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REG - Mitsubishi Elect. - Statement re (Investigation into Improper QC)

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RNS Number : 6060W  Mitsubishi Electric Corporation  23 December 2021

 

 

 FOR IMMEDIATE RELEASE  No. 3471

                        Media Inquiries
                        Takeyoshi Komatsu
                        Public Relations Division
                        Mitsubishi Electric Corporation
                        Tel: +81-3-3218-2346
                        prd.gnews@nk.MitsubishiElectric.co.jp
                        (mailto:prd.gnews@nk.MitsubishiElectric.co.jp)
                        www.MitsubishiElectric.com/news/

 

Update on Investigation into Improper Quality Control Practices and

Implementation of Reform Roadmap (Second Report)

 

TOKYO, December 23, 2021 - Mitsubishi Electric Corporation
(http://www.mitsubishielectric.com/) (TOKYO: 6503) announced today the second
report tendered by its Investigative Committee (Chaired by Hiroshi Kimeda,
Partner (Attorney-at-law), Nishimura & Asahi, announced on July 2, 2021),
regarding improper quality control practices that were carried out by the
company. The company also issued today an update on reforms being carried out
in three key areas-quality assurance, organizational culture and
governance-including measures designed to prevent any recurrence of the
improper quality control practices, as first announced on October 1.

 

The Investigative Committee will continue looking into quality-control
practices at Mitsubishi Electric's various manufacturing sites and plants,
aiming to complete this phase of its investigation by around April 2022, after
which the committee will turn its attention to group companies. As previously
announced, roughly every three months Mitsubishi Electric intends to issue
updates on the committee's latest findings and the company's progress in
implementing reforms to correct the situation. The report being disclosed
today provides an update on developments that have occurred since the first
report was released on October 1.

 

Mitsubishi Electric also takes this opportunity to reiterate its sincere
apologies to all customers, valued stakeholders and broader society for the
impact of these incidents. The company takes the findings and recommendations
of the report very seriously and is committed to regaining trust in its entire
group by carrying out necessary reforms, including to prevent any recurrence
in the future.

 

In addition, the company received today a report on the accountability of the
company's Executive Officers and Board of Directors from the Governance Review
Committee, which was established on October 20 and is chaired by Toshiaki
Yamaguchi, Managing Partner (Attorney-at-Law, Certified Fraud Examiner),
Yamaguchi Toshiaki Law Office. Mitsubishi Electric, taking this report very
seriously, convened a Board of Directors Meeting today to decide disciplinary
action concerning the executives involved. The action was announced in a
separate press release, also issued today, entitled "Mitsubishi Electric
Announces Disciplinary Actions against Directors & Officers in Connection
with Improper Quality Control Practices," which is discussed below.

1. Status of Investigative Committee's investigation

The Investigative Committee, established on July 2, 2021 and chaired by an
outside attorney, conducted a questionnaire survey of all employees in Japan.
The committee has used objective data and other information to verify the
consistency of the responses it received, and it has conducted forensic
investigations into Executive Officers and other relevant parties as well as
carried out interviews and inquiries with relevant parties at the affected
sites.

By the time the company had announced the committee's findings regarding
improper quality control practices at the Kani Factory of Nagoya Works and the
Nagasaki Works on October 1, 2021 the committee reported it had received
reports of 2,305 quality control related occurrences (including duplicate
events, previously disclosed events, expressions of concern, etc.). Therewith,
the committee announced that it would carefully review and confirm every
report. The committee has already investigated around 42% of the reports
received via its survey and plans to investigate the remainder going forward.

The findings in the report being issued today describe occurrences that have
come to light since the first report was received and disclosed on October 1.
Tables 1 and 2 provide overviews. Table 3 summarizes the company's up-to-date
responses to improper quality control practices covered in the first report.

