Kobe Steel names new CEO after fake data scandal

Hiroya Kawasaki, center, bows during a press conference after announcing his resignation as president and chief executive of Kobe Steel over a scandal that surfaced last year involving massive falsification of data from inspections of the company's products. (AFP)
Updated 09 March 2018
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Kobe Steel names new CEO after fake data scandal

TOKYO: Japanese steelmaker Kobe Steel named a new CEO on Friday and pledged “fundamental reforms” in the wake of a scandal over fake strength and quality data it submitted to clients.
The firm said its board had appointed Mitsugu Yamaguchi, currently Kobe Steel’s executive vice president, to the top role left empty after Hiroya Kawasaki stepped down on Tuesday.
“Under a new structure in the coming future, Kobe Steel intends to fulfil its responsibilities ... along with restoring the trust of everyone as quickly as possible,” the company said in a statement.
“Kobe Steel will move forward with fundamental reforms to the organization and its corporate culture.”
Kawasaki, who had been in the role since 2013, stepped down on Tuesday as a long-awaited report into the scandal revealed the data falsification was more widespread that initially thought.
It said false strength and quality data had been submitted for products sold to hundreds of clients worldwide.
The products affected by the scandal included steel wires used in car engines and tires, as well as aluminum used to manufacture Japan’s famous bullet trains.
The firm, founded in 1905, has been at pains to stress there are no safety issues arising from the fake data.
The revelations were a new blow to the reputation of Japan Inc. after similar quality-control scandals hit industrial titans ranging from carmaker Nissan to Mitsubishi Materials.
Kobe Steel has vowed to overhaul its compliance procedures and internal structures, ensuring a third of the board are independent outside directors.
All company directors will have their pay docked by between 10 and 50 percent for a period ranging from one to four months.


Foreign investors hope India dials back policy shocks after Modi win

Updated 5 min 7 sec ago
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.
“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”