Kawasaki Heavy Industries Ltd. will have managing director Takashi Sugo concurrently serve as chairman of scandal-hit affiliate Nippi Corp., Kawasaki Heavy sources said Friday.
The decision to appoint Sugo, the 64-year-old head of Kawasaki Heavy's aerospace business, followed revelations last week that Nippi overcharged the Defense Agency for airplane repairs and inspections.
Nippi President Yoshimasa Tanaka is expected to resign next month along with all other board members, and Kawasaki Heavy plans to name an executive in its aerospace division as Nippi president at a later date, the sources said.
The Defense Agency began looking into the situation in March after receiving a tip from a whistle-blower in the firm and finding that it had been overcharged for repairs and inspections on Air Self-Defense Force YS-11 transport aircraft in fiscal 1997.
The agency said it suspects it was overcharged in several more cases in fiscal 1997.
Kawasaki Heavy will form a special committee to investigate the matter.
Founded in 1934, Nippi became a wholly owned unit of Kawasaki Heavy in April as part of the heavy machinery maker's strategy to enhance its aerospace business.