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Posted on: Friday, June 11, 2004

Former Mitsubishi chief arrested

By Yuri Kageyama
Associated Press

TOKYO — In a major blow to Mitsubishi Motors Corp.'s hopes for revival, former president Katsuhiko Kawasoe was arrested yesterday on charges related to a cover-up of auto defects suspected in a fatal accident.

A Mitsubishi Fuso truck drives past the troubled automaker's dealership in Tokyo Tuesday, June 8, 2004. Mitsubishi Fuso Truck & Bus Corp. on Tuesday disclosed the existence of an additional 93 defects in its vehicles based on an investigation going back to 1992, including some that reportedly caused 21 fatal accidents.

Associated Press

Five other Mitsubishi officials, including a former president and vice president at the truck unit, also were under arrest, police said.

The arrests come just weeks after several Mitsubishi officials were charged in a separate accident, and are a serious setback to a turnaround plan announced last month after the company's partner DaimlerChrysler refused to provide fresh infusions of cash.

Mitsubishi Motors' image has been badly tarnished and sales have fallen since it admitted four years ago it had systematically hidden auto defects and announced a massive recall.

Kawasoe, 67, resigned as president of the company in 2000 to take responsibility for the recall scandal, but denied any knowledge of the cover-up that had been going on for decades at the company.

Police now say Kawasoe and the others failed to follow orders from authorities to report auto defects, dealing only with reported problems dating to March 1998 and choosing to overlook suspected clutch defects reported in 1996.

Kawasoe and the other former Mitsubishi officials could not be reached for comment.

Those defects are suspected in an October 2002 accident, in which the driver of a Mitsubishi truck died after he crashed. Only this year did the truck unit acknowledge the defects that could cause clutch covers to crack and lead to brake failure.

Mitsubishi Fuso Truck & Bus Corp. President Wilfried Porth has acknowledged a "corporate culture of concealment," and has publicly apologized to the mother of a woman killed by a wheel that rolled off a Mitsubishi truck because of a suspected defect. That defect has resulted in belated recalls of thousands of trucks.

Mitsubishi Motors has announced 10 recalls this year affecting thousands of vehicles for dozens of defects it had kept hidden even after the attempt four years ago to come clean.

Authorities said all six of those arrested yesterday are in police custody. Prosecutors will be deciding whether to file official charges. Under Japanese law, a conviction for professional negligence resulting in injury is punishable by a prison term of less than five years or a fine under $4,500.

Mitsubishi Motors has announced one revival plan after the other in recent years, promising to beef up quality control under the guidance of DaimlerChrysler. But the spate of recalls has not ended.

"Regaining credibility is not an easy task amid a recurring emergence of recall cover-ups," Japan's top business daily Nihon Keizai Shimbun said yesterday.

Mitsubishi reported a $2 billion loss for the fiscal year ended March 31 and expects to stay in the red this fiscal year. Although it is hoping to return to profitability by March 2007, sales in Japan have been plunging, dropping nearly 60 percent in May, for example, and are not expected to recover for months.

Mitsubishi Motors announced another turnaround plan last month with injections of money from the Mitsubishi group and other companies that will lower DaimlerChrysler's stake in the company from 37 percent to about 20 percent.