Kobe Steel announces more cases of faked inspections data

Kobe Steel Group's logo is seen in Tokyo Wednesday Oct. 11 2017

Kobe Steel Group's logo is seen in Tokyo Wednesday Oct. 11 2017

Kobe Steel's president, Hiroya Kawasaki, said he did not expect product recalls because of the faked inspections data.

The affected products include aluminium found in Japan's iconic bullet trains as well as materials in high-speed trains in Britain, although it is not clear whether the scandal affected product safety.

The cheating crisis engulfing Kobe Steel just got bigger.

Japan's Kobe Steel admitted on Friday (Oct 13) that a snowballing falsified data scandal had affected around 500 customers, more than twice as many as initially thought.

The scale of the misconduct at Japan's third-largest steelmaker weakened its shares by 9 percent, wiping about $1.8 billion off its market value this week.

"If it was found that there are safety problems (with steel wires) it could shake the foundation of Kobe Steel", Takayuki Atake, manager of credit research at SMBC Nikko Securities, said in a report.

A growing number of vehicle makers including Toyota and General Motors are investigating whether aluminium with falsified and strength and durability data has been used in their cars, after supplier Kobe Steel admitted to tampering with its product standards.

The pipes were delivered to its Fukushima Daini station, located near the destroyed Fukushima Daiichi plant, but have not been used, Tepco said, adding it was checking all its facilities.

In the United States, General Motors said that it did use aluminum from Kobe Steel "in certain models and we are working with Kobe to understand the potential impact".

No safety issues have yet been identified in the unfolding imbroglio.

Kobe Steel shares fell almost nine per cent on Friday and have fallen more than 40 per cent since the scandal broke.

"There's a possibility that there will be new cases of wrongdoing", Kawasaki said.

"It is hard to predict the extent of legal costs", said Motokazu Endo, a lawyer at Tokyo Kasumigaseki law office.

Compounding matters, Kobe also revealed that the data falsification may have started a decade ago.

The corrosive business practices have raised broader questions over corporate governance in Japan, and cast doubt on the integrity of a manufacturing industry once the envy of the world.

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