Tokyo Prosecutors Indict a Second Firm in Faked Data Scandal

(Bloomberg) -- Mitsubishi Materials Corp. became the second Japanese firm to be indicted by Tokyo prosecutors for falsifying product data, in a scandal that has rocked the nation’s prized reputation for manufacturing prowess.

Three units of the Tokyo-based company -- Mitsubishi Aluminum Co., Diamet Corp. and Mitsubishi Cable Industries Ltd. -- were indicted on suspicion of breaching Japan’s unfair competition law, the Tokyo District Public Prosecutors Office said Wednesday in a statement. The former presidents of Diamet and Mitsubishi Cable also face prosecution.

The current president of Mitsubishi Aluminum has resigned, the parent company said in a statement, which added that executives at the three units would forgo 10 percent of their pay for October. A firm found guilty of the charges faces a fine of up to 300 million yen ($2.7 million).

The prosecutors’ action comes less than two months after Kobe Steel Ltd. was indicted on similar charges. In October, Japan’s third-biggest steelmaker set off a series of revelations from Japanese manufacturers by admitting it falsified product specifications in misconduct dating back to the 1970’s, and which included parts shipped to hundreds of customers, including Toyota Motor Corp. and Boeing Co. Kobe Steel is also being probed by the U.S. justice department.

Stocks Rise

The upshot of Mitsubishi Materials own inquiry concluded in March that five units had falsified data on products delivered to more than 700 companies. On Thursday, its stock rose as much as as 4 percent in Tokyo, although it’s still down almost a quarter since first revealing the problem in November.

“We deeply apologize for all the trouble caused to our customers and related parties,” Mitsubishi Materials spokesman Nobuyuki Suzuki said by phone. “We take this situation seriously and intend to strengthen corporate governance.”

Also on Wednesday, farm machinery maker Kubota Corp. joined the list of Japanese data fakers after it said 85 customers had received steel-rolling equipment that didn’t meet standards.

Its stock fell as much as 4.9 percent in Tokyo, before rebounding on Thursday, with JPMorgan Securities Japan Co. analyst Tomohiko Sano noting in a report that Kubota made only 0.25 percent of its sales from that part of the business.

To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Jake Lloyd-Smith

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