Subject: [cwj 83] Mitsubishi Motors facing criminal charges over cover-up
From: Corporate Watch in Japanese <>
Date: Wed, 23 Aug 2000 13:50:20 -0700
Seq: 83

For more information on Mitsubishi corporation corporation, see

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

"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

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

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

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

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