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PRESS RELEASE

MFTBC TAKES DISCIPLINARY ACTION
IN FORMER RECALL COVER-UPS AND
FURTHER IMPROVES ITS CORPORATE GOVERNANCE


June 2 , 2004

In a continuing effort to proactively improve corporate culture Mitsubishi Fuso (MFTBC) today updates the public on the current status of ongoing activities and initiatives. The company hereby provides an update on three key measures:

  • Initiation of disciplinary action against 29 employees in connection with quality issues surrounding the so-called “Hub Case” and “Clutch Housing Case” recalls.
  • Strengthening of its corporate governance structures.
  • Enhanced channels of communications aimed at better providing the public with information on quality issues.

During the last week, a number of former executives and employees were indicted. MFTBC takes this very seriously. President and CEO, Wilfried Porth, today, once again, expressed his sincerest apologies to MFTBC’s customers and all effected persons for any inconvenience and anguish caused by this matter.

“We deeply regret the wrongdoings in the past. The new management will strive constantly to improve our quality management. In doing so, we will continue with our internal quality investigation in order to regain the fullest trust of our long-established customers and the general public,” Porth said.

MFTBC continues to fully cooperate with all relevant police and investigating authorities.

MFTBC had announced on May 20th that it would take disciplinary action against employees in connection with the quality issues related to two previously announced recalls: the “Hub Case” and the “Clutch Housing Case”.

An internal investigation has determined that three departments should be held accountable for previous misconducts. These departments are:

  • The Development Office for such wrongdoings as poor performance in its day-to-day operation, noncompliance with testing standards, insufficient follow-up of design results and unsatisfactory and indifferent reaction to accidents reports;
  • The Quality Department for mismanagement of so-called “Product Quality Reports” (PQR’s) and delayed reporting to the Ministry of Land, Infrastructure and Transport (MLIT) and for failing to take appropriate and timely; and
  • The Service Departments for such wrongdoings as neglect of appropriate market reactions, such as not filing for recalls or undermining warranty inspections of vehicles.

The responsibility of the former truck division’s management and employees, in this respect, has been proven material. Provided, however, that in some way the respective former management and employees acted in a framework which made them follow established yet unwritten rules imposed by top management, leniency was taken into account while deciding on disciplinary actions against them.

As a result of the ongoing internal investigation, 29 staff members were subjected to the following disciplinary actions for direct involvement:

  • 4 Suspensions: (2 Executive General Managers and 2 Senior Managers); suspension period = 5 days
  • 6 Pay cuts: (2 Senior Executive Officers, 1 Executive General Manager and 3 Senior Managers) = SEO; 30% of pay for 3 months; EGM and SM = 50% of pay for one day.
  • 19 Reprimands: (3 Senior managers, 16 Managers and Experts) = written letter of apology.

These actions are in line with Japanese “Labor Standards Law” as-well as in-house company rules and procedures.

The second proactive measure that seeks to improve MFTBC’s corporate culture relates to the corporate governance structure. MFTBC believes that a clear prerequisite for change is to develop and improve this structure. It has therefore established two committees in the wake of the recent findings. These committees are the:

  • Quality Advisory Committee
  • Corporate Culture Reform Committee.

Both Committees, respectively, have by now met in session and decided upon a time-frame for future reform.

A decisive role for reform is played by the “Quality Advisory Committee”. Its task is to evaluate and decide upon concrete measures for quality improvement.

The Committee held its inaugural meeting on May 17th. It is comprised of four members, MFTBC’s Chairman Michio Hori, and three external experts:

  • Committee Chairman, Dr. Naomasa Nakajima, Vice-President, the University of the Air (Chiba Prefecture), Professor Emeritus, The University of Tokyo.
  • Dr. Masuru Yoshimori, Professor, the University of the Air (Chiba Prefecture). Professor Emeritus, Yokohama National University.
  • Hideaki Imamura, Vice President, Boston Consulting Group.

MFTBC is deliberately seeking the counsel of external specialists as it considers their expertise and independence key to developing impartial directives.

This committee has three sub-committees which deal with the following issues:

  • Engineering and testing.
  • Quality information management processes.
  • Customer quality information and dealer services.

The chairman of MFTBC, Michio Hori said: “Our job is to provide a framework for reform and to drive action which supports the reform of corporate governance. We very clearly have our customers and the public in focus.”

The second committee is the Corporate Culture Reform Committee. It is headed by Atsushi Ueki, Expert, Corporate Office. This committee is comprised of 12 members from different areas of the company. It has already met a number of times and has set an agenda calling for the examination of the following points:

  • Defining challenges to the existing corporate culture and the nature of organization at MFTBC.
  • Defining the ideal corporate culture for the company.
  • Exploring possible disparities between existing corporate culture and the ideal approach.
  • Proposal to bridge this disparity.

Both committees have set themselves a clear timeline of 12 months, taking into account the complexity of the matter. There will be regular up-date reports.

As a third point of practical corporate action, MFTBC today announced the start of an ongoing, internet-based quality progress report. The aim of this initiative is to consistently update the public on background facts as well as progress made in quality issues. These details can be accessed at www.mitsubishi-fuso.com/jp. This new service - for the domestic market - will start next week. It will provide information on the work-progress of the Committees as well as the recall issues. Countermeasures for export models will also be conducted, but in line with the regulations of the respective markets.

In its effort to update the public MFTBC would like to point out the progress of the ongoing quality issues:

Regarding the recall of the front and rear hubs (Hub Case”), MFTBC is currently, as announced, employing temporary measures while doing further evaluation to confirm permanent measures by the end of the June.

Regarding the “Clutch Housing Case”, MFTBC has again initiated a temporary measure. During the period required to develop a permanent solution, affected vehicles are subject to stringent inspection and will have replacement parts provided if defective parts are found.


MFTBC is currently working on three additional cases including the propeller shaft and braking system of the heavy-duty “Sightseeing” bus, as well as the propeller shaft of certain heavy-duty trucks, which it announced on May 20. An official recall date has yet to be determined, but MFTBC will endeavor to submit this as soon as possible.

MFTBC would like to point out that this report represents the status of the quality findings as of today. In line with its approach on improved transparency, MFTBC will hold a press conference in the near future to further discuss the exploration and resolution of quality issues. As the internal investigation continues in earnest, the company can not exclude the discovery of further quality issues that might require a recall campaign. As such, MFTBC believes that any future disclosure should be conducted on a step-by-step basis as and when new information emerges. It will then be presented to the public. This, MFTBC believes, reflects the systematic improvement of its quality management system since early 2003.


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