 

Table 1: Status of company-wide investigation (as of December 23, 2021)

 Progress level                                  Manufacturing site
 1) Completed investigation                      1 works site

                                                 Kani Factory of Nagoya Works
 2) Ongoing investigations
                 Covered in most recent report   5 works sites

                                                 Nagasaki Works, Air-Conditioning & Refrigeration Systems Works, Power
                                                 Distribution Systems Center, Fukuyama Works, Kamakura Works
                 To be covered in later reports  17 works sites

                                                 Kobe Works, Itami Works, Communication Networks Center, Energy Systems Center,
                                                 Transmission & Distribution Systems Center, Inazawa Works, Communication
                                                 Systems Center, Nakatsugawa Works, Shizuoka Works, Kyoto Works, Gunma Works,
                                                 Nagoya Works, Industrial Mechatronics Systems Works, Himeji Works, Sanda
                                                 Works, Power Device Works, High Frequency & Optical Device Works

-   Temporary suspensions of ISO9001 certifications: 2 sites (Nagoya Works,
Fukuyama Works)

-   Partial withdrawal of ISO9001 certifications: 2 sites (Nagasaki Works,
Power Distribution Systems Center)

 

 

Table 2: Overview of newly reported incidents of improper quality control
practices (as of December 23, 2021)

      Site                                                Improper quality control practice                                                Mitsubishi Electric's response
 ①    Nagasaki Works                                      1. Improper quality control practices for HVAC systems for railcars              1.

                                                          1) Additionally discovered cases of improper development-performance tests

                                                          • Figures differing from those measured in development-performance tests         1) 2) Explained situation to affected customers. For the products which had
                                                          were recorded in the test reports                                                been delivered, individually consulted with the customers.

                                                          Scope: 2014-20, 521 units                                                        Inspections will be performed and products will be shipped in accordance with

                                                                                customer instructions.
                                                          • Results of development-performance tests on different models were reused

                                                          in inspection records without consulting customers, and false statements were
                                                          recorded.

                                                          Scope: 2017-20, 320 units

                                                          2) JIS-compliant dew tests agreed on with some customers performed improperly

                                                          Scope: 1991 - Jun. 2021, 18,860 units

                                                                                3) Once discovered, appropriate entries were made in the inspection records
                                                          3) In commercial tests, improper test results were recorded for voluntary test   and submitted
                                                          points

                                                                                2.
                                                          Scope: From around 2000 onward

                                                                                1) 2) Decided countermeasures
                                                          2. Emergency power supply equipment (disclosed December 20, 2021)

                                                                                for all affected products.
                                                          1) Reverse mounting of tantalum capacitors on specific models due to design

                                                          mistake, and delayed reporting to customers and public                           Began implementation of the countermeasures upon informing customers.

                                                          Scope: Sep. 2014 - Oct. 2016,

                                                          309 units (shipped, including the units with

                                                          countermeasures implemented)

                                                          2) Misaligned slip ring, and delayed reporting to customers and public

                                                          Scope: Oct. 2001 - Sept. 2010,

                                                          985 units (shipped, including the units with countermeasures implemented)

 ②    Air-Conditioning & Refrigeration Systems Works      1. Some inspections not carried out owing to inadequacies with commercial        1. Conducting market inspections of all products subject to the Electrical
                                                          air-conditioning & refrigeration system inspection equipment (disclosed          Appliances and Materials Safety Act.
                                                          July 30,2021)

                                                                                Repaired the inspection equipment, thoroughly making sure of daily checking
                                                          Scope: Jun. 2014 - Jul. 2021                                                     procedures to prevent recurrence.

                                                          Units affected (violation of Act on Product Safety of Electrical Appliances      Submitted countermeasures to prevent recurrences to Ministry of International
                                                          and Materials): 2,427 units (27 models)                                          Trade and Industry, Japan on December 10, and received a notification dated

                                                                                December 17 to implement the prevention measures thoroughly.

 ③    Power Distribution Systems Center                   1. Some tests not conducted on 72/84kV CGIS (cubicle-type gas-insulated          1. Once discovered, inspections were conducted in accordance with relevant

                                                   switchgear) units (disclosed August 17, 2021)                                    standards and customer contracts. The situation was explained to customers to

                                                                                whom products had already been delivered, and inspections and discussions for
                                                          • Lightning impulse withstand voltage test not conducted                         countermeasures are being conducted upon request.

