- The Washington Times - Tuesday, August 29, 2000

TOKYO (AP) Mitsubishi Motors' shares fell 12.4 percent yesterday following a weekend raid on its headquarters and reports that its president would resign to take responsibility for a growing scandal over decades of hiding auto defects.

Mitsubishi shares fell 48 cents to $3.39 a share on the Tokyo Stock Exchange, even as the benchmark 225-issue Nikkei Stock Average hit a six-week high. The Nikkei rose 269.79 points, or 1.60 percent, closing at 17,181.12 points.

Mitsubishi President Katsuhiko Kawasoe yesterday promised a thorough housecleaning.

"Together with my management team, I will … devise a set of measures to rectify the situation and to prevent any recurrence, as well as taking strict disciplinary action within the company," he said in a statement.

The Nihon Keizai financial newspaper and Kyodo News agency reported yesterday that Mr. Kawasoe had decided to resign, citing unidentified company sources.

A Mitsubishi spokesman, speaking on the condition of anonymity, denied it.

Mr. Kawasoe's predecessor, Takemune Kimura, stepped down in 1997 over accusations that the company made illegal payments to corporate racketeers.

Mitsubishi's policy of hiding defects from the government and repairing them on a case-by-case basis as consumers complained stemmed from the mistaken impression among employees that recalls would be humiliating, Mr. Kawasoe said last week.

The automaker gave the government a report last week saying that workers and managers had knowingly and systematically hidden about 64,000 consumer complaints about auto defects since 1977.

Since last month, Mitsubishi has recalled 620,000 vehicles for defects that include failing brakes, fuel leaks and malfunctioning clutches. The recalls came only after government inspectors found documents about the defects hidden in a company locker room.

None of the defects has been known to cause any deaths, though several accidents in Japan have been attributed to them.

Consumer reaction in Japan has been muted, and sales have not taken a hit, although it may be too soon to tell its long-term effects. Car sales totaled about 12,000 in August, up from 10,800 a year ago.

Mitsubishi Vice President Sumikazu Yokogawa said last week that dealers have been making a special effort to push their cars since the scandal broke.

Transportation Minister Hajime Morita said Friday that the government and police planned to bring charges against the car-maker. A plan under consideration would fine Mitsubishi $37,800 at most and no Mitsubishi executives or employees would face prosecution.

Automakers are required to report consumer complaints to the Transport Ministry and must issue recalls if serious defects are found.

Police searched Mitsubishi headquarters, two factories and the homes of two officials Sunday, confiscating records of meetings of Mitsubishi officials discussing recalls, consumer complaints, and computer disks containing records of recalls and consumers' claims.

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