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April 11, 2006 1:10 pm

Probe finds more data falsifications in Toshiba

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Toshiba said on Tuesday it would cut the salaries of top executives, including its president, after it found several incidents of data falsification related to equipment supplied to domestic nuclear and electric power plants.

The Japanese electronics group, which also said it would adopt measures to strengthen compliance, said an internal investigation had revealed employees had falsified data on equipment provided to three nuclear and seven electric power plants.

The latest revelations highlight the lack of internal controls and strict compliance rules at the group, which is to become the global leader in the nuclear power plant industry after agreeing in February to acquire Westinghouse for $5.4bn.

The number of incidents involving inappropriately altered data is larger than Toshiba’s earlier estimate of irregularities, which it initially found at two nuclear powerplants.

The data falsification came to light after a whistleblower told Tokyo Electric Power (Tepco) in January that Toshiba had provided incorrect test data on equipment supplied to the generating company’s nuclear power plant in Fukushima.

It emerged only days later that data had been tampered with at another plant. That incident spurred the industry regulator into ordering an internal investigation by Toshiba as well as by Tepco.

Toshiba, Tepco and the Ministry of Economy Trade and Industry, which oversees the sector, all said the falsified data did not affect safety at the power plants.

But Meti said, “the incident is extremely regrettable. We expect Toshiba to take thorough measures to recover the public’s confidence.” Meti’s Nuclear and Industrial Safety Agency is conducting its own probe into the matter and expects to issue a report shortly.

The latest revelations will fuel widespread concerns about the safety of nuclear power plants in Japan, where a series of accidents and scandals have hardened opposition to the use of nuclear energy.

Toshiba said it took the matter seriously and would amend its labour contract to make such inappropriate activity punishable. It is also adopting measures to clarify responsibilities and improve transparency. Top executives, including Atsutoshi Nishida, president, will take a 20 per cent pay cut for three months.

Toshiba said the falsification of data had resulted from its agreement to meet very stringent standards for equipment used to measure the volume of water flowing into the reactor. Tepco’s standards are much higher than those of the government, according to Meti.

Failure to meet the customer’s specifications, or further efforts to provide the required data, would have resulted in a damaging delay in supplying the equipment as well as higher costs, the group said.

Toshiba also admitted that it had insufficient checks in place to ensure that such falsification did not occur.

Japan’s nuclear power stations, which account for about one-third of electricity production, have been hit by a number of scandals and accidents that have shaken public faith in the industry’s safety.

Two workers were treated for smoke inhalation after a fire broke out last month at a radioactive waste plant in Fukui prefecture, about 200 miles west of Tokyo. Kansai Electric Power, which runs the plant, said there was no radioactive leak.

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