Kobe Steel Ltd. on March 6 announced the findings of the external committee's investigation into its data fraud scandal along with measures to prevent a recurrence.

For decades, the steel manufacturer delivered products that fail to meet the quality standards demanded by the clients by falsifying related data.

The company said it will take steps to make it harder to tamper with such data, including automatizing the production of inspection records. It will also appoint the chairman of the board of directors from among outside directors as part of its efforts to improve corporate governance.

Chairman and President Hiroya Kawasaki and Executive Vice President Akira Kaneko will resign in April to take responsibility for the scandal and install new leadership for the company’s transformation.

But the problems that have come to light are apparently so entrenched as to raise doubts whether the company will really be able to clean up the rot and overhaul its culture.

According to the investigation, excessive emphasis on earnings led to a corporate culture driven by a “production-above-all” credo, which put absolute priority on sales expansion through increasing the amount of orders received.

Plants that accepted more orders than they could handle resorted to data falsifications as they found themselves unable to stably manufacture products according to the specifications required by the clients.

The company’s highly compartmentalized structure and the almost total lack of personnel exchange between different sections made it possible for employees involved in data fraud to climb the corporate ladder. There have been cases in which the same fraudulent practices continued through several generations of leadership in specific sections.

Five former and current board members, including two who have already left the firm, have been found to have been involved in or connived at misconduct, according to the findings.

The problem has never been discussed among members of the board.

These are all shocking facts, but don’t represent the entire picture of the scandal.

No clear answer has been given to the question why the data cheating that started in the 1970s at certain plants spread to a total of 23 plants, including those of group companies.

Kobe Steel didn’t publish the report written by the external investigative committee, citing the ongoing investigation in the United States. The company only provided a summary of the report it has made itself.

The company said that five outside directors had confirmed the contents of the summary. Since these five people are in positions that make them also responsible for the fraud, however, the way the company has disclosed information is flawed.

Kobe Steel has also pledged to reduce the number of board members who have risen through the ranks within the company and increase the number of outside directors from the current five so that they will occupy a third or more of the seats on the board. But it is hard not to be skeptical that this approach will help solve the problems.

Kobe Steel has a history of scandals. In 2006, it was revealed that the steelmaker had doctored environmental data at two of its plants that were reported to the local governments. In 2009, the then chairman and president of the company stepped down following revelations about inappropriate donations to the support groups for local assembly members.

The latest scandal poses a decisive test of the company’s commitment to pushing through really meaningful reforms of its culture and management.

Kobe Steel has joined a growing list of Japanese materials makers that have been involved in shenanigans concerning product quality, including Mitsubishi Materials Corp., Toray Industries Inc. and Ube Industries Ltd.

While the circumstances of the scandals are not the same, there seem to be common factors that have negatively affected the shop floor, such as relentless pressure for profits and a labor shortage.

All companies need to glean lessons from Kobe Steel’s mistakes and re-examine their own management and corporate culture.

--The Asahi Shimbun, March 8