                                                          • Some power frequency voltage test not conducted

                                                          • Partial discharge test conducted improperly

                                                          Scope: 1996-2021, up to 4,448 units
 ④    Fukuyama Works                                      1. Improper quality control practice discovered with respect to UL489-listed     1. Shipments of the products were stopped as soon as the incidents were

                                                   low-voltage circuit breakers when conducting regular factory audits (disclosed   discovered. In accord with UL's instructions, tests were reperformed.
                                                          September 1, 2021)                                                               Shipments were resumed with UL's approval once all tests had passed.

                                                          • Parts differing from those in actual mass-produced products were used
                                                          (sample for FUS)

                                                          • At time of audit, test was conducted at lower voltage than specified

                                                          Scope: Around 2004 - Jul. 2021, 25 models

                                                          Investigation into other possible improper test practices continues.

                                                                                2. Reported to the relevant authority and application procedure is now under
                                                          2. Did not make sufficient applications under the Radio Act for CO(2) laser      way. Also communicating the matter broadly within the company.
                                                          marker equipment

                                                          Scope: 1995 - 2018, 20 equipments
 ⑤    Kamakura Works                                      1. Improper quality control practices for ETC equipment                          1. The product is for specific customers. The company has explained the

                                                                                situation to these customers and is currently discussing next steps.
                                                          • Conducted sampling inspections against 100%- inspection contracts, did not
                                                          conduct some waterproof tests, and conducted tests different from what was
                                                          agreed on

                                                          Scope: Jan. 2011 - Aug. 2021, 30 occurrences

 

Apart from the cases mentioned in Table 2 above, a total of 12 improper
quality control practices cases are described in the footnotes of the reports
by the Investigative Committee. No new cases of improper quality control
practice have been reported at the Kani Factory of Nagoya Works since the
October 1 report.

 

Table 3: Status of responses to previously reported cases (as of December 23,
2021)

      Site and details                                                                 Current status
 ①    Kani Factory of Nagoya Works                                                     1) Investigation by the Investigative Committee

      Inconsistency of electromagnetic switchgear and manual motor starters with UL    was completed
      certification

                                                                                       2) The Kani Factory Quality Assurance Section (product quality certification)
                                                                                       was transferred to the Nagoya Works Quality Assurance Department (August 2021)

                                                                                       3) The production control system was modified to prevent the use of
                                                                                       uncertified materials (in operation from December 2021)

                                                                                       4) Standard conformity checks for items other than materials added to
                                                                                       production control system (to be completed by July 2022)
 ②    Nagasaki Works                                                                   1) Investigationby the Investigative Committee on the matters mentioned in the

                                                                                left were completed
      • Improper quality control practices or inspections not carried out for HVAC

      systems for railcars                                                             2) Shifted each Quality Assurance Section belonged to Railcar Air Conditioning

                                                                                Systems Department and Electrical Facility Systems Department, to Quality
      • Reuse of old test data for development-performance tests of air                Assurance Department. Established newly Quality Management Section in Quality
      compressors for railcars                                                         Assurance Department. (December 2021)

                                                                                       3) Revised product development policy to strengthen management of product
                                                                                       specifications and regulated procedures (December 2021)

                                                                                       4) Investment on enhancement of technical and commercial test facilities for
                                                                                       development of HVAC systems for railcars (in operation from June 2022)

                                                                                       5) Working on setting up individual workplace quality meetings to uncover
                                                                                       quality issues and improve them.

                                                                                         (October 2021)

 

2. Progress in carrying out reforms, including measures to prevent any
recurrence

Below is an update on the company's progress in reforming its quality
assurance, organizational culture and governance in accordance with the
Investigative Committee's recommendations.

 

Figure 1: Summary of measures to prevent recurrence in response to the
Investigative Committee's suggestions

 

(1) Quality assurance reforms

The Corporate Quality Assurance Reengineering Group, which was established on
October 1 and reports to the CEO, is executing the company-wide measures shown
in Table 4. Its aims are to create a new company-wide structure for quality
assurance led by the head office, to share knowledge and to provide flexible
support across business divisions.

