Japan Bans Kawasaki From Defense Bids Over Submarine Data Fraud.

Tokyo; December 2025: Japan has barred local shipbuilder Kawasaki Heavy Industries from bidding on government contracts after confirming decades-long falsification of fuel efficiency data for submarine engines used by the Japan Maritime Self-Defense Force (JMSDF).

The suspension, in effect through March 2026, follows Kawasaki Heavy’s disclosure that it manipulated inspection data for 66 submarine engines supplied between 1988 and 2021, according to local media.

Japan’s Ministry of Defense said the misconduct did not affect submarine safety or operational performance but constituted a serious breach of contracting standards.

“The Company takes this misconduct very seriously and offers an assurance to all stakeholders that it will continue to take clear and resolute compliance measures to ensure such misconduct is prevented in the future”, Kawasaki said.

The decision comes alongside disciplinary action against 11 JMSDF personnel implicated in a separate incident involving improper gifts from the contractor. Kawasaki Heavy Industries Ltd. dipped into slush funds worth 1.7 billion yen ($10.8 million) to entertain and provide gifts to Maritime Self-Defense Force submarine crew members, a report found.

The money was accumulated over a period of 06 years through fiscal 2023 via fictitious transactions for submarine repair work, according to a special investigation committee’s report released by KHI on December 27th.

However, using fictitious transactions to stay on the good side of the submariners had been going on for at least 40 years, revealing the cosy relationship between the public and private sectors over defense equipment, the report showed. The fraudulent behaviour involved KHI’s Kobe shipyard in the city’s Chuo Ward, which aside from building ships is in charge of inspecting and repairing submarines for the MSDF.

A tax investigation of KHI by the Osaka Regional Taxation Bureau uncovered the fraud, and KHI established a special investigation committee in June. According to the report, fictitious transactions between KHI and three subcontractors KHI were repeatedly made under the guise of legitimate material orders for submarine repairs. The funds generated by the bogus transactions were pooled by the subcontractors to create the slush fund, according to the report.

Crew members also requested gifts and KHI was happy to oblige, the report noted. In addition to equipment used on the submarine, there were items for personal use, such as game consoles and golf equipment. In some cases, the funds were used to cover the cost of food and beverages at social gatherings for crew members.

The report pointed out that once the fraudulent activity became entrenched it had to be continued to maintain a good relationship with submarine crews. This meant that even when the person in charge was replaced, the “organisational culture of following precedents” was carried on, the report said.

The Defense Ministry released an interim report the same day on a special defense inspection which was carried out in response to the slush funds issue. The report stated that KHI will be required to refund a “substantial amount of money” following the discovery of fictitious transactions between the company and its subcontractors.

As for submarine crew members who received personal items from KHI, the ministry said it is investigating the individuals on suspicion of violating the Self-Defense Forces Personnel Ethics Law.

In a survey by the ministry of approximately 2,500 unnamed individuals, including those who had served on submarines, 26 respondents answered “Yes” to the question of whether they had received gifts from companies, and 58 answered “I have seen or heard of it”.

Of the 333 respondents who said they had shared food, drink or entertainment with private companies, 04 said the company covered the bulk of the cost.

The defense agency said the items, including game consoles, golf bags, and watches, were purchased using “slush funds generated through fictitious transactions” tied to submarine repair contracts.

03 sailors who supervised ship repair and supply contracts received suspensions, while 08 current or former submariners were given pay cuts. The ministry said the total value of the items amounts to approximately 1.16 million yen ($7,432). Kawasaki Heavy Industries is a major supplier of submarine engines to the JMSDF and one of Japan’s largest defense contractors.

Japan, the East Asian Nation currently operates 25 Kawasaki vessels across various submarine series, including the next-generation Taigei Class Attack Submarines.

Team Maverick.