DOJ Accuses Japanese Steel Manufacturer Of Supplying Substandard Metal for use in Cars, Plains and Trains

As a result of an investigation by the Department of Justice (DOJ), the third largest steel distributor of Japan has admitted to falsifying data and supplying substandard steel and aluminum parts, which were used to manufacture cars, planes, and trains worldwide. 

Kobe Steel Ltd CEO and chairman, Hiroya Kawasaki, announced on Tuesday that the company had been committing data fraud for nearly five decades, in which the steel supplier falsified the specifications of steel, aluminum and copper materials to over 600 customers across the world. The company now faces a class action lawsuit (PDF) filed on Monday in a California federal court.

The Department of Justice opened an investigation last year, requesting documents and records related to any substandard metals sold to customers throughout the United States. The records indicate the sub-par metal was supplied to several major American manufacturers including Boeing, Ford and General Motors, among others.

Kobe Steel’s CEO Kawasaki announced this week that he would be resigning on April 1, and that the company would need to undergo major changes under new management. According to reports, several other higher execs within the company would also be stepping down as potential consequences could begin to arise from the DOJ.

This week’s lawsuit was filed by two California residents who are seeking to represent a nationwide class action lawsuit, which accused the Japanese steel maker of concealing known data that the quality of the metals being provided were not to specification, which could impact vehicle safety and performance.

Toyota Motors was also named as a defendant in the complaint, alleging the automobile manufacturer had superior knowledge and access to know whether the metals used to build their vehicles were to specification.

According to the complaint, Toyota’s Prius, Camry, Land Cruiser and Lexus vehicles have all been manufactured with sub-standard steel, aluminum and copper materials. The class action lawsuit demands compensatory and punitive damages of an unspecified amount.

In addition to the lawsuits in the United States, four individuals from Canada who bought vehicles that use Kobe’s products have filed lawsuits against the distributor and its subsidiaries seeking an unspecified amount in damages.

The DOJ is still investigating and is expected to take some action against Kobe Steel, which could include fines and civil penalties that could reach into the billions.