Cover-up forces Mitsubishi boss out

Deep regrets: Mitsubishi president Katsuhiko Kawasoe (right) bows to Transport Minister Hajime Morita

The German-American car giant DaimlerChrysler has negotiated a lower price for its 34% stake in troubled Mitsubishi Motors, following a cover-up scandal of faulty vehicles and the resignation of the firm's president.

DaimlerChrysler will also send one of its top executives to join Mitsubishi's management team.

Company president Katsuhiko Kawasoe took the fall after it emerged that Mitsubishi had failed for decades to report customer complaints about faulty vehicles to the authorities.

Mitsubishi, Japan's fourth-largest car firm, has now recalled close to one million vehicles for repair or checks.

Mitsubishi president Kawasoe: "It is extremely regrettable that this happenend ".

A month ago, an internal investigation found that the firm had covered up faults since 1977 and repaired cars secretly, instead of reporting the problems to the transport ministry.

Japan's Transport Minister, Hajime Morita, said: "That the president [of Mitsubishi] did not know and was not told about this problem shows that there is a problem with the corporate make-up of this company."

Close to tears, Mr Kawasoe told a news conference at the ministry that "the incident over the quality of our vehicles has caused trouble for our customers and lost their trust".

The transport ministry said it would impose a fine on Mitsubishi and file a criminal complaint with the police.

DaimlerChrysler moves in

Mitsubishi apologises to its customers

News of the scandal broke just as heavily-indebted Mitsubishi was about to link up with DaimlerChrysler.

The German-American car giant now pays just $1.9bn (2.2bn euros) for the 34% stake. The previously agreed price had been $2.1bn.

DaimlerChrysler will also send one of its own top managers to take charge of the company.

Rolf Eckrodt, who turned around Daimler's Adtranz rail technology subsidiary, will become chief operating officer at Mitsubishi Motors. Adtranz was recently sold to Bombardier of Canada.

Mitsubishi's new president will be Takashi Sonobe, the group's executive vice president. Mr Sonobe helped to revitalise Mitsubishi's operations in the United States.

Mr Kawasoe was made Mitsubishi Motors' president in 1997, after his predecessor stepped down following a racketeer payoff scandal.