Japanese steel scandal grows as Kobe admits more cases of falsified information

Japanese steel scandal grows as Kobe admits more cases of falsified information

The cheating crisis engulfing Kobe Steel just got bigger.

The scale of the misconduct at Japan's third-largest steelmaker pummelled its shares as investors, anxious about the financial impact and legal fallout, wiped about $1.8 billion off its market value this week.

Shares of USA steelmakers jumped on Friday after Japan's Kobe Steel Ltd said the firm's data cheating may have spread beyond the country to affect about 500 companies, sparking global supply chain concerns.

"The company deeply regrets this incident and sincerely apologizes for the enormous worry and trouble this incident has caused to its customers and other related parties", Kobe Steel said in a news release.

In the U.S., General Motors said it is checking whether its cars contain falsely certified parts or components sourced from Kobe Steel, the latest major automaker to be dragged into the widening scandal.

"So far we have not identified any suppliers that procure materials from Kobe Steel for parts fitted on our aircraft", he said by email.

The Nikkei newspaper reported earlier that more than 30 non-Japanese customers including Airbus had been affected by data fabrication discovered at the Japanese firm.

West Japan Railway also foundsubstandardKobealuminum parts in seven high speed trains made by Hitachi and Nippon Sharyo, according to West Japan Railway spokesman Shugo Nishimura.

It also found one case of falsified data on iron powder products - material used for auto parts such as gears - that were shipped to a customer.

Kobe Steel shares fell almost nine per cent on Friday and have fallen more than 40 per cent since the scandal broke. Kobe said it is contacting each company to explain the situation.

"We can not rule out the possibility that this will shake Kobe Steel to its foundation".

Jefferies Group LLC has said splitting the producer along business lines could be a way for the 100 year-old company to weather the scandal, with Japan's No 2 steelmaker, JFE Holdings Inc, touted as a possible buyer of its steel assets. Such are its establishment bona fides that Shinzo Abe, the prime minister and scion of a political dynasty, worked at the company decades ago, before entering politics.

"There's a possibility that there will be new cases of wrongdoing", Kawasaki said.

In 2015, it was revealed that Toyo Tire & Rubber fabricated data to secure government approval for materials to absorb shocks from earthquakes.

"It will likely continue to be extremely hard to make judgements on creditworthiness and investment until the safety of the products and the extent of damages are clarified", SMBC Nikko Securities said in a note to clients.

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