Japan's Ministry of Defense is in the process of implementing a "suspension of designation" on Kawasaki Heavy Industries Ltd., preventing the company from bidding on projects due to falsifying fuel efficiency data for diesel engines used in Maritime Self-Defense Force (MSDF) submarines, according to reports.
The ministry's choice seems to be influenced by the widespread occurrence of contract violations. It is anticipated that the suspension will continue for approximately 2 1/2 months, and efforts to determine the penalties are currently ongoing.
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During an inquiry into Kawasaki Heavy's manipulation of data in inspections for commercial ship engines, it was revealed that there may have been misconduct with submarines as well. The company informed the Defense Ministry about these suspicions.
To get to the bottom of the situation, Kawasaki Heavy has set up a special committee, which includes external legal experts. A comprehensive report is anticipated to be released by the conclusion of the year. According to the Defense Ministry, the Maritime Self-Defense Force (MSDF) has a total of 25 submarines in operation. These submarines are built by Kawasaki Heavy and Mitsubishi Heavy Industries Ltd in roughly equal numbers.
Kawasaki Heavy is responsible for producing the diesel engines that are used to charge the storage batteries, which serve as the power source for submarines including those made by Mitsubishi Heavy. These engines are installed in active submarine classes like the "Oyashio," "Soryu," and "Taigei." After being put together, the engines are tested on land to collect different types of data, such as fuel usage.
According to insiders, Kawasaki Heavy Industries provided inaccurate numbers to make it seem like the engines met the government's requirements and to reduce discrepancies in the measurement results.
The fraudulent data manipulation by the company has been going on for approximately two decades, beginning no later than 2002.
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According to Gen Nakatani, the former Defense Minister, the Defense Ministry confirmed that Kawasaki Heavy met standards during sea trials and stated that this does not impact the safety or performance of the submarines. Kawasaki Heavy Industries has been a prominent contractor for the Acquisition, Technology & Logistics Agency's procurement of defense equipment, including submarines, aircraft, naval vessels, and missiles. In the fiscal year 2024, it ranked second with contracts valued at 638.3 billion yen, trailing behind Mitsubishi Heavy Industries. Being suspended from bidding typically implies that the company is prohibited from partaking in future contracts. If Kawasaki Heavy Industries were to face such a suspension, it may hinder Japan's objective of enhancing its defense capabilities.
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Since December 2024, Kawasaki Heavy Industries has received two "strict warnings" from the Defense Ministry due to a slush fund scandal. This scandal involved the company generating around 1.7 billion yen ($11 million) in connection to a repair contract for MSDF submarines, where inappropriate gifts were provided to crew members and others. Some individuals within the ministry believed that the response to this scandal was too lenient. Additionally, in 2013, Kawasaki Heavy Industries faced a two-month suspension of designation for their participation in a bid-rigging scandal related to helicopter development for the Ground Self-Defense Force.