Tuesday 10 October 2017

Kobe Steel faces investors' ire after data fabrication scandal surfaces

Kobe Steel

Investors looked set to bail out of Kobe Steel Ltd on Tuesday, after Japan's third-biggest steelmaker revealed it had fabricated data to show its products met customer specifications in the latest scandal to rock corporate Japan.

Kobe Steel said on Sunday that about 4 per cent of the aluminium and copper products that it shipped from September 2016 to August 2017 were falsely labelled as meeting the specifications requested by customers.

The misconduct involved dozens of staff and possibly stretched back 10 years, the company said.

The admission from the steel and aluminium maker follows similar scandals at Japanese companies including Nissan Motor, Mitsubishi Motors and Takata Corp. Toshiba Corp is still battling the fallout of a scandal involving reporting inflated profits.

"The impact on financials is unclear, but could be substantial depending on request(s) for replacement/recall," Jeffries analyst Thanh Ha Pham said in a note. "Handling the situation is key to avoid long-term reputation damage."
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