on Thursday.
GENERAL MOTORS: In the US, General Motors said it is checking whether its cars contain falsely certified parts or components sourced from Kobe Steel, the latest major automaker to be dragged into the widening scandal. “General Motors is aware of the reports of material deviation in Kobe Steel copper and aluminium products,” spokesman Nick Richards said. “We are investigating any potential impact and do not have any additional comments at this time”
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