Hitachi Metals faked test data since the 1980s — then sold itself to Bain

In January 2020, Hitachi Metals' parent, Hitachi Ltd, received an anonymous letter alleging that the Yasugi specialty-steel plant was "entering fabricated values without running tests." The tip triggered a quality-compliance audit, and Hitachi Metals' own technical chief, Yasugi plant manager and quality chief prepared a list of frauds to report to the parent — until the then-president ordered the aerospace and energy segment struck from it. Those engineers objected; the president prevailed, and that segment stayed hidden for another year.

What the 2020 disclosure did show was already damaging: inspection data rewritten on specialty steel and on ferrite and rare-earth magnets, shipped to roughly 170 customers, with about ¥24.5B of fraudulent shipments. CEO/Chairman Mitsuaki Nishiyama admitted the practice had run for "at least ten years." The magnets sit in hybrid-car motors, air conditioners and home appliances; the steel goes into auto parts. Five executives, including the president, resigned in May 2020.

The special investigation committee's report, published in January 2021, widened the blast radius to 1,747 customers (9.4% of them Hitachi Group companies) and dated the practice back to the 1980s — routine, across plants, with four signature moves: recording values that were never measured, testing by methods other than the customer-specified ones, carrying forward past measurements as if they were current results, and silently changing declared production sites and subcontractors.

Because the president had carved aerospace out of the 2020 report, that segment was only investigated later. In October 2021 the company disclosed the rest: specialty steel for aircraft and energy uses, ~380 steel grades, 105 customers, and fraud running over 30 years. A consultant quoted by Nikkei xTECH called the company "a department store of quality fraud." Hitachi's answer to the reputational hole was to exit: Bain Capital's takeover completed in 2023, and the 111-year-old Hitachi Metals was renamed Proterial.

Fraudulent shipments of ~¥24.5B to 170+ customers found in 2020; 1,747 customers had received non-conforming product; the president and four executives were forced out

Sales won work by promising manufacturing capability the plants did not have, so the gap between promise and test results was closed by rewriting data — the direct cause the committee identified.

Engineers did not treat a deviation from the customer's specified test method as a product failure; "quality" had drifted to "roughly meets performance" rather than "matches the spec."

Employee appraisal targets pressured plants to keep shipping, making any request to change specs or reject lots a personal loss — so the falsification self-perpetuated across sites and decades.

The president ordered aerospace frauds kept off the audit report, fearing the blast radius, lost customers and compensation costs — which delayed the reckoning by a year and made it worse.

When price-first bidding outruns plant capability, falsification becomes the pressure valve. And a fraud investigation channel that reports to the president it is investigating will stop at his desk.

The January 2021 report covered magnets, specialty steel and castings back to the 1980s; the October 2021 addendum added 105 aerospace/energy customers across ~380 steel grades over 30 years. Hitachi Ltd, which had already flagged the subsidiary as lacking synergy, sold it: Bain Capital's tender offer completed in 2023 and the company became Proterial, whose new CEO told Nikkei in January 2023 he intended to relist it eventually. No safety failures were reported in any of the affected product lines.