Kobe says overseas businesses may be affected

Hiroya Kawasaki, Kobe's president and chief executive, bows facing Director-General Akihiro Tada (left) of the Manufacturing Industries Bureau of the Ministry of Economy, Trade and Industry in Tokyo on Thursday. [Photo/Agencies]

TOKYO — Kobe Steel's chief executive said on Thursday the firm's data-fabrication may have spread beyond Japan and 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's credibility at "zero", underscoring the deepening crisis at the steelmaker and the sweep of quality problems besetting Japan's manufacturing sector.

"We will make efforts to regain trust as soon as possible," Kawasaki, 63, told reporters after meeting government officials.

A senior government official said Kobe managers were involved in fabricating data on products used in planes, trains and automobiles, but Kawasaki said his priority is to deal with safety checks with clients. The official did not elaborate.

The company has found there may be more cases of tampering, including in overseas operations, he said.

The Ministry of Economy, Trade and Industry ordered Kobe to report on the results of safety checks in about two weeks and the reasons behind the tampering and prevention measures in under a month.

He said he was not expecting to see recalls of cars or airplanes for now and none of the company's customers have canceled orders. Kobe has no plans to sell assets at the moment, Kawasaki said.

He did not rule out the possibility that Kobe might be liable for compensation.

Hiroya Kawasaki, Kobe chief, aims to "regain trust". [Photo/Agencies]

Shares in Kobe stock stabilized on Thursday after investors, worried about the impact and potential legal fallout, wiped about $1.6 billion off its market value in two days.

In the United States, General Motors said it is checking whether its cars contain falsely certified parts or components sourced from Kobe, the latest major automaker to be dragged into the scandal.

The steelmaker admitted over the weekend it had falsified data about the quality of aluminum and copper products used in cars, aircraft, space rockets and defense equipment.

The company says it is examining possible data falsifications going back 10 years.

Previous cases in Japan involving falsified data included Nissan, Mitsubishi and Takata, which filed for bankruptcy this year over faulty air bags blamed in 17 deaths and scores of injuries.

Japan's manufacturing industry has been trying to establish itself among fierce international competition by building the image of good quality, but the multiple scandals have dealt a heavy blow to such efforts, said Zhu Yan, professor of economics at Takushoku University in Japan.

Reuters-Xinhua-AP