Subject: [cwj 83] Mitsubishi Motors facing criminal charges over cover-up
From: Corporate Watch in Japanese <cwj@corpwatch.org>
Date: Wed, 23 Aug 2000 13:50:20 -0700
Seq: 83
For more information on Mitsubishi corporation corporation, see http://www.corpwatch.org/japan/intl/#japan Wednesday, August 23 4:44 PM SGT Mitsubishi Motors facing criminal charges over cover-up TOKYO, Aug 23 (AFP) - Japan's government said Wednesday it was looking at criminal charges against Mitsubishi Motors Corp. after the firm admitted to covering up customer complaints about defective vehicles for decades. Analysts warned the scandal had caused untold damage as the share price of Japan's fourth largest automaker, 34-percent owned by German-US giant DaimlerChrysler AG, tumbled 6.5 percent on the Tokyo Stock Exchange. The cost of punitive action could reach billions of dollars, said Shinichi Yoshizawa, an official in the Transport Ministry's auto safety division. "We are considering punishing Mitsubishi following its admission to the cover-up," he told AFP. "We are carefully examining our options, which range from issuing a warning to imposing a fine, to filing a criminal complaint," Yoshizawa said. A court could impose a fine of up to one million yen (9,345 dollars) for each recall violation under the Road Vehicles Law, he added. "It would be a staggering amount for Mitsubishi if we sought recall penalties by adding up all their recall violations in the past," Yoshizawa said. "But we must act tough on the company in order to secure and protect customers' safety." An additional 90,000 vehicles built between December 1990 and June this year would be recalled to add to 532,000 recalled last month, taking the total cost to the firm to seven billion yen, Mitsubishi said Tuesday. The cover-up was exposed by a whistle-blower who prompted a Transport Ministry inspection of Mitsubishi last month, which found documents on faulty vehicles stashed away in employees' lockers at Mitsubishi's head office. Instead of issuing costly model recalls, Mitsubishi had also repaired vehicles itself after customers complained, in violation of the law. The practice of hiding complaints from ministry inspectors dated back at least to 1977, Mitsubishi president Katuhiko Kawasoe said Tuesday as the company submitted an in-house report on the scandal to the ministry. Investors marked down Mitsubishi's share price to 401 yen, a fall of 28 yen from Tuesday's close. "The scandal is a devastating blow to the company. It has shattered its brand image," said Kazue Mayuzumi, senior market analyst at Nikko Securities. "Even before the scandal, the company had been concerned over whether it could survive in the global auto market," Mayuzumi said. "And the recall scandal has made it plainly clear that it cannot." Under the DaimlerChrysler deal announced in March, the German-US automaker has taken effective control of Mitsubishi in a deal worth around two billion dollars. But DaimlerChrysler chairman Juergen Schrempp has insisted that his group will not take on Mitsubishi's vast interest-bearing debt, standing at nearly 1,500 billion yen. For the year to next March Mitsubishi has forecast a net loss of 70 billion yen, compared to a net loss of 23.33 billion yen in the past financial year. ______________________________________ Tuesday, August 22 4:03 PM SGT Mitsubishi comes clean on defect cover-up TOKYO, Aug 22 (AFP) - Japan's Mitsubishi Motors Corp. Tuesday issued a grovelling apology as it admitted a cover-up of customer complaints stretching back to 1977. An additional 90,000 vehicles built between December 1990 and June this year would be recalled to add to 532,000 recalled last month, taking the total cost to seven billion yen (64.8 million dollars), a spokeswoman said. Mitsubishi president Katuhiko Kawasoe submitted a report to the Ministry of Transport on the scandal, which first surfaced in press reports last month, acknowledging for the first time the extent of the cover-up. "I deeply apologise," Kawasoe told a news conference as he admitted that staff had flouted the law. "I will punish company personnel involved very strictly. I will cut my salary as well as that of other executives," he vowed. But there would be no resignations while the ministry reviews the in-house report, the president said. "The entire company will embark on reform. The important job for me is to rebuild the company." The cover-up was exposed by a whistle-blower who prompted a Ministry of Transport (MOT) inspection of Mitsubishi last month. Ministry inspectors found documents on faulty vehicles stashed away in employees' lockers at Mitsubishi's head office. Japan's fourth largest auto maker, 34-percent owned by German-US giant DaimlerChrysler AG, could face criminal charges, the Asahi Shimbun reported. "Unfortunately, I have no option but to admit that the report reflects a truly regrettable state of affairs at our company," Kawasoe said. The company announced it was recalling an additional 88,015 cars, trucks and buses suffering from a variety of problems that were concealed from MOT inspectors. Covered in the Japanese recall are 45,374 Mitsubishi Minicab passenger cars and 7,202 models of the popular Lancer sedan. A further 32,371 Galant, Eterna and Emeraude passengers cars are also being recalled. The cover-up involved product information reports (PIRs) on Mitsubishi vehicles sent by sales agents which should have been passed on to the ministry. Instead Mitsubishi repaired many suspect vehicles itself without issuing a model-wide recall, the in-house report acknowledged. Many PIRs revealing a defect were classified as "special" and kept secret, while others were classed as "standard" and passed on to the ministry. "The company failed to report to the MOT about two-thirds of the 87,757 complaints received from customers between April 1998 and June 2000," the president said. "The company kept two sets of PIRs and this double record-keeping began as early as September 1977," he said. "This practice had become customary after concerned personnel decided to hide some product information." But the discovery of incriminating documents in employees' lockers "was not for the purpose of concealment, but was due to a lack of storage space in the office," the report maintained. The ministry was most concerned about the false reporting of complaints and Mitsubishi's failure to notify inspectors when it recalled vehicles itself for repair, said an MOT official. "We have yet to decide what to do about these two concerns," said the official in the ministry's auto safety division after the Mitsubishi report was submitted. "We are aware of the newspaper report that we will file criminal charges against the company," he added. "I would like to decline to comment on the report." FAIR USE NOTICE. This document contains copyrighted material whose use has not been specifically authorized by the copyright owner. Corporate Watch in Japanese is making this article available in our efforts to advance understanding of ecological sustainability, human rights, economic democracy and social justice issues. We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the US Copyright Law. 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