Mitsubishi Motors report points to poor governance as cause of mileage scandal

TOKYO (Reuters) – Poor overall governance at Mitsubishi Motors Corp was a root cause of the automaker’s mileage cheating scandal rather than just the fault of errant engineers, a probe by three former public prosecutors and an ex-Toyota director said on Tuesday.

File photo of Mitsubishi Motors Corp's vehicles and a passer-by reflected on an external wall at the company headquarters in Tokyo

Mitsubishi Motors Corp’s vehicles and a passer-by are reflected on an external wall at the company headquarters in Tokyo, Japan May 23, 2013. REUTERS/Toru Hanai/File Photo

The group was hired by Mitsubishi Motors to conduct a three-month investigation into practices at the Japanese company after it admitted to overstating the fuel economy on two of its mini vehicle models, along with two models manufactured for Nissan Motor Co Ltd. It also used improper data to calculate mileage for other models, going back to 1991.

That revelation, the third scandal to rock the company in two decades, caused a slump in Mitsubishi’s market value and forced it to suspend sales in Japan for almost three months. The company sought financial assistance from Nissan, which agreed to buy a controlling one-third stake in the company for $2.2 billion.

In 2000, Japan’s sixth-largest automaker by vehicle sales revealed it had covered up customer complaints for more than two decades, and in 2004 admitted to conducting secret recalls.

The company last week reported a 75% plunge in first-quarter operating profit due to a slump in domestic sales as a result of the sales stoppage.

The report on Tuesday recommended five improvements at the company: a revamp in development, stricter compliance, greater transparency, a better understanding of the law, and a greater willingness to uncover and tackle violations.

(Reporting by Naomi Tajitsu and Tim Kelly; Editing by Christopher Cushing)



Categories: Asia Unhedged, Japan

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