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Mitsubushi Ex-Execs Charged

A former president is one of six arrested in the death of a truck driver. The firm is accused of covering up defects.

June 11, 2004|Bruce Wallace | Times Staff Writer

TOKYO — The bad news at Mitsubishi Motors Corp. turned from the scandalous to the possibly criminal Thursday as Japanese police charged the company's former president with failing to recall and repair deadly defects in buses and trucks.

Broken propeller shafts caused by a faulty clutch system are believed to have led to brake failure on a 9-ton Mitsubishi Fuso truck that smashed through a highway tollgate and into a concrete wall in October 2000. The late-night crash killed 39-year-old driver Makato Ikeda as he drove a load of refrigerated vegetables to market.

Police allege that "professional negligence" on the part of Mitsubishi's then-president, Katsuhiko Kawasoe, and five other former executives also arrested Thursday was responsible for the truck driver's death. Japanese television showed police leading away Kawasoe as the former president hid his face under a gray jacket.

The executives conspired as far back as 1996 to hide the faulty clutches, police said, instructing company mechanics to fix the problem secretly during routine servicing rather than issuing an embarrassing recall.

Mitsubishi recalled 168,000 trucks last month to fix the problem that allegedly killed Ikeda.

It is the second time this year that police have linked Mitsubishi design flaws to a road death. A pedestrian was killed in 2002 when she was struck by a wheel that had flown off a Mitsubishi truck.

Five executives were charged last month over that death as well, accused of falsifying data that the company provided to industry regulators.

The arrests are another blow to a struggling automaker that is part of Japan's richest conglomerate but was already in a desperate struggle for survival. Mitsubishi, the nation's fourth- largest automaker, lost more than $2 billion last fiscal year. And the company's auto sales in North America have been in steep decline for a year.

DaimlerChrysler, which owns 37% of Mitsubishi Motors, delivered its own vote of no confidence in April by refusing to participate in a massive financial aid package aimed at restructuring the company.

DaimlerChrysler added to the crisis mood Thursday by suggesting it may sue Mitsubishi over the secrecy surrounding the truck and bus defects.

Mitsubishi has issued nine recalls this year alone, affecting more than 400,000 of the estimated 6 million vehicles it has on the road in Japan. An additional 220,000 cars it sold in Europe have turn-signal problems and may have to be recalled, the company says. No evidence of defects has been reported in North American models.

The company's troubles stem in large part from what analysts describe as an arrogant corporate culture that reflected a belief that Mitsubishi could get away with not reporting the bulk of its manufacturing ills.

In 2000, it was disclosed that tens of thousands of consumer complaints had been ignored and mechanics were instructed to fix problems surreptitiously when owners brought their vehicles in for regular servicing.

The company even offered Japanese police forces free maintenance of their Mitsubishi car fleets as a way to get at and fix troubled parts.

Mitsubishi's "management did not have the high level of ethics that consumers expected," said Shunji Kobayashi, a professor of corporate ethics at Waseda University in Tokyo.

Thursday's arrests came as Mitsubishi was about to embark on a three-year, $4-billion restructuring program that current President Yoichiro Okazaki described in April as the firm's last chance to save itself.

But the essential investment required for any revival appears to depend almost entirely on the automakers' cousins in the Mitsubishi family: Mitsubishi Corp., Mitsubishi Tokyo Financial Group Inc. and Mitsubishi Heavy Industries Ltd.

Many observers see that closed structure, in which management is isolated from the prying eyes of outside shareholders, as an obstacle to attracting the necessary capital. The dramatic recovery at Nissan Motor Co. came about, they contend, because Chief Executive Carlos Ghosn severed its links to its related companies.

"It is going to be difficult for Mitsubishi Motors to carry out the drastic company restructuring as Nissan did because they have so many group companies under them," professor Kobayashi said.

Hisako Ueno in The Times' Tokyo Bureau contributed to this report.

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