OREANDA-NEWS. October 23, 2015. It has become clear that Asahi Kasei Construction Materials Corp., a subsidiary of Asahi Kasei Corp., performed faulty installation of a portion of foundation piles, and diverted and modified data in the corresponding installation report, in work performed as secondary subcontractor to Hitachi High-Technologies Corp., which was subcontracted by Sumitomo Mitsui Construction Co., Ltd., the prime contractor for the construction of a condominium complex for Mitsui Fudosan Residential Co., Ltd. in Yokohama, Kanagawa, Japan.

On October 14, 2015, Asahi Kasei Corp. launched a fact-finding committee to elucidate the cause and prevent recurrence. Asahi Kasei Construction Materials Corp. will bear all costs incurred for investigation related to this project as well as necessary reinforcement and repair, etc. Appropriate efforts will now proceed under the direction of the relevant authorities in cooperation with Mitsui Fudosan Residential Co., Ltd. and Sumitomo Mitsui Construction Co., Ltd. with the highest priority given to the safety of the residents. If rebuilding is deemed necessary, Asahi Kasei Construction Materials Corp., Hitachi High-Technologies Corp., Mitsui Fudosan Residential Co., Ltd., and Sumitomo Mitsui Construction Co., Ltd. will deliberate on the allocation of expenses.

1. Timeline

September 24, 2015:   Sumitomo Mitsui Construction Co., Ltd. informed Asahi Kasei Construction Materials Corp. that there was diversion of ammeter data for the pile installation work for this project
October 9, 2015:   Mitsui Fudosan Residential Co., Ltd. and Sumitomo Mitsui Construction Co., Ltd. began explanation to residents
October 14, 2015:   Asahi Kasei Corp. issued a press release entitled “Faulty installation of foundation piles, and diversion and modification of data in installation report, by Asahi Kasei Construction Materials”
October 16, 2015:   Asahi Kasei Corp. issued a press release entitled “Additional finding in ongoing investigation regarding installation of foundation piles by Asahi Kasei Construction Materials”

2. Outline of the problem

1) Faulty installation of piles

It is now believed that of the 473 piles installed for this project, 6 piles failed to reach the bearing stratum and 2 piles were not inserted to a sufficient depth in the bearing stratum.

2) Diversion and modification of ammeter data

It has become clear that there was diversion and modification of ammeter data, which indicates when a pile reaches the bearing stratum, regarding 38 piles in the installation report.

3) Diversion and modification of flowmeter data

It has become clear that there was diversion and modification of flowmeter data for the injection of cement milk for consolidation of pile tips regarding 45 piles in the installation report.

Combining 2) and 3) above, without double-counting the 13 piles that are included in both, there were 70 piles for which incorrect data was included in the installation report.

3. Elucidation of the cause and actions moving forward

1) Establishment of a task force

A task force led by Asahi Kasei President Toshio Asano was established on October 19, 2015. The task force will guide the Asahi Kasei Group’s response to this matter with the utmost sincerity, giving the highest priority to the safety of the residents, while reexamining the Asahi Kasei Group’s compliance system and planning its thorough application.

2) Investigation by fact-finding committee

A fact-finding committee led by Asahi Kasei Vice-Presidential Executive Officer Masahito Hirai was launched on October 14, 2015, with 10 members including company employees specializing in legal, compliance, and construction technology fields, and 2 outside attorneys. The committee has begun planning measures to investigate the facts related to pile installation work for this project, to investigate the safety of the piles, to elucidate the cause of the faulty installation and the diversion and modification of data, and to prevent recurrence. Disclosure of the results of investigation is targeted by the end of 2015 after verification by an independent commission.

3) Establishment of an independent commission

In consideration of the wishes of the residents, an independent commission comprised of attorneys having no conflict of interest with the Asahi Kasei Group will be established without delay. The independent commission will a) verify the results of investigation by the fact-finding committee, b) investigate facts related to data in the installation report, etc., including by interviewing related parties, c) analyze the cause of the faulty installation and the diversion and modification of data, and d) provide recommendations on measures to prevent recurrence. The results of investigation by the independent commission will be disclosed at an appropriate time.

4. Actions related to other construction projects

The fact-finding committee will collect data on the installation of precast concrete piles for approximately the past 10 years, and investigate whether or not there was any diversion of data, etc. In any case where more detailed investigation is required, additional actions will be studied on an individual basis. The investigation will proceed while receiving advice and counsel from the independent commission. In any event that a safety issue is identified, necessary measures will be taken promptly.

The financial effect of this matter on the consolidated performance of Asahi Kasei Corp. is unclear at this time. An announcement will be made promptly in the event that a material impact is confirmed.