By Francine McKenna, MarketWatch
Investors should feel “déjà vu all over again” after Kobe Steel Ltd, Japan’s third-biggest steel maker, admitted it faked quality inspection data for aluminum and copper products used in cars, aircraft and space rockets.
Kobe Steel /zigman2/quotes/207391157/delayed JP:5406 -3.84% has admitted to faking product quality data in the past.
In 2016, a Kobe affiliate, Shinko Wire Stainless Co, disclosed it faked data on tests for tensile strength of some stainless steel wire for springs for more than nine years. Also in 2006, another unit admitted to falsifying soot emissions data for more than five years.
The company’s statement on Sunday described the latest “improper conduct” as “systematic.” The practices go back up to 10 years for some items, according to executive vice president Naoto Umehara who apologized for the fabrications at a news conference on Sunday . He said workers were “feeling pressure” to meet delivery goals the products, but that senior management had ordered or was aware of the conduct.
Kobe Steel joins a rogues gallery of other Japanese and global multinationals that have been accused of duping consumers and regulators about product and environmental quality and safety.
Earlier this October Japanese auto maker Nissan /zigman2/quotes/208298710/delayed JP:7201 -1.42% ordered a recall more than one million cars in Japan after finding out that quality inspections at all six of its plants, including safety and environmental checks, had been conducted by non-qualified staff.
In 2016 Japanese transport ministry officials raided the Tokyo headquarters of Mitsubishi /zigman2/quotes/202404490/delayed JP:7211 -4.52% and accused the company of cheating on fuel-efficiency tests for more than 25 years.
Volkswagen’s /zigman2/quotes/204309985/delayed DE:VOW3 +0.22% admission in September 2015 that it had rigged its diesel cars to cheat on emissions tests eventually implicated two more of Germany’s largest auto makers—Daimler r /zigman2/quotes/201850364/delayed XE:DAI -3.35% and BMW /zigman2/quotes/209548467/delayed DE:BMW -1.19% . Those three firms continue to face the repercussions of those falsified fuel-efficiency data scandals.
Just like Kobe Steel, India’s Tata Steel Ltd. /zigman2/quotes/208974733/delayed IN:500470 -7.57% has been accused of falsifying product quality certifications at its UK operations. A Serious Fraud Office criminal investigation into the UK unit of the company is ongoing.
Lumber Liquidators /zigman2/quotes/202539569/composite LL +2.30% shares took a beating in March 2015 when the CBS News program “60 Minutes” aired an investigation into China-made laminate flooring produced from 2012 to 2014 and sold by the company. In 2016 the Centers for Disease Control and Prevention followed up with a report that consumers who bought the China-sourced flooring were about three times more likely to fall ill with cancer.
This August the company posted its first quarterly profit since that scandal and is now trading at the high end of its 52-week range.
Investors in Japanese companies have also been hit with some of the biggest global accounting scandals in recent years, at Olympus Corp. /zigman2/quotes/200860615/delayed JP:7733 -2.87% and Toshiba Corp. /zigman2/quotes/205628942/delayed JP:6502 -3.62% .
The Kobe Steel case is not an accounting scandal, but the company said the impact of the data falsification on its earnings is still unknown. Kobe has reported losses in the last two full financial years.
“The impact on financials is unclear, but could be substantial depending on request(s) for replacement/recall,” Jefferies analyst Thanh Ha Pham said in a note reported by Reuters.