To monitor the effectiveness of the company's governance system concerning
quality compliance (i.e., Corporate Quality Assurance Reengineering Group), on
December 6 the company launched the quality governance subcommittee, which is
headed by Professor Shu Yamada, Faculty of Science and Technology, Keio
University, and includes seven other external experts. The subcommittee, which
is under the Corporate Compliance Committee, has been commissioned by the
Executive Officers' Meeting to monitor and assess the Corporate Quality
Assurance Reengineering Group's activities. Roughly every two months, the
subcommittee will hold a monitoring meeting to report the status of its work
and assessments to the Executive Officer's Meeting and the Audit Committee. In
turn, the Corporate Quality Assurance Reengineering Group will implement
improvements using the Plan-Do-Check-Act (PDCA) method.

 

The company has also commenced a process for selecting and hiring an external
Chief Quality Officer (CQO), whom the company intends to appoint in April
2022.

In addition, regarding the two-year budget of 30 billion yen established to
develop quality-assurance system infrastructure, the company has decided to
invest 490 million yen of this budget to modify production control systems at
the Kani Factory of Nagoya Works by April 2022 and to enhance testing
equipment that will go on line at the Nagasaki Works in June 2022. The company
will also reorganize related evaluation and testing processes for the
equipment to be installed at the Nagasaki Works.

Further, the company is investigating what aspects of operations and processes
it must strengthen to meet its contractual and product quality-assurance
obligations to customers. The aim is to complete a preliminary investigation
by the yearend and begin implementing measures in January 2022.

The Investigative Committee's second report states that there is
overconfidence in assuming that "there is no problem with quality," for some
products and this should be acknowledge. Instead, improvements should be made
in quality and technology. The company, viewing this as an extremely serious
issue, will introduce new measures to enhance the various quality-assurance
departments' knowledge of products and inspection equipment and also help the
department to respond appropriately to market needs and process defects.

 

 

Table 4: Progress of quality assurance reforms

 Task                                                                                                   Progress as of December 2021
 ① Creating a new company-wide structure for quality assurance (led by head                             ・Set up the quality governance subcommittee under the Corporate Compliance
 office)                                                                                                Committee and recruited external experts. Kickoff held on December 6, 2021.

                                                                                                        ・To ensure compliance with laws, standards and customer specifications,
                                                                                                        assessing how quality assurance systems/procedures and infrastructures can be
                                                                                                        strengthened. For the quality assurance systems, completed investigation as
                                                                                                        shown below ②-1. 1). For the infrastructures, commenced investigations at
                                                                                                        all sites to find areas to strengthen. Preliminary results will be compiled in
                                                                                                        December. As a means of preventing any recurrence, decided to invest 490
                                                                                                        million yen in total to renovate production-control systems at Kani Factory of
                                                                                                        Nagoya Works (scheduled to go into operation in April 2022) and enhance
                                                                                                        testing equipment at Nagasaki Works (scheduled to go into operation in June
                                                                                                        2022) .
 ② Company-wide measures for quality assurance reforms
                                          ②-1 Restructure the control functions                         1) Greater independence and separation of chain of command:

                                                                                                        Established a broad outline of the new quality-assurance system led by the
                                                                                                        head office and adapted to each site, the details of which are being worked
                                                                                                        out. Planning to complete the reorganization of quality-assurance departments
                                                                                                        by around April 2022.

                                                                                                        2) Strengthening of quality assurance functions:

                                                                                                        With respect to "a. Optimization of the order process" through "f. Rebuilding
                                                                                                        the quality management system" in the document released October 1, the company
                                                                                                        is currently investigating existing structures and conditions at each
                                                                                                        manufacturing site.

                                                                                                        For "d. Enhancement of quality audits," the new revisions emphasize laws,
                                                                                                        standards, customer specifications and product consistency. Trial audits are
                                                                                                        now being conducted at some sites. Hereafter, the company will formulate
                                                                                                        quality-audit methods and as the second line of defense audit-implementation
                                                                                                        plans will be formulated by the Corporate Quality Assurance Reengineering
                                                                                                        Group , aiming for a company-wide rollout on April 2022.
                                          ②-2 Addressing technical capabilities and resources issues    1) Strengthen and ensure compliance with laws, regulations and public
                                                                                                        standards

To strengthen the management of information on laws and regulations relevant
                                                                                                        to each site, the company is drafting the outline of a system via which the
                                                                                                        Corporate Quality Assurance Reengineering Group will centrally collect and
                                                                                                        manage information on laws and regulations common to all sites, aiming to
                                                                                                        complete the management structure and system concept by March 2022.

