It further acknowledged other deep-seated issues that require consideration, including the desirable state of the board, division system, methods of personnel allocation and development, and formulation of management plans.Improved quality control oversight: Acknowledging its long history of quality problems, Kobe Steel said it will establish an independent quality supervision committee consisting of external experts “as a temporary measure to keep our effort to regularly monitor the status of correcting the misconduct and implementing remedial measures, as well as to provide a platform to discuss appropriate measures to overcome various quality compliance problems that the group may face in the future.”In turn, the head office could not manage a compliance program that ensured effective quality assurance. The following factors created the motive for engaging in, and continuing to engage in, misconduct:A false assumption that products falling short of customer specifications could be shipped to the extent that they had no safety issues; andConsidering the results of the IIC’s investigation and its own internal examination, Kobe Steel attributed the causes of the misconduct to the following three ethics, compliance, and internal audit failures:In another example, Toray Industries, one of Japan’s largest producer of chemicals and advanced materials, admitted in November 2017 that one of its subsidiaries inappropriately overwrote data provided in inspection reports to customers. Kobe Steel is one of the pillars of the Japanese industrial establishment. The board sits at the apex of an organisation, all-too-often removed from day-to-day operations, but the answers to these questions will be found in the body of the organisation not in the audit and remuneration committee.The unfolding crisis at Kobe Steel lays bare some uncomfortable questions for all senior executives.A password will be e-mailed to you.It is one of the ironies of the governance debate that, at times of crisis, questions around corporate governance at board level are quickly aired.
Civil complaints against the company and its subsidiaries are springing up like weeds. Institute for Economics and Peace (IEP) reveals the most peaceful countries in the world. Despite living in the most peaceful century in human history, the world has become less peaceful over the last decade. The company's steel, aluminium and copper products are used by over 500 Japanese and global firms including the likes of Nissan, Toyota, Boeing and General Motors. Commercial real estate is being reshaped by the health crisis, offering both risk and opportunity.Not registered on GFMag.com yet?Most companies around the world are being profoundly affected by Covid-19, and the impact on financial reporting and control is significant.
A notable example of corporate governance failure recently involved Kobe Steel — Japan’s third-largest steelmaker — which admitted having falsified steel product quality data, possibly, for as long as a decade. This includes its Machinery Business; Electric Power Business; Technology Administration Department of the Iron & Steel Business; and under the Quality Management Department of the Welding Business.Such falsified data initially concerned Kobe Steel’s copper and aluminum products, but later engulfed its steel products, as well. Further, it acknowledged, a large-scale transfer of authority from the head office to individual divisions weakened the ability to assume centralized control over the entire Kobe Steel Group.Sorry but it looks as if your browser is out of date. But now, the effect is being felt far beyond its borders.
Is the board only getting information from official channels and what risk does that pose?These questions can only be answered if the board of directors is willing to widen its own remit, outside of the normal confines, and take a more holistic view of their companies and their own responsibilities. In 2008, Kobe Steel subsidiary Nippon Koshuha Steel Co. was found to have cheated on steel inspection data.
CQI CEO, Vincent Desmond says: “It is too early to say what the senior leadership of Kobe Steel knew, but this intensifying scandal reminds us once again that operational governance failures pose a serious risk to corporate reputation, market capitalisation and the ongoing commercial viability of …