Irregularities rampant under sloppy management at Mitsubishi Electric

Editorial

12:35 JST, December 28, 2021

The rampant misconduct at major companies could shake the foundation of the Japanese manufacturing industry. The latest disciplinary actions must be the first step toward restoring public trust.

Mitsubishi Electric Corp. has announced disciplinary action for 12 of its current and former executives, in response to the discovery of improper quality control practices on train car and other equipment. The 12 include former Chairman Masaki Sakuyama and former President Takeshi Sugiyama. President Kei Uruma, who assumed his post in July, was also disciplined, because he was the head of the business unit involved in the improper practices during the relevant period.

The disciplinary action was prompted by the results of an investigation conducted by an external panel of experts including lawyers who looked into the company’s corporate governance. The 12 current and former executives will see reduced compensation or be asked to voluntarily return part of their retirement benefits and other pay.

Starting in 2016, fraudulent inspections at automakers and other firms came to light one after another. Following these discoveries, Mitsubishi Electric has conducted three in-house investigations since fiscal 2016. Executives who overlooked any irregularities on those occasions naturally bear an extremely heavy responsibility.

The external panel concluded that Sakuyama, who was president from April 2014 to March 2018, “did not appear to have been proactively involved” in the in-house investigations. When Sugiyama succeeded Sakuyama, the matter was not passed on as an important issue, the panel said.

Sugiyama was also criticized for failing to fully inform his employees of the need to identify all problems during the fiscal 2018 investigation. Such an attitude must be described as negligent for someone in a management position.

Other problems have also been revealed. A separate external panel that is investigating the details of irregularities has compiled its second report, following the first one in October. The second report said 29 other problems were found at five sites including plants in Wakayama and Kagawa prefectures.

There had been reports in the past of emergency power generators manufactured at the Nagasaki Works site malfunctioning due to design errors. However, Mitsubishi Electric did not replace or repair all the generators and instead dealt with clients individually.

The generators were delivered to such institutions as elderly welfare facilities and hospitals. The company’s mishandling of the matter is serious, as it could have endangered people’s lives in times of disaster.

Mitsubishi Electric’s top-down, bureaucratic communication culture has also not changed. In the companywide investigation over the misconduct, the external panel distributed a questionnaire to Mitsubishi Electric employees, asking them to send the answers directly to the panel so they did not have to consider their superiors when answering.

Despite such efforts, some senior staff told their subordinates to give their responses to the company. It is unacceptable if this was an attempt to sabotage the investigation.

There has been no end to the irregularities at major manufacturers. Major auto equipment maker Hitachi Astemo, Ltd., a subsidiary of Hitachi, Ltd., was found to have conducted fraudulent inspections on suspension and brake parts.

Both Mitsubishi Electric and Hitachi are prestigious Japanese companies known around the world. If international trust in Japan’s manufacturing industry is undermined, it could impede the country’s economic revitalization. Eradicating malfeasance is an urgent task.

— The original Japanese article appeared in The Yomiuri Shimbun on Dec. 28, 2021.