                                                                                                        2) Enhance quality through IT and digitalization

                                                                                                        • The company has completed its site-by-site survey of consistency between
                                                                                                        customer specifications and shipped products, centralized management of
                                                                                                        test/inspection data, etc. and is currently considering basic company-wide
                                                                                                        management-system specifications to be finalized by March 2022.

                                                                                                        • The company is surveying tools for the digital management of customer
                                                                                                        specifications and inspection data. Also, information on digitalization tools
                                                                                                        under the purview of the Corporate Total Productivity Management &
                                                                                                        Environmental Programs Group was rolled out company-wide in December 2021.

                                                                                                        3) Strengthen head office support for manufacturing sites

The quality support team composed of internal experts has started gathering
                                                                                                        information on problems experienced in specific workplaces and will expand
                                                                                                        this effort to all sites from April 2022.

                                                                                                        4) Training of quality-control personnel

                                                                                                        As a step toward optimizing workforce sizes and human resources development in
                                                                                                        the quality-assurance departments of manufacturing sites, the company is
                                                                                                        working to visualize the skills it possesses. Knowledge of products and
                                                                                                        inspection processes to acquire, as pointed out in the second report, will be
                                                                                                        added to the skills, and specific training plan will be formulated by March
                                                                                                        2022.

                                          ②-3 Re-fostering an awareness of quality compliance           1) Revitalize personnel rotation

                                                                                                        Before addressing personnel rotation, the company determined that it has a
                                                                                                        shortage of personnel in the various quality-assurance departments. In
                                                                                                        response, the company is now ascertaining and analyzing each department's
                                                                                                        workload and skills requirements, based on which an optimization plan will be
                                                                                                        formulated by June 2022.

                                                                                                        2) Instill awareness of quality compliance among senior managers

A compliance seminar for executives is planned in February 2022.

                                                                                                        3) Quality Compliance Awareness Training

                                                                                                        • Messages from the CEO and head of the Corporate Quality Assurance
                                                                                                        Reengineering Group were issued during Quality Month (November).

                                                                                                        • Improper Conduct Prevention meetings using the Kani Factory as a case
                                                                                                        study are being held in all workplaces companywide from November 15 to
                                                                                                        December 29.

                                                                                                        • The Kani Factory and Nagasaki Plant cases were communicated at the
                                                                                                        company-wide Compliance Managers meeting in November 2021.

                                                                                                        • At the companywide meeting for persosn responsible for corporate quality
                                                                                                        assurance planning, examples of improper quality control practices were
                                                                                                        explained to participants, the CEO gave a talk and a roundtable discussion
                                                                                                        between the CEO and quality-assurance managers took place.

                                                                                                        • A company-wide e-learning program, entitled "The Basics of Quality," is
                                                                                                        being provided to employees from October to December 2021.

 

 

(2) Organizational culture reforms

The "Team Sousei (Creation)" company-wide transformation project was launched
on October 16. Comprising selected employees who demonstrated a strong desire
for reform, the project is led by the CEO. It is currently putting together
proposals and an action plan for the creation of a "new" Mitsubishi Electric.
The proposals and action plan are to be submitted to the Executive Officers'
Meeting by the end of March 2022, after which they will be deliberated by the
Board of Directors and then put into action. Concurrently, the company will
renew its personnel system to correct an overly inward-looking organizational
culture, effect necessary changes in senior managers' behavior, and support
middle management and other at manufacturing sites.

Taking seriously the comments by the Investigative Committee's second report
on the necessity of developingthe middle management, the company will enhance
its personnel education program.

Similar to the first report on the ongoing investigation, the second report
has pointed out that the company's culture is not conducive to people speaking
up. In response, the company now aims to foster a culture in which managers
and those reporting to them can work together more closely and employees can
coordinate across divisional boundaries to address issues. The first step will
be to change the mindset and behavior of all Executive Officers.

In August, the CEO sent a message to all employees that the company will
achieve an organizational culture where "employees feel that they can consult
with their superiors," "failures are tolerated," and "problems are solved
together." In addition, after September, the company has been continuously
setting up opportunities for direct dialogues between the CEO and employees to
stimulate the type of communication essential to fostering a workplace culture
in which everyone can flourish and encourage positive behavioral changes of
each employees.

