Mitsubishi Covered Up Auto Defects

For years, employees at Mitsubishi Motors Corp. tucked consumer complaints about auto defects away by the dozen in a special place. That was the file known to workers as "H," for the Japanese word for "secret" or "defer."

The complaints by Japanese consumers were never reported to authorities — they stayed filed, awaiting clarification, explanation or documentation that usually never came.

The defects, including failing brakes, fuel leaks, malfunctioning clutches and fuel tanks prone to falling off, were fixed on a case-by-case basis to avoid any humiliating recalls.

As it announced another recall Tuesday, Mitsubishi acknowledged in documents submitted to the government that the cover-ups dating back to 1977 were carried out with the full knowledge of workers, managers, even one current board member.

The revelation is a blow to the struggling automaker, which is likely to face an uphill battle regaining consumers' shattered faith in its ethics and the quality of its vehicles. Last month, the heavily indebted firm signed a deal to sell German-American DaimlerChrysler AG a 34 percent stake.

"It's definitely another problem for Mitsubishi Motors," said Noriyuki Matsushima, auto analyst with Nikko Salomon Smith Barney in Tokyo. "It can hope to win back social credibility once it takes proper steps to rectify its mistakes."

The recalls announced Tuesday by Mitsubishi are based on eight defects in 88,000 trucks and cars. Those were in addition to recalls announced last month on 532,000 vehicles.

The recalls will cover about 50,000 vehicles exported to the United States.

Brakes may fail in the Montero sport-utility vehicle because of leaking brake fluid, a chassis joint may come loose in the Galant sedan and the Mirage may stall out because of a defective engine shaft.

At a time when Mitsubishi is struggling to turn around lagging sales, the recalls will cost it $69 million.

Ironically, when Katsuhiko Kawasoe took over as president three years ago, he promised to clean up Mitsubishi. His predecessor resigned to take responsibility for a scandal involving payoffs to racketeers.

Kawasoe denied personal knowledge of the cover-ups and refused to resign. He promised further reforms — a panel with outsiders to monitor product quality, and executive pay cuts.

Tatsuro Nakagami, executive officer in charge of product quality, said he knew of the "H" file, which included data on three or four potential recalls a year, but did not realize that the policy was illegal.

The Transportation Ministry accused Mitsubishi of systemically hiding defects as a policy and said it was studying possible penalties.

The cover-ups surfaced in a recent government inspection, when officials found batches of documents about driver complaints that they had never seen before, stashed away in a Mitsubishi locker room.

In order to vert recalls, Mitsubishi contacted owners through dealers and fixed the problems without reporting them.

Although no accidents linked to the defects have been reported abroad, there were at least three in Japan, Mitsubishi said.

Two were minor crashes without injury, but a brake defect in a Mitsubishi Pajero, sold as the Montero in the United States, caused it to crash into the rear of another car in June. Two people in the front car suffered minor whiplash, and Mitsubishi is looking into possible compensation.

"The problem was the lack of conscience among our employees," Kawasoe said. "There was an impression that recalls meant we were making shoddy cars."

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