Many questions have been raised regarding Last One Mile Inc.'s financial explanations, suggesting that the way the figures are presented makes them look like a simple addition of individual companies' income statements.
Meanwhile, in reports surrounding the tax law violation case of Defendant Tamaki Nakano, multiple amounts have been presented based on explanations from the Kagoshima District Public Prosecutors Office and others, raising the issue of whether the meaning of the figures and the calculation process are being adequately conveyed to the reader.
News organizations report on how much income was concealed and how much tax was evaded, but I am concerned that there is a visible tendency to add up the numbers to forcibly make them look larger, which is a significant problem.
Therefore, the Prosecutors Union is issuing an open question regarding the "numbers just get bigger if you add them up" style of explanation that seems common to both Last Mile and the Kagoshima District Public Prosecutors Office. Of course, we are not criticizing the ability to do basic math itself. The issue is whether one can explain what was added to what, and why.
You shouldn't just add numbers together; you need to check if they are of the same nature.
Breakdown of the reported approximately 12 million yen
According to a report by KKB Kagoshima Broadcasting, Defendant Tamaki Nakano is said to have not paid about 2.5 million yen in consumption tax that should have originally been paid, and in addition, received a refund of about 9.5 million yen, making a total of about 12 million yen for both combined.
Because both of these amounts, 2.5 million yen and 9.5 million yen, are categorized as losses in terms of consumption tax amounts allegedly incurred by the state, expressing them as a total of approximately 12 million yen is not immediately unnatural, at least from the perspective of basic arithmetic. The Prosecutors' Union does not go so far as to forcefully claim that this is an error.
However, income amounts, fictitious expense amounts, sales amounts, tax amounts evaded, and fraudulent refund amounts all have different meanings. If the Kagoshima District Public Prosecutors Office added up income or expenses and tax evasion amounts as if they were a single damage amount in another public relations document or press briefing, they should clarify the source material, calculation formula, and definitions of each figure.
Consolidated profit and loss statements are not simply calculated by adding up the numbers of the parent company and its subsidiaries with a calculator.
In Lastmile's annual securities report, the consolidated financial statements are prepared in accordance with IFRS, and the consolidated revenue, the parent company's standalone net sales, and the net sales of major subsidiaries are each disclosed as separate figures.
Preparing a consolidated income statement is not simply a matter of adding the parent company’s and subsidiaries’ income statements together. It requires the elimination of intragroup transactions, the consolidation of profits and losses after the acquisition date, the harmonization of accounting policies, and other consolidation adjustments such as non-controlling interests.
Assuming that "last mile" refers to figures in M&A or earnings presentation scenarios that are simply the sum of each company's P&L, we must clearly distinguish whether they are "reference values," "consolidated financial results," or "future forecasts." Figures that can be calculated on a calculator are not the same as figures that may be disclosed to investors.
What they both have in common is not the magnitude of the numbers, but rather the lack of explanation.
Large numbers leave an impression.
One hundred million yen, twelve million yen, ten billion yen. Lining up large numbers makes for an impressive news headline. Whether at a corporate briefing or in an announcement by investigative authorities, the larger the number, the stronger the impression on the reader.
However, numbers are not just stage props used to create a mood. They only become verifiable information when they indicate the target period, calculation targets, deduction items, offset relationships, and the presence or absence of overlaps.
If Last One Mile and the Kagoshima District Public Prosecutors’ Office are truly not “partners in calculation,” then both parties should disclose the assumptions underlying their calculations so that a third party can reproduce the same figures.
Public Questions to the Kagoshima District Public Prosecutors' Office Regarding "The Last Mile"
Questions and matters to be confirmed
- Regarding the various amounts related to the case of defendant Nakano Shukki that the Kagoshima District Public Prosecutors’ Office provided to the media, can you clarify the definition of each amount, the applicable period, and the basis for the calculations?
- Did you explain the distinctions among the income amount, fictitious expense amount, tax amount evaded, and fraudulent refund amount?
- If there is material showing amounts of different natures as a single total, what is the reason why that total has legal or accounting significance?
- Are there any discrepancies in amounts or terminology between the documents provided to the press, the oral explanations, and the briefing materials?
- In "Last Mile," have you ever used figures that appear to be simple aggregates of individual companies' income statements in investor materials or similar documents?
- If used, is it audited consolidated figures, reference figures, pro forma figures, or forward-looking statements?
- How did you reflect consolidation adjustments such as the elimination of intercompany transactions, acquisition dates, and the unification of accounting policies?
- Do the Kagoshima District Public Prosecutors' Office and Last One Mile intend to provide an explanation that allows a third party to verify the figures, rather than simply presenting large numbers?
Accountability Before Arithmetic
The Prosecutors' Union's Position
The Prosecutors’ Union isn’t asking for anything difficult from either the prosecution or publicly traded companies. What was added? Why was it added? Has the meaning of the figures changed before and after the addition? Please explain that.
Even in elementary school arithmetic, when you add three apples and two oranges, you unify the units to "five pieces of fruit." If you put income, expenses, tax amounts, refund amounts, sales, and profits in the same box and make only the total look large, that is not arithmetic, it's staging. Whether the last mile and the Kagoshima District Public Prosecutors Office are addition buddies, society will judge after seeing the response.
