Japanese steel scandal grows as Kobe admits more cases of falsified information

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The head of Japan's Kobe Steel (Other OTC: KBSTF - news) warned Thursday that a quality control scandal engulfing his firm was likely to widen at home and overseas, as he acknowledged that trust in the steelmaker has "fallen to zero".

"This incident of improper conduct came to light following self-inspections and emergency quality audits of the compliance status of contracts executed as to products shipped over the past year", Kobe Steel said in a news release.

The latest company to comment on its links to Kobe, Ford Motor Co., said Friday it used aluminum from the company in its Mondeo auto hoods in China, although it hasn't confirmed whether the parts were compromised.

"We deeply apologise", Hiroya Kawasaki told a press briefing as he bowed deeply - a common act of contrition for Japanese executives.

More than thirty non-Japanese clients, including Daimler and Airbus to name a few, had been affected by the company's data fabrication.

"The Kobe Steel crisis is definitely helping other steel producers", Wunderlich Securities chief market strategist Art Hogan said.

Nuclear power plant parts are the latest to join the list of affected equipment as Fukushima nuclear operator Tokyo Electric Power (Tepco) said on Friday it had taken delivery of pipes from Kobe Steel that were not checked properly.

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Faulty parts have also been found in Japan's famous bullet trains that run at speeds as high as around 300 kilometres (180 miles) per hour and a space rocket that was launched in Japan earlier this week.

Asked if he plans to step down, Kawasaki said: "My biggest task right now is to help our customers make safety checks and to craft prevention measures".

No safety issues have yet been identified in the unfolding imbroglio.

"Trust in Kobe Steel has fallen to zero".

Kobe's shares have plunged 41 percent this week, including a 8.2 percent drop on Friday, after it revealed on Sunday that it had fudged data on the strength and durability of metals supplied to as many as 200 customers around the world, including Toyota Motor Corp, General Motors Co and space rocket-maker Mitsubishi Heavy Industries Ltd.

"We can not rule out the possibility that this will shake Kobe Steel to its foundation".

"It will likely continue to be extremely hard to make judgements on creditworthiness and investment until the safety of the products and the extent of damages are clarified", SMBC Nikko Securities said in a note to clients.

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