Non-compliance with reporting directives in quality self-investigation in the Kobe Steel Group

At this time, with regard to improper conduct at Kobe Steel, Ltd. and its group companies, we deeply apologize for the enormous amount of trouble we have caused to customers, suppliers, shareholders and many others.

Kobe Steel is undertaking an investigation on the facts concerning improper conduct in its Aluminum & Copper Business and its other business units, as announced in “Improper conduct concerning a portion of the aluminum and copper products manufactured by Kobe Steel” on October 8, 2017, “Report on improper conduct: the case of steel powder and an inspection company” on October 11, and “Report on improper conduct concerning Kobe Steel and its group companies” on October 13.

In addition, Kobe Steel has previously announced that its business units are conducting self-inspections of their products with emergency audits conducted by the head office. With the cooperation of its customers to which it had shipped products subject to improper conduct, Kobe Steel is proceeding with technical verification to determine the effect its products have on the quality of customers’ products.

In carrying out the abovementioned self-inspection at the Chofu Works of the Aluminum & Copper Business, Kobe Steel discovered yesterday from information reported through an internal hot line that there was non-compliance with reporting directives by some Kobe Steel Group employees, including a number of managers.

Kobe Steel has begun an investigation on this incident and is reporting by this release about the facts found up to this time. In the future, Kobe Steel plans to verify facts as well as take strict disciplinary action in accordance with its company regulations.

Upon conducting self-investigations at the Extrusion & Fabrication Plant of the Chofu Works in the Kobe Steel Group, some Kobe Steel Group employees, including managers, did not report on the quality inspection data of nonconforming products whose dimensions were outside the standards specified by the customers. In this manner, the non-conformity escaped discovery. In addition, when an emergency audit was conducted by the head office, the proper quality inspection data was not reported, and therefore the nonconformity of the affected products was not discovered. At this time, Kobe Steel has not verified whether similar incidents have occurred in addition to the incident reported in this release.

Aluminum extrusions: The quantity is currently being confirmed. (Meetings have already begun with customers.)

In view of the recent incidents, instead of the Quality Investigation Committee established within the company, Kobe Steel plans to establish an independent investigation committee consisting only of outside members independent of Kobe Steel. This committee will carry out investigations on improper conduct, thoroughly determine the causes, and consider measures to prevent recurrence. Details of the new independent investigation committee are forthcoming. In the event that new facts are verified, Kobe Steel will promptly make an appropriate announcement.

The effect these incidents will have on Kobe Steel’s business performance is unclear at this time. Kobe Steel plans to make an announcement when extent of the impact becomes clear.