Kobe Steel says lack of quality controls, focus on profits to blame for data tampering

Chief Executive Officer Hiroya Kawasaki submitted the internal report on Friday to Akihiro Tada, director general of METI’s manufacturing industries bureau, before releasing the report publicly. (Reuters)
Updated 10 November 2017
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Kobe Steel says lack of quality controls, focus on profits to blame for data tampering

TOKYO: Kobe Steel said on Friday a lack of quality controls and a focus on profits was behind the widespread data tampering that has shaken up the supply chains of car and plane makers around the world.
Japan’s third-largest steelmaker, which has posted losses in the last two business years, promised to automate more of its operations and reorganize its quality control systems to recover from one of the nation’s biggest corporate scandals.
The 112-year-old company admitted last month that workers had tampered with product specifications for at least a decade, causing global automakers, aircraft manufacturers and other companies to check whether the safety or performance of their products had been compromised.
No safety issues have so far been identified from the data cheating, which mainly involves falsely certifying the strength and durability of products.
Kobe Steel was ordered by the Ministry of Economy, Trade and Industry (METI) last month to provide a detailed explanation of the data cheating and say what steps it would take to prevent future abuses.
Chief Executive Officer Hiroya Kawasaki submitted the internal report on Friday to Akihiro Tada, director general of METI’s manufacturing industries bureau, before releasing the report publicly.
“Clarifying your company’s thinking on the causes of this incident is a meaningful step toward restoring trust,” Tada told Kawasaki as he arrived to deliver the report. “I look forward to getting a proper explanation.”
The company also appointed a trio of outside investigators who are due to report back by the end of the year. Sources have said that Kawasaki and other executives will decide whether to resign for the scandal happening on their watch only after the external report.
“Given the magnitude of the scandal, we expect upper management to get the boot,” Thanh Ha Pham, an analyst at Jefferies in Tokyo, wrote in a note on Friday, without saying when that might happen.
Kobe Steel, also subject of a US Justice Department inquiry as well, has had a Japanese government-sanctioned seal of quality revoked on some of its products and lost customers.
As of Friday, the company said 474 out of 525 affected customers found no safety issues or their products were deemed safe by Kobe Steel, up from 470 earlier this week.
The company has said it cannot yet fully state what impact the tampering will have on its finances. Last week, it pulled its forecast for its first annual profit in three years for the 12 months through next March.
Kobe Steel’s shares have fallen by nearly a fifth since it revealed the data fabrication a month ago.


Saudi-backed SoftBank to ramp up tech investment

Updated 20 June 2018
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Saudi-backed SoftBank to ramp up tech investment

  • SoftBank CEO Masayoshi Son to step up company's "unicorn hunting" investment strategy
  • Saudi Arabia's PIF has contributed $45 billion to SoftBank's Vision Fund

LONDON: Japanese conglomerate SoftBank will double down on its ambitious tech investment strategy, in a move that could create opportunities for further collaboration with Saudi Arabia’s Public Investment Fund (PIF).
SoftBank — which owns Japan’s third-largest telecoms operator — has emerged in recent years as one of the world’s largest tech investors, acquiring stakes in companies including Chinese e-commerce giant Alibaba, and UK chipmaker ARM Holdings.
It last year launched the $100 billion Vision Fund, boosted by a $45 billion investment from PIF. It attracted $93 billion in funds last year, aided by contributions from Abu Dhabi’s Mubadala Investment Company, Apple, Foxconn and others, making it the world’s largest buyout fund.
The Vision Fund has invested in disruptive firms, especially those in the technology space, including Swiss pharmaceuticals startup Roivant, office space company WeWork, and enterprise messaging service Slack.
CEO Masayoshi Son signaled that such dealmaking will become even more of a focus for SoftBank.
“I have spent 97 percent of my time on managing the telecoms business and only 3 percent on investing,” he told investors at the group’s annual meeting on Wednesday, Reuters reported.
Reversing that balance will allow SoftBank to grow faster, he said.
Son’s comments fit with a transformation underway at SoftBank from a domestic telecoms firm to “unicorn hunter” — as Son termed it — focusing on late-stage startups around the world.
Last month, SoftBank invested $2.25 billion in GM Cruise, the carmaker’s autonomous vehicle unit, complementing its shareholdings in China’s Didi Chuxing, the world’s largest ride-sharing app, as well as rivals Uber, Grab and Ola.
The Vision Fund will initially invest $900 million in GM Cruise Holdings, investing the remaining $1.35 billion when GM’s Cruise AVs are ready for commercial deployment. The investment gives the Vision Fund a 19.6 percent stake in GM Cruise.
Saudi Arabia’s PIF has been key to SoftBank’s tech investment strategy with its contribution to the Vision Fund, with the Kingdom also benefiting directly from partnerships with SoftBank.
Son said in November that SoftBank planned to invest as much as $25 billion in the Kingdom in the next three to four years, and aimed to deploy up to $15 billion in Neom, a futuristic city to be built on the Red Sea coast.
PIF and the Vision Fund in March announced a partnership to build the world’s largest solar project in Saudi Arabia, with a capacity of up to 200 gigawatts, in line with the Kingdom’s solar ambitions as set out in Vision 2030.
The agreement will establish an electricity generation company in Saudi Arabia, and will commission two solar plants with a capacity of 3GW and 4.2GW by the end of next year. It envisages localizing a significant portion of the renewable energy value chain in the Saudi economy, including research and development and the manufacturing of solar panels.
SoftBank shareholders on Wednesday approved the appointment of three executive vice presidents — SoftBank unit Sprint Corp’s former chief executive, Marcelo Claure, and former bankers Katsunori Sago and Rajeev Misra.
Bolivian-born billionaire Claure was appointed SoftBank’s chief operating officer in May, tasked with driving cooperation between the group’s portfolio companies. Former Goldman Sachs executive Sago became chief strategy officer on Wednesday and will focus on group investment. Misra runs the Vision Fund.
Son yesterday bemoaned the so-called conglomerate discount weighing on SoftBank’s shares at its investor meeting.
He said when the market value of stakes the firm holds in companies such as Alibaba Group Holding and ARM Holdings are taken into account, SoftBank’s shares should be trading above 14,000 yen ($127), rather than about 8,000 yen currently.