TOKYO, July 19 (Xinhua) -- Kobe Steel Ltd. was indicted by prosecutors Thursday on suspicion its instances of falsifying data regarding the quality of its products shipped domestically and overseas have violated an unfair competition law.
By mass-misrepresenting its inspection data and providing false information about the strength and durability of its products, authorities believe the firm, Japan's third-largest steelmaker, is criminally liable and will face criminal charges.
The steelmaker is accused of manipulating data to meet the specific needs of its clients at three of its plants in Japan. The plants are in Tochigi, Yamaguchi, and Mie prefectures, according to the indictment.
The scandal-mired steelmaker said in October last year that it had found cases of improprieties regarding inspection data that failed to meet industry inspection standards.
The results of an internal probe initially found that products sold that had their inspection data fabricated were shipped to hundreds of companies.
Kobe Steel has admitted sending quality assurance certificates to its clients between September 2016 and September 2017, despite the corresponding products not meeting the requisite standards.
At the conclusion of a probe and in a report released in March, Kobe Steel said in order to make it look like their products met their clients' specifications, they deliberately falsified the strength and other data pertaining to products, which were supplied to over 600 companies at home and overseas.
Data was manipulated at 23 domestic and overseas plants, the report said.
The company also admitted that more than 40 employees were involved in the falsification practice, which the firm said had been endemic in the company since the 1970s when the misconduct first began at its Tochigi Plant.
The steelmaker's headquarters were recently raided in Tokyo and Kobe as well as other locations by police and prosecutors in search of evidence of the company's misdoings and to question staff and officials about the fraudulent activities.
Kobe Steel Ltd., at first, said it had falsified inspection data on a number of its products, including aluminum, copper, steel powder and special steel products.
It came to light that the embattled steel maker's own investigations had, additionally, revealed cover-ups and more incidents of data falsification thereafter.
Companies ranging from automakers and airplane manufacturers, to defense equipment and Shinkansen bullet train makers, have been affected by the scandal that has rocked the manufacturing world both domestically and globally.
Investigations revealed that Kobe Steel, initially, knowingly shipped at least 20,000 tons of aluminum and copper products with fabricated inspection data. The products were sent to around 200 companies.
The scandal-plagued firm also admitted that an internal probe had revealed that 140 tons of iron powder shipped in fiscal 2016 did not meet customer specifications.
It also said that one of its subsidiaries, Kobelco Research Institute, had falsified data related to the production method of liquid crystal displays, DVDs and other electronic equipment.
In Japan, major railway operators Central Japan Railway and West Japan Railway have stated that their Shinkansen bullet trains contained aluminum parts sourced from Kobe Steel that did not meet industry standards.
The railway operators have since taken their own measures to rectify the potentially faulty components.
Beyond automakers and trains, Kobe Steel has also been implicated in fabricating data for aerospace and defense-related products.
Along with domestic firms such as Toyota Motor Corp., Nissan Motor Co., Honda Motor Co. and major Japanese railway operators, the scandal has also affected overseas companies including General Motors Co., Ford Motor Co., Airbus and Boeing Co.
These companies have also been undertaking investigations to see if their products have been adversely affected by Kobe Steel's erroneous data-related practices.
As a result of this, the U.S. Department of Justice ordered Kobe Steel to handover documents relevant to the data falsification scandal, and a number of the firm's overseas clients have filed class-action civil lawsuits against Kobe Steel for providing products that were not up to industry specifications.
Two of the employees known for routinely falsifying inspection data in the past, went on to become members of the firm's board of directors, sources close to the matter have said.
Kobe Steel was founded in 1905 and has been a bastion of Japan's manufacturing sector.
The revelations of the data fabrication scandal and the company's indictment Thursday, however, have cast doubts over corporate governance in the manufacturing industry and in Japan, and cast serious aspersions over Japan's once stellar reputation for precision manufacturing, industry experts here said.
Last year saw a slew of scandals related to Japanese manufacturers, including Mitsubishi Materials Corp.'s subsidiaries who were found to have falsified quality data for products used in multiple industries, including in equipment used by Japan's Self-Defense Forces (SDF), which compounded growing concerns about quality control in Japan's manufacturing sector.
Uncertified safety checks were also found to have been routinely carried out by automakers Nissan Motor Co. and Subaru Corp., which led to extensive recalls.
Nissan, earlier this month, also said that it had uncovered more instances of misconduct involving falsified data.
The automaker revealed that it had found that data involving car exhaust emissions tests had been falsified at five of its domestic plants, affecting 1,171 vehicles.
Nissan said that data based on emissions and fuel economy tests had either been falsified, or the tests themselves conducted in inappropriate environments.