April 25, 2018 / 4:15 AM / 7 months ago

Kobe Steel says under investigation over data tampering scandal

TOKYO (Reuters) - Kobe Steel Ltd (5406.T) said on Wednesday that it is under investigation by Japanese authorities over its data tampering, widening a scandal that undermined faith in Japan’s industrial sector last year.

FILE PHOTO: The Kobe Steel (Kobelco) headquarters building is seen in Kobe, western Japan October 24, 2017. REUTERS/Thomas White/File Photo

In a statement, Kobe Steel said that “investigating authorities” were conducting an inquiry, without elaborating on who was carrying out the probe or what was being investigated, and that it is cooperating with the investigation. A company spokesman confirmed the investigation concerned the data tampering but declined to say when the probe started.

Earlier, the Nikkei newspaper reported The Tokyo District Public Prosecutors Office’s special investigative unit has already subpoenaed documents from Kobe and suspects the company, Japan’s third-largest steelmaker, of criminally misrepresenting data.

The Kobe Steel spokesman declined to comment on the Nikkei report.

The Tokyo District Public Prosecutor’s Office and the Metropolitan Police Department declined to comment on the Nikkei report.

A criminal investigation opens up a new phase of the scandal that began when Kobe Steel last October admitted to widespread tampering of quality data for its products causing disruptions in global supply chains as customers re-tested their goods. The company’s shares fell 4.3 percent by 0349 GMT.

Kobe Steel, which supplies steel parts to manufacturers of cars, planes and trains around the world, has admitted to supplying products with falsified specifications to more than 600 customers and admitted the data fraud has been going on for nearly five decades.

The case was one of the country’s biggest industrial scandals in recent memory, which set off a rash of malfeasance revelations by other Japanese companies, denting the country’s reputation for manufacturing excellence.

In addition to the Japanese investigation, Kobe Steel is also the subject of a U.S. Justice Department probe. Additionally, Japanese government-sanctioned seals of quality have also been revoked on some of its product.

In its defense, Kobe has said it sold products that met safety and other standards but did not fulfill contract specifications agreed with customers.

However, Nikkei reported that the Tokyo prosecutors believe the shipping of mislabeled materials to clients may have violated product misrepresentation laws.

Reporting by Ahmed Farhatha in Bengaluru and Yuka Obayashi in Tokyo, Editing by Rosalba O'Brien, Aaron Sheldrick and Christian Schmollinger

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