The company has also begun running workshops for Executive Officers to gain
better mutual understanding and align their reform objectives.

 

Table 5: Progress of organizational culture reforms

 Task                                                              Progress as of December 2021
 ① "Team Sousei (Creation)" company-wide transformation project    • A kickoff meeting was held on October 22 & 23 with the CEO, other
                                                                   steering members and 45 people selected internally from 465 applicants.

                                                                   • In Step 1 of the project was completed on December 11. Key company-wide
                                                                   issues were identified, via departmental interviews on a group-by-group basis,
                                                                   and the underlying causes were determined.

                                                                   • In Step 2 (current, to early February 2022), solutions and reform
                                                                   proposals are being formulated to realize the envisioned company-wide
                                                                   transformation. In Step 3 (to March 2022) a plan for robust transformation
                                                                   will be drafted.
 ② Renewal of the personnel system                                 1) Overcome inward-looking organizational culture

                                                                   • Considering a new rotation system attuned to individual career preferences
                                                                   with a focus on younger employees (to be trialed from October 2022).

                                                                   • Considering measures to increase managerial rotation with the aim of
                                                                   expanding individual's horizons and engendering more company-wide cooperation
                                                                   (to be trialed from April 2022).

                                                                   • Continuing to promote greater recruitment and participation of women and
                                                                   hiring of experienced midcareer to personnel to reduce the disproportionate
                                                                   emphasis on new graduates in the workforce.

                                                                   • Considering a scheme to enable overseas employees to work in Japan-based
                                                                   operations, and to promote active personnel exchange with enhanced  remote
                                                                   working system (guidelines to be established in April 2022).

                                                                   2) Change in behavior of senior managers

                                                                   • Reviewing Executive Officer's compensation system, including improvements
                                                                   in evaluating business performance and non-financial matters (to be completed
                                                                   by June 2022).

                                                                   • Introduced coaching by external consultants for all Executive Officers
                                                                   (from November 2021 to May 2022).

                                                                   • In terms of HR management, putting emphasis on manager evaluation and
                                                                   appointment practices (to be trialed from October 2022).

                                                                   3) Supporting middle management and others at manufacturing sites

                                                                   • Reviewing workforce size and managerial scope of control to fine-tune
                                                                   support for and balance workloads of middle management (to be deployed in
                                                                   regular rotations from April 2022).

                                                                   • Investigating systems/schemes for apportioning managerial roles/functions
                                                                   (policies/concepts to be launched in October 2022).

                                                                   • Enhancing personnel training programs to foster consciousness of
                                                                   managerial roles/functions (to be launched in April 2022).
 ③ Encouraging mindset and behavioral change                       • Conveyed CEO's thoughts on reforms and continuously arranging
                                                                   opportunities for dialogue between CEO and personnel at company sites to
                                                                   facilitate two-way opinion exchanges (started September 2021 and will complete
                                                                   40 out of the 42 sites by the end of December 2021).

                                                                   • Holding Executive Officer workshops to deepen mutual understanding and
                                                                   facilitate shared recognition of issues and plans (November 2021 onward).

 

(3) Governance reforms

To strengthen the company's management oversight functions and realize
sustainable medium- to long-term growth in its corporate value, Mitsubishi
Electric has initiated a reform of its Board of Directors. On October 20, 2021
it established the Governance Review Committee comprising third-party lawyers
to begin assessing the company's internal-control and governance systems in
order to identify problems and provide recommendations for improvement. Upon
receiving the recommendations in March 2022, the company plans to devise and
implement further improvements.

In addition, to strengthen risk management, in January 2022 the company plans
to set up a specialist panel reporting directly to the CEO and appoint a new
Chief Risk Officer (CRO).

 

Table 6: Progress of governance reforms

 Task                                                                 Progress as of December 2021
 ① Strengthen management supervisory functions                        1) Strengthen Board of Directors' functions

(Board of Directors reforms)

                                                                      Review of Board of Directors' agenda, including how execution and supervision
                                                                      should be and what theme should be discussed, is currently discussed in Board
                                                                      of Directors (expected April 2022).

