Kobe Steel Ltd. (KBSTY) said Tuesday that its CEO will leave the group next month following a scandal at Japan's third-largest steelmaker linked to falsified data and an internal cover-up that ultimately aroused the interests of the U.S. Department of Justice.
Hiroya Kawasaki will step down in April, the company said Tuesday after a four-month investigation into the scandal that impacted hundreds of Kobe Steel clients and impacted steel supply chains all over the world. A new boss will be chosen by the board, the company said. Japan's Nikkei business daily had reported that data control issues related to the quality of its steel, copper and aluminium shipments were picked found as far back as 2007 as part of the company's probe into the scandal. Around 500 of the company's customers have been impacted, the company has admitted, although none have reported safety concerns or sought resale agreements.
"We discovered that inappropriate actions were widespread, and were carried out with the knowledge and involvement of many, including management," the company said Tuesday. "Considering the multiple compliance issues that we've had in the past, we must say that there are deep-rooted problems, not only in terms of compliance but also in the corporate culture and mindset of employees and management."
Kobe Steel shares closed at ¥1,110 each in Tokyo Tuesday after rising around 0.09% on the session. However, it has nonetheless lost around 18.8% of its market value since the news of the scandal was first revealed on Oct. 6.
"A portion of the products traded with customers did not comply with the product specifications which were agreed between the Company and its customers," the company said in a statement at the time. "Data in inspection certificates had been improperly rewritten etc., and the products were shipped as having met the specifications concerned."
"Causing this serious matter has brought overwhelming shame to the Company ... (Kobe) deeply regrets this incident and sincerely apologizes for the enormous worry and trouble this incident has caused to its customers and other related parties."
Kobe first said about 4% of shipments between September 2016 and August 2017 were impacted by the scandal, which was discovered by what it called an "emergency quality audit", but admitted the falsifications may have occurred over a period of ten years. It later admitted falsifying quality control data on nine other products.
The group's steel and aluminium division had sales of ¥323.3 billion ($2.9 billion) in its last financial year, which ended in March, and has about 200 customers.