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Mitsubishi cover-up hinders sales, image

By YURI KAGEYAMA
The Associated Press

SHIZUO KAMBAYASHI / AP Wilfried Porth, foreground, chief executive of Mitsubishi Fuso Truck and Bus, and Hideyuki Shiozawa, senior executive officer, bow in apology last month. Porth said this week that some 500,000 Mitsubishi trucks and buses in Japan will have to be recalled or repaired.

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Katsuhiko Kawasoe stepped down as president and promised that the systematic cover-ups that spanned decades would never happen again.

Today, the Japanese automaker is in deeper trouble, having admitted that it never did come clean during the 2000 scandal, continuing instead to hide defects. Mitsubishi has had to announce recall after recall, lost a third of its car sales in Japan and has been forced to cut jobs and workers' salaries.

Chief Executive Yoichiro Okazaki announced yesterday that the continued recalls will likely reduce domestic sales for the fiscal year ending March 31, 2005, to 220,000 vehicles. That's a 40 percent drop from the previous year and down from the initial target of 300,000.

Kawasoe, meanwhile, is in jail, waiting to hear whether prosecutors will file charges of professional negligence in connection with the 2002 accident of a driver of a Mitsubishi truck that crashed after the brakes failed.

	Mitsubishi Motors Chief Executive Yoichiro Okazaki listens to questions at a news conference in Tokyo yesterday.

Police and Mitsubishi officials say Kawasoe and others chose not to report clutch defects though they knew the problems could cause serious accidents. Mitsubishi admitted the clutch defects only this year.

A recent company investigation found that more than 150 defects in trucks and buses were concealed since 1989, many of them secretly repaired without recalls, although the defects were suspected in more than 100 accidents.

The crisis at Tokyo-based Mitsubishi raises serious questions about corporate culture at a time when many major companies are striving to keep up with global ethical standards.

Analysts say Mitsubishi group companies, including a trading house, bank and machinery maker, were once synonymous with quality in Japan, especially after World War II when powerful manufacturers were revered as leaders of economic growth and modernization.

But managerial arrogance and a hierarchical relationship with workers meant that even common sense concerns were silenced, said Takashi Nomura, professor of public policy at Tokushima Bunri University.

"It is simply too horrible that for years and years reported defects were shrugged off and squelched," Nomura said.

In Japan's conformist culture, workers strive to blend in and be part of a team, a quality that has often been praised as contributing to this nation's greatest manufacturing achievements. But some Japanese also shirk individual accountability because standing out is considered undesirable, a quality that has discouraged whistle-blowers.

Still, there are signs of gradual change in Japan's response to the Mitsubishi scandal. The unusual arrest last week of a former head of a major company, Kawasoe, appears to signal that authorities are getting more serious about pursuing criminal responsibility in corporate wrongdoing.

In addition to Kawasoe, 10 other former and current Mitsubishi officials have been arrested. Five are charged in a separate 2002 fatal accident in which a pedestrian was smashed by a wheel that rolled off a Mitsubishi truck.

After years of blaming poor maintenance, Mitsubishi officials acknowledged defects in the wheel hub this year.

Product-liability lawsuits are still rare in Japan, but the culture of shame about lawsuits has been diminishing, possibly allowing car owners, shareholders and accident victims to resort to court action without fears of social backlash.

The mother of the pedestrian lethally crushed by a truck tire has filed a damage lawsuit against Mitsubishi, although initially she feared public attention. The case is still pending.

Above all, consumers are saying no to buying Mitsubishi.

Over the last four years, Mitsubishi car sales in Japan have nose-dived by about a third to 350,000 vehicles for the fiscal year ended March 31. The recalls for Mitsubishi passenger cars announced this year affect 370,000 vehicles.

Yesterday, in addition to forecasting lower sales, the company announced it was cutting executives' salaries by as much as a half, and rank-and-file workers' pay will be cut by 5 percent for the next two years to help make up for the lost sales. These pay reductions are in addition to cost cuts announced last month that included the elimination of nearly 11,000 jobs, a quarter of Mitsubishi's work force, over three years.

Also this week, Wilfried Porth, chief executive of Mitsubishi Fuso Truck and Bus, who was sent in by German partner DaimlerChrysler last year, said some 500,000 Mitsubishi trucks and buses of the 1.3 million on Japanese streets will have to be recalled or repaired. Details about overseas recalls are still being worked out.

The defects covered a wide range — faulty parking brakes, cracked fuel tanks, tumbling wheels and leaking oil. But officials chose to be "selective," reporting only four defects in 2000, Porth said.

"I think it is totally unacceptable," he told reporters. "It is not my management culture. And it is not the new Fuso management culture."

Shin Kikuchi, a lawyer and corporate-governance expert, said Mitsubishi was overly obsessed with company politics, turning inward like a feudalistic village rather than properly dealing with customer safety and managerial transparency.

"The world is changing, but the company failed to keep up," Kikuchi said. "The problems are more primitive than the usual questions about corporate governance. They are far more basic. If there's a defect, you must carry out a recall."

Copyright © 2004 The Seattle Times Company

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