Investigation status of violation of JIS regulations by Shinko Wire Stainless Company, Ltd. and results of an overall inspection regarding compliance status of laws and regulations concerning product quality in the Kobe Steel Group

With regard to the violation of JIS regulations by Shinko Wire Stainless Company, Ltd., a subsidiary of Shinko Wire Company, Ltd., announced on June 9, an overall inspection were conducted to determine the compliance status of laws and regulations concerning product quality in the Kobe Steel Group, and progress was also made in confirming the applications of the products subject to violation of the JIS regulations and in confirming quality aspects and safety aspects.With regard to the violation of JIS regulations by Shinko Wire Stainless Company, Ltd., a subsidiary of Shinko Wire Company, Ltd., announced on June 9, an overall inspection were conducted to determine the compliance status of laws and regulations concerning product quality in the Kobe Steel Group, and progress was also made in confirming the applications of the products subject to violation of the JIS regulations and in confirming quality aspects and safety aspects.

We take this violation very seriously and sincerely apologize for causing considerable trouble to customers and other parties. We intend to rebuild our quality assurance system and strive to restore trust.

The current progress follows below.

We established an investigation committee on June 10 for the purpose of confirming the compliance status of laws, regulations and standards concerning product quality, of all Kobe Steel Group companies, along with determining the cause of the violation event and drawing up measures to prevent recurrence.

As for all products of the Kobe Steel Group, an overall inspection was conducted with regard to the compliance status of laws, regulations and standards concerning product quality. Specifically, the Kobe Steel Group, consisting of Kobe Steel, Ltd., its subsidiaries, equity-valued affiliates and furthermore their subsidiaries and equity-valued affiliates, was subject to investigation for the most recent one-year period (June 2015 to May 2016). Written answers were requested from the quality assurance departments of each company, and Kobe Steel, Ltd. conducted on-site confirmation.

As a result, with regard to the products that each Kobe Steel Group company shipped, no new violations were found under domestic laws, public qualification, certification and standards concerning product quality. In addition, out-of-spec noncompliant products were properly disposed, and no new alterations and other falsifications were found.

As for inspection records at Shinko Wire Stainless Company, Ltd. for the period of nine years and two months (April 2007 to May 2016) concerning the 55.5 tons of products subject to violation of JIS regulations, we proceeded to confirm whether there had been any problems in quality or safety, with the cooperation of spring manufacturers and others. Although we have completed reports to spring manufacturers, it is also necessary to trace the supply chain to final product manufacturers, and thus we anticipate that some time will be needed. Once the results are known, we will promptly disclose them.

As for the period prior to March 2007, the investigation committee conducted a hearing investigation on-site with related parties (including former employees). As a result, it was found there is a possibility that alterations began around 2001 or earlier. However, as inspection records no longer remain, we are unable to determine the facts.

We will continue to work on confirmation of the subject products. The investigation committee aims to thoroughly determine the cause of the violation event and establish a concrete action plan by around the end of July to prevent recurrence.