Kobe Steel shares tumble to near five-year low as cheating crisis deepens
TOKYO (Reuters) – Shares of embattled Kobe Steel Ltd tumbled to their lowest level in nearly 5 years on Monday, as a cheating scandal at the Japanese steelmaker ensnared hundreds of firms and left investors fearing for the financial and legal fallout.
Kobe Steel Chief Executive Hiroya Kawasaki on Friday revealed that about 500 companies had received its falsely certified products, more than double its earlier count, confirming widespread wrongdoing at the steelmaker.
Shares of Japan’s third-biggest steelmaker were down 0.12 percent at 804 yen by the end of the morning session after hitting 774.0 yen, the lowest since Dec. 11, 2012. The broader Tokyo stock market was up 0.68 percent, touching a 21-year high.
No safety problems have surfaced as the Japanese steelmaker attempts to get a grip on the data tampering that it earlier said may go back as far as ten years.
The revelations over the past week rippled through supply chains across the world as companies from operators of Japan’s famous bullet trains to the world’s biggest aircraft maker, Boeing Co,, were ensnared in the scandal.
The scale of the misconduct at the steelmaker hammered its shares as investors, worried about the financial impact and legal fallout, wiped about $1.8 billion off its market value last week.
Kobe Steel also said last week that the problems had gone beyond the borders of Japan with data falsification found in subsidiaries in Thailand, China and Malaysia.
Kawasaki told a press briefing on Friday the steelmaker plans to compensate customers for any costs arising from replacements.
Kobe Steel initially said on Oct. 8, 200 companies were affected when it admitted at the weekend it had falsified data about the quality of aluminum and copper products used in cars, aircraft, space rockets and defense equipment.