                                                                      2) Review the composition of the Board of Directors

                                                                      • Appointed an independent outside director as chairman of the Board of
                                                                      Directors (October 2021).

                                                                      • Beginning with the general meeting of shareholders in June 2022, planning
                                                                      to institute a board comprised of members capable of fulfilling the board's
                                                                      expanded functions and objectives, including a majority of independent outside
                                                                      directors.

                                                                      3) Strengthen the Board of Directors Secretariat's functions

                                                                      • Strengthened cooperation between corporate-related divisions and the Board
                                                                      of Directors Secretariat by having selected personnel serve the Secretariat
                                                                      and corporate departments concurrently (November 2021).

                                                                      4) Strengthen the functions of the three statutory committees

                                                                      • Nomination Committee: Was given the additional role of deliberating
                                                                      proposals for CEO selection/dismissal to be submitted to the Board of
                                                                      Directors and tendering CEO succession plans to the board (November 2021).

                                                                      • Compensation Committee: Reviewing Executive Officer's compensation system,
                                                                      including to improve evaluations of business performance and non-financial
                                                                      matters (to be reviewed in June 2022).

                                                                      • Audit Committee: To be reviewed as necessary based on the results of the
                                                                      Governance Review Committee's assessment (expected March 2022).
 Assessment of internal-control system (Governance Review Committee)  Established Governance Review Committee on October 20,2021

                                                                      • Chair: Toshiaki Yamaguchi, Managing Partner (Attorney-at-Law, Certified
                                                                      Fraud Examiner), Yamaguchi Toshiaki Law Office

                                                                      • Members:

Junya Naito, Partner (Attorney-at-Law), Momo-o, Matsuo & Namba

Takashi Kiuchi, Partner (Attorney-at-Law, Certified Public Accountant), Miura
                                                                      & Partners

                                                                      • The company received the committee's report on Executive Officer and
                                                                      Director accountability, and the Board of Directors decided and disclosed
                                                                      disciplinary action for those involved on December 23, 2021

                                                                      • The committee will continue to assess the company's internal control and
                                                                      governance systems and will submit its conclusions and recommendations by
                                                                      March 2022.
 Strengthen risk-management systems                                   To respond swiftly and strengthen cross-divisional responses in times of
                                                                      crisis and address various risks that could affect the execution of group
                                                                      business, the company will set up a specialist panel and appoint a new Chief
                                                                      Risk Officer (CRO) in January 2022.

 

3. Executive accountability and disciplinary action

As disclosed in the October 20, 2021 press release "Mitsubishi Electric
Announces Establishment of Governance Review Committee," the company set up
the Governance Review Committee comprising external experts who do not have
any business relationship with Mitsubishi Electric. The committee's objective
has been to assess the company's internal control and governance systems and
to clarify the accountability of Executive Officers and Directors regarding
improper quality control practices. On December 23, the company received the
committee's report on its investigation into this matter.

Mitsubishi Electric, taking this report very seriously, convened meetings of
its Board of Directors and Compensation Committee today to decide what
disciplinary action to take regarding those accountable. For details, please
see the December 23, 2021 press release entitled "Mitsubishi Electric
Announces Disciplinary Actions against Directors & Officers in Connection
with Improper Quality Control Practices"

The committee will continue to assess the accountability of executives
regarding matters revealed in the Investigative Committee's second report
disclosed today as well as any related matters that come to light hereafter.

 

###

 

About Mitsubishi Electric Corporation

With 100 years of experience in providing reliable, high-quality products,
Mitsubishi Electric Corporation (TOKYO: 6503) is a recognized world leader in
the manufacture, marketing and sales of electrical and electronic equipment
used in information processing and communications, space development and
satellite communications, consumer electronics, industrial technology, energy,
transportation and building equipment. Mitsubishi Electric enriches society
with technology in the spirit of its "Changes for the Better." The company
recorded a revenue of 4,191.4 billion yen (U.S.$ 37.8 billion*) in the fiscal
year ended March 31, 2021. For more information, please visit
www.MitsubishiElectric.com

*U.S. dollar amounts are translated from yen at the rate of \111=U.S.$1, the
approximate rate on the Tokyo Foreign Exchange Market on March 31, 2021

 

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