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It's been a really bad week for foreign steel.
Last week, President Trump announced a 25 percent tariff on all steel imports. This week, Japan's third-largest steelmaker announced its chief executive officer is resigning in a cloud of malfeasance.
The events are not necessarily related, unless you are in foreign steel. In which case, that grating sound may be your stock portfolio or your job grinding to a halt.
Kobe Steel, which supplies steel parts to car manufacturers, planes, and trains, admitted last year that it falsified specifications on steel products to about 500 customers around the world. Now, the company admits the fraud has been going on for nearly five decades.
"I feel heavy responsibility as our data falsification has caused trouble to so many customers," said resigning CEO Hiroya Kawasaki. "I think preventive measures should be done under a new management."
Announcing the results of a four-month investigation, the company found new cases of impropriety. It revealed that 605 customers had been cheated, including 222 overseas.
Reuters reported the scandal was part of a string of large-scale industrial meltdowns in the country's recent history. Mitsubishi Motor Corps, Toray Industries and Ube Industries have also admitted fabricating product data. Automakers Nissan Motor and Subaru have revealed false inspection procedures.
Kawasaki will resign as CEO and chairman effective April 1, with a successor to be chosen at an upcoming board meeting. The company said "inappropriate actions were widespread."
"Considering the multiple compliance issues that we've had in the past, we must say that there are deep-rooted problems, not only in terms of compliance but also in the corporate culture and mindset of employees and management," it said.
The company said executive vice president Akira Kaneo will also step down, and all internal executive officers will have temporary pay cuts up to 80 percent.
That may well include compliance officers and in-house counsel.
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