Investigations Reveal New Corporate Malpractices in Japan

Corporate Japan’s credibility hit another low after Toray Industries, one of Japan’s biggest materials manufacturers, joined a list of companies admitting to falsifying data.

Toray announced on Tuesday it had uncovered 149 cases of data fabrication at its subsidiary, Toray Hybrid Cord, in three products sold to tire companies and auto parts makers: tire cords, cords for car hose belts and cords for paper making. The subsidiary made the products look as though they met customer requirements, Nikkei reported.

The company said that 13 domestic and overseas companies, including at least one South Korean company, are affected.

In a statement, Toray maintained that the “amount by which the data was adjusted to fit customer contract standards was insignificant.” The company believed there were no safety issues involved.

Toray Hybrid Cord discovered the problem during a July 2016 internal compliance check, with Toray president Akihiro Nikkaku being informed of the matter the following October.

Explaining why it took more than a year to disclose the falsification, Nikkaku said at a news conference in Tokyo on Tuesday morning that the company would usually not have revealed such data falsification, as there were no safety concerns or violations of law. He added that Toray would normally settle the matter with customers privately.

However, Nikkaku said: “We found a post on the internet in early November that said our subsidiary was falsifying data, and we had some of our shareholders and customers contacting us about the issue. In order to clarify the situation, we decided it was best to go public.”

Nikkaku also revealed that Toray was in the midst of conducting a group-wide investigation into other possible malpractices, and that there were still 137 cases remaining to be examined.

As well as supplying fabrics to casual wear manufacturer Uniqlo, Toray also provides carbon fiber to Boeing. “I believe that there are no irregularities in our products to big customers like Boeing or Fast Retailing,” Nikkaku said, referring to the US aircraft maker and Uniqlo’s parent.

Meanwhile, the president of Mitsubishi Materials, Akira Takeuchi, apologized Friday for the latest breach of quality standards to rattle corporate Japan after the company said it had falsified inspection data for components it sold to manufacturers of cars, aircraft and industrial equipment. “I deeply apologize for causing great trouble to many customers and shareholders,” he said.

Mitsubishi Materials said the components it sold, including rubber seals used in aircraft and automobiles, met legally mandated safety standards and were therefore not dangerous. Still, the revelation is a fresh blow to Japan’s reputation for scrupulous high-quality manufacturing after admissions of similarly deceptive practices at Kobe Steel.