Japan Wary of U.S. Ban on Toshiba, but Won’t Intervene

The Japanese government said Thursday that it wouldn’t interfere with a proposed U.S. import ban on Toshiba Corp., following disclosure that one of the company’s subsidiaries sold machinery for ultraquiet submarines to the Soviet Union.

Japanese officials also vowed to take steps to prevent any further violations of rules controlling exports to Communist countries.

The U.S. Senate voted 92 to 5 on Tuesday in favor of banning Toshiba and a Norwegian company, Kongsberg Vaapenfabrikk, from selling nearly any products in the United States for two to five years. The proposal still needs approval of the House and the President to take effect.

Kongsberg and Toshiba Machine Co., a Toshiba subsidiary, sold the Soviet Union propeller-milling equipment, which will allow Soviet submarines to run quietly and escape detection.

The president and chairman of Toshiba Corp. resigned late Wednesday to take responsibility for the illegal sales, although both emphatically denied any direct link between the parent company and the transactions.

Four high-ranking executives of the subsidiary have also stepped down, while two others have been indicted on charges of violating Japan’s decrees that ban exports of 178 high-tech items to Communist countries. The decrees are in line with rules of the Paris-based Coordinating Committee for Export Control, which regulates exports to Communist nations.

In a regular Foreign Ministry briefing Thursday, Yukio Okamoto, director of the National Security Affairs Division, said: “There is a very, very strong feeling and recognition” within the Japanese government that “we should never allow these things to happen again.”

Okamoto added that the government does not intend to “protect Toshiba from American congressional action, although such harsh provisions deliberated in the American Congress are certainly not conducive” to U.S.-Japan relations.

Toshiba Corp. had an estimated $2.76 billion in sales in the United States last year. Its products include semiconductors, color television sets, video recorders and personal computers.

In an emergency meeting with leaders of top industrial associations, International Trade and Industry Minister Hajime Tamura expressed his regret over the Senate action.

Atsushi Iwaai, director of MITI’s strategic export control office, also quoted Tamura as saying export control violations “could seriously damage confidence not only in Japanese industry but also in Japan as a whole.”

Iwaai, speaking at a news conference, said Tamura asked industrial leaders to ensure adherence to the rules of the Coordinating Committee for Export Control.

Masakazu Toyoda, director for international policy planning at MITI, said that the Japanese government first became aware of Toshiba Machine’s violation when it received an inquiry from the Paris council in December, 1985, followed by another from the U.S. Department of Defense in June, 1986.

Toyoda said the ministry wasn’t able to make a thorough investigation at the time because of a lack of sufficient evidence and “enough proof to make a charge against Toshiba Machine.”

But last December, another U.S. inquiry contained enough information for MITI to start a thorough investigation, he said.

“We asked and asked and asked (Toshiba Machine about the alleged violations), but they didn’t tell the truth until the police entered the company,” Iwaai said.

He said Toshiba Machine had falsified its export license application for the milling machines by understating their capabilities.

Iwaai said that under instructions from the prime minister, MITI will increase the number of export license inspectors and strengthen inspection at custom clearance companies.

Toshiba Machine has been banned from exporting any products to Communist countries for one year and, along with two other companies involved as sales contractors, Wako Koeki and C. Itoh, has lost the right to sponsor entry visas for individuals from the Soviet Union and Eastern Europe.