Mitsubishi Motors to sue ex-bosses over recalls

posted on:
March 30, 2005

author:
Staff

category:
Uncategorized

Japans Mitsubishi Motors Corp. (MMC) said on Wednesday that it would sue three former presidents and four others for damages totalling 1.3 billion yen ($12 million) for their roles in a defect cover-up scandal that has damaged the auto makers brand.

The action is part of a series of disciplinary measures that MMC decided to take at the conclusion of an investigation into the quality problems by a group including outside lawyers.

The embattled auto maker said in a statement it would also demand the return of a portion of 10 other senior officials severance packages.

MMCs decades-long practice of systematically concealing safety defects from authorities first came to light in 2000, and resurfaced last year when at least two road deaths were linked to hidden defects in trucks made by its then-truck arm, Mitsubishi Fuso Truck and Bus Corp.

Sales at MMC have plummetted by double digits almost every month in its most important Japanese and U.S. markets since those revelations, forcing the company to seek a multi-billion-dollar bail-out from group companies.

Among the seven former board members and executives targeted for the damages are Hirokazu Nakamura, Takemune Kimura and Katsuhiko Kawasoe, who served as president from 1989 to 2000.

At an average of about 200 million yen per person, the damages claims are among the highest sought by a major Japanese firm against former managers, the Nihon Keizai newspaper said.

Kawasoe, along with a few other former executives, has also been indicted in a criminal case for his role in the fatal truck accident. He has pleaded not guilty.

On Tuesday, MMC said it would post a special loss of 70 billion yen at the consolidated level from compensation paid to DaimlerChrysler AG and 10 other companies, including Mitsubishi Heavy Industries Ltd., Mitsubishi Corp. and the Bank of Tokyo-Mitsubishi, for the fall in value of their stakes in Fuso.

Fuso, spun off from MMC in 2003 and now owned 85 percent by DaimlerChrysler, is also suffering from plunging sales in Japan.

MMC, Japans only loss-making car maker, had sought and failed to restore confidence in its brand under a new management team installed in April last year, and in late January assigned Mitsubishi Corp veteran Osamu Masuko to lead the firm.

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