Japan’s Ministry of Defense (MoD) announced a series of measures after an investigation confirmed that Kawasaki Heavy Industries (KHI) had falsified engine test data and provided inappropriate gifts to a number of Japan Maritime Self-Defense Force personnel over a period described as spanning around four decades. KHI first disclosed in 2024 that it had launched an internal probe following reports suggesting long-running manipulation of test results to meet contractual delivery timelines.
KHI is a long-term supplier of engines for Japan’s submarine fleet and works alongside Mitsubishi Heavy Industries on submarine construction programs. In July and August 2024, the company issued statements acknowledging irregularities linked to submarine repair operations and marine engine testing.
According to the MoD, falsification has been confirmed in engine testing documentation for 23 submarines. KHI stated that test reports used target values for emissions and fuel efficiency rather than measured results. The MoD added that all 24 Japanese submarines operate with KHI engines, and that only one vessel delivered after 2024 has accurate test data on record.
MoD officials said the issue does not affect engine safety or functionality, but it does mean vessels may not meet contracted fuel-consumption requirements. As a result, the ministry decided to temporarily suspend KHI from participating in MoD tenders. The initial suspension period was set at five months, but was later reduced by half in recognition that KHI notified the ministry, acknowledged misinformation, and cooperated with authorities.
The KHI case also emerged amid broader scrutiny of test-data manipulation across the sector. The issue gained momentum after a whistleblower report in February 2024 alleging that IHI Power Systems had altered fuel-consumption data for decades. In July 2024, Hitachi Zosen published a report confirming it had identified modified test data, and KHI confirmed its own involvement the following month.
KHI said its internal findings indicate the practice existed at least from 1988 and continued at least through 2021, driven by the goal of meeting delivery schedules. On 26 December, the company published a detailed notice after receiving final reports, calling the misconduct “very serious” and outlining steps to strengthen compliance and governance, including continued efforts to automate inspection processes.
Separately, KHI received internal findings concerning improper allocation of work time at its Kobe shipyard and wrongdoing in procurement processes. In August 2025, reports also surfaced that KHI and other major shipbuilders had billed the MoD for fraudulent or inflated transactions, with part of the money allegedly flowing into a fund used to purchase gifts for naval personnel.
Items cited as gifts included game consoles, golf bags, and matches. While the scheme was described as operating for more than 40 years, reports estimated the value of gifts over the last six years at about $7,400. The MoD initially identified 13 recipients, later revising the figure to 11, saying two individuals received only official work-related items.
Last week, the MoD announced disciplinary action against three sailors involved in ship repair oversight, supply stores, and contracting with shipbuilders. A senior NCO received a 15-day suspension, while another senior NCO and an NCO received five days each. Eight serving or former submariners were also subjected to pay reductions.
KHI apologized and said it has established three core compliance principles aimed at preventing a recurrence—strengthening prevention, improving detection capabilities, and reforming organizational culture.
