JAPAN: Mitsubishi Motors claims damages from former executives

By just-auto.com editorial team | 30 March 2005

Mitsubishi Motors Corp on Wednesday said it is demanding damages of up to 1.3 billion yen ($US12 million; €9 million) from seven former executives for their responsibility in a recurring scandal over hidden vehicle defects, the Associated Press (AP) reported.

The news agency said the penalty for the former management, including several former presidents, was disclosed in a report on an investigation by Mitsubishi Motors that was submitted to the Japanese government on Wednesday - the investigation included outside lawyers.

AP noted that Mitsubishi Motors has seen its sales plunge after acknowledging in 2000 that it had systematically concealed vehicle defects for decades - last year, the automaker disclosed that it failed to come clean five years ago and had more hidden defects.

Among the defects are those suspected in two fatal 2002 accidents - a clutch system that could cause brake failures and a faulty hub that could cause a truck wheel to fall off, the report added.

Osamu Masuko, appointed president this year after a string of predecessors resigned in disgrace, reportedly said the payment from the former management will be decided through negotiations and will not develop into a lawsuit.

The maximum amount equals their retirement pay, he said, according to the Associated Press - the charges include failing to carry out recalls, managerial responsibility in the cover-up and improper handling of the cover-up after it surfaced.

AP said the company will also demand that 10 other senior managers in quality control, sales and research at the Tokyo-based automaker return at least part of their retirement pay, totaling 350 million yen ($3 million; €2 million).

Masuko reportedly said it had been a hard decision to penalise the former management - among the seven are Katsuhiko Kawasoe, who resigned as president in 2000 when the scandal surfaced, and Takashi Usami, former chairman of the Mitsubishi truck division.

AP noted that Kawasoe and Usami are on trial on charges of professional negligence in one of the fatal accidents and have pleaded innocent.

Masuko reportedly said the report was meant to show that Mitsubishi Motors had broken with its past.

"The mind-set of the company has changed," he told the Associated Press at the ministry, adding: "I will do my utmost to make sure there is no third time."

AP said that, on Tuesday, Mitsubishi Motors' former truck unit, which is now 85% owned by DaimlerChrysler, acknowledged it had delayed in reporting defects - even under new management sent in by DaimlerChrysler two years ago.