Block & Leviton LLP Investigates Kobe Steel, Ltd

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                                                            |By Yuka Obayashi

Image Zoom |By Yuka Obayashi

The Kobe Steel scandal broke on Sunday when the manufacturer admitted to falsifying data linked to the strength and quality of products.

There was a single case of data tampering of iron powder products the company said, along with 70 cases of data tampering at its research unit Kobelco Research Institute Inc.

Aluminum castings, forgings and flat-rolled items, along with copper strips and tubes were among the products affected, the company said in a statement.

Kobe Steel's admission has reverberated through supply chains and cast a shadow over Japan's reputation for precision manufacturing.

Toyota, General Motors, Honda and Mazda are among the major automakers checking their models.

Honda users stated that C column of Civic sedans produced in Turkey was caused by Kobe Steel, while Honda Turkey made a statement about it.

"We can't rule out the possibility that the external investigation will find other cases", Katsukawa said, adding no customers had raised any safety issues or stopped buying its products.

"There are suspicious cases in Japan and abroad" that could involve further wrongdoing, as the ongoing investigation has not been completed, Hiroya Kawasaki told reporters after meeting with a senior industry ministry official.

Japan's "Shinkansen" bullet trains also used Kobe Steel's aluminum, as did high-speed trains in Britain, according to engineering firm Hitachi. He criticized the apparently widespread falsification of data as "inappropriate". Big multinationals, including automakers like Toyota, General Motors and Ford, as well as aircraft manufacturers like Boeing and Mitsubishi Heavy Industries, are investigating.

In 2015, it was revealed that Toyo Tire & Rubber fabricated data to secure government approval for materials to absorb shocks from earthquakes.

On Wednesday, the Japanese government urged Kobe Steel to clarify the extent of the manipulation of inspection data. Conglomerate Toshiba Corp is still battling the fallout of a scandal over reporting inflated profits.

Following this news, American Depositary Receipts ("ADRs") of Kobe Steel fell $1.92 per share over two trading days, or over 32%, to close at $4.00 per share on October 10, 2017. "Kobe Steel's technology is not something easily substitutable by others, and existing customers have nowhere else to go", said Yasuo Sakuma, Chief Investment Officer at Libra Investments in Tokyo. Toyota said it uses materials from Kobe in bonnets, rear doors and other auto parts.

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