Japan has imposed strict sanctions on Kawasaki Heavy Industries after confirming that the company falsified submarine engine test data for more than three decades. The action follows a government investigation that found long-term manipulation of inspection results related to both military submarines and commercial marine engines. The case has become one of the most serious industrial compliance scandals in Japan’s defense sector.
Kawasaki Heavy Industries is Japan’s second-largest defense contractor and a key supplier to the Japan Maritime Self-Defense Force. The misconduct involved falsified fuel efficiency and inspection data submitted to the Ministry of Defense over many years. Authorities confirmed that multiple internal departments were involved and that the practices continued despite repeated engine performance failures during testing.
Defense Ministry Imposes Sanctions Over Submarine Engine Falsification
On December 26, Japan’s Ministry of Defense announced that Kawasaki Heavy Industries will be banned from participating in defense bidding for two and a half months. The restriction will apply from December 26, 2025, to March 11, 2026. The decision followed confirmation that the company had falsified test data related to submarine diesel engines supplied to the Japan Maritime Self-Defense Force.
Government investigators found that Kawasaki Heavy Industries replaced actual fuel efficiency test results with target values during land-based engine testing. This was done because many engines failed to meet the technical specifications set by the Ministry of Defense. The falsified data was then submitted as official inspection records to ensure timely delivery of engines.
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The misconduct related to submarine engines lasted from 1988 to 2021 and involved 66 engines. Of Japan’s 24 active submarines, 23 were found to contain engines linked to falsified inspection data. While authorities confirmed that the falsification did not affect submarine safety or basic performance, the engines did not meet required fuel consumption standards.
Based on these findings, the Ministry of Defense determined that Kawasaki Heavy Industries was unsuitable as a defense contractor during the sanction period. On the same day, the company released a supplementary investigation report and issued another public apology. Company president Yasuhiko Hashimoto stated that the matter was being taken seriously and that disciplinary action against involved employees was under consideration.
Commercial Marine Engines and Long-Term Improper Practices
The investigation also revealed that similar misconduct occurred in Kawasaki Heavy Industries’ commercial marine engine business. In August 2024, the company confirmed that improper testing and data falsification affected 673 commercial marine engines.
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During workshop trial runs, engine test data related to fuel consumption and nitrogen oxide emissions was altered. In some cases, testing equipment was modified to produce acceptable results. In others, data was directly adjusted to meet customer requirements and reduce variation. These falsified results were then submitted as official test records.
Kawasaki Heavy Industries also admitted to inflating budgets linked to certain contracts. According to the supplementary investigation report, this practice continued for at least 30 years, further highlighting weaknesses in internal oversight and compliance systems.
Gift Scandal and Wider Industry Findings
In addition to data falsification, the Ministry of Defense uncovered a separate scandal involving improper gifts. Eleven members of the Japan Maritime Self-Defense Force were found to have received personal items such as game consoles, golf bags, and watches. The total value of the items was approximately 1.16 million yen.
Investigators determined that the gifts were funded through fictitious transactions created under ship repair contracts involving Kawasaki Heavy Industries and its contractors. The defense personnel involved were disciplined through suspensions or salary reductions.
The case has drawn wider attention to Japan’s marine engine industry. In 2024, IHI Corporation and Hitachi Zosen Corporation were also found to have engaged in large-scale data falsification. IHI confirmed that data had been falsified for 86 percent of nearly 4,900 engines shipped. Hitachi Zosen subsidiaries were found to have altered fuel efficiency data for 1,364 engines since 1999, with only two engines found to be free of falsification.