On July 30, Japan’s Ministry of Defense officially released a special investigative report on submarine maintenance contracts, detailing 40 years of improper dealings between contractors and the Japan Maritime Self-Defense Force (JMSDF) in submarine maintenance. The report revealed that Japanese shipbuilders engaged in fictitious transactions to obtain “kickbacks” for procuring submarine-related equipment and gifted items to supervisors. The Ministry of Defense apologized to the Japanese public and announced disciplinary actions against 93 individuals involved.
According to the report, the investigation originated from an audit by the Osaka Regional Taxation Bureau in February 2024, which uncovered fictitious transactions at Kawasaki Heavy Industries. In April of the same year, Kawasaki Heavy Industries voluntarily reported suspicions of “fictitious transactions” and “improper acts such as providing goods to submarine crew members” to the Ministry of Defense.
The investigation found that Kawasaki Heavy Industries, Mitsubishi Heavy Industries, Japan Marine United (JMU), and Sasebo Heavy Industries had engaged in varying degrees of misconduct, with the earliest case dating back to 1985 at Kawasaki Heavy Industries. The report stated that Kawasaki Heavy Industries secured funds through fictitious transactions to meet submarine crew demands for onboard supplies and even personal items. The company also gifted items such as gaming consoles, golf equipment, and watches to Ministry of Defense officials, totaling over $9,000. Mitsubishi Heavy Industries and JMU primarily violated regulations by failing to fulfill certain contracts and providing gifts to officials.
The Ministry of Defense stated that the incident severely damaged public trust, revealing long-standing issues where JMSDF submarine crews were unable to obtain essential supplies through formal procurement channels, forcing them to seek “irregular support” from contractors. The JMSDF Chief of Staff was disciplined for inadequate oversight and tolerating systemic flaws, while those who accepted gifts will be referred to an ethics review committee. Although the shipbuilders’ actions were improper, considering they mostly fulfilled JMSDF requests without additional financial gain, Kawasaki Heavy Industries received a severe reprimand (already enforced), while Mitsubishi Heavy Industries, JMU, and Sasebo Heavy Industries will face warnings or severe reprimands (with possible leniency).
Additionally, the Ministry of Defense will reform procurement and contract procedures, separating the “contract awarding” and “acceptance” roles of supervisors, and enhance compliance training for all naval personnel to prevent recurrence.
Kawasaki Heavy Industries also issued a statement on July 30 responding to the investigation. It stated that an external lawyer-led “Special Investigation Committee” continues to probe the company’s submarine maintenance violations and will disclose findings promptly. The company pledged to implement effective measures to prevent recurrence with a “determination to thoroughly eliminate the issue.”
To strengthen compliance in defense operations, Kawasaki Heavy Industries established a Defense Business Management Headquarters in November 2024 and decentralized authority over submarine maintenance operations at its Kobe Shipyard in February this year, while also disciplining relevant personnel.
