Japan's Kobe Steel names Yamaguchi as president after data fraud

TOKYO (Reuters) - Japan's Kobe Steel Ltd 5406.T on Friday appointed the head of its machinery business as its new president and chief executive, looking outside its major steel division for leadership in the wake of a widespread data fraud scandal.

FILE PHOTO: The logo of Kobe Steel (Kobelco) is seen at the company headquarters in Kobe, western Japan October 24, 2017. REUTERS/Thomas White/File Photo

Mitsugu Yamaguchi, 60, currently executive vice president, will replace Hiroya Kawasaki, who said on Tuesday he would step down from April 1 to take responsibility for the fraud that the company admitted has been going on for nearly five decades.

Naming a CEO and president from a business segment other than Kobe Steel’s mainstay steel business or its general affairs division is rare for Japan’s third-biggest steelmaker, which is seeking to change its corporate culture.

“Under a new management structure, Kobe Steel will move forward with fundamental reforms to the organization and its corporate culture in an effort to restore the trust of everyone as quickly as possible,” the company said in a statement.

Yamaguchi, who will hold a press conference next Friday, faces a difficult challenge to rebuild credibility at the 112-year-old company.

Kobe Steel, which supplies steel parts to manufacturers of cars, planes and trains around the world, admitted last year to supplying products with falsified specifications to about 500 customers, throwing global supply chains into turmoil.

Releasing results from a four-month-long investigation by an external committee on Tuesday, it said it had found new cases of impropriety, widening the total of affected clients to 605, including 222 customers overseas.

The company’s steel division is one of eight business segments and accounted for about 40 percent of total sales in the nine months to end-December and about a third of total recurring profit.

The company’s data tampering came mostly from its aluminum and copper division, but some cheating cases were found at the steel division.

The Kobe Steel case, one of the country’s biggest industrial scandals in recent memory, set off a rash of malfeasance revelations by other Japanese heavyweights, hitting the country’s reputation for manufacturing excellence.

Reporting by Chris Thomas in BENGALURU, Kaori Kaneko and Yuka Obayashi in TOKYO; Editing by Stephen Coates and Richard Pullin