We will examine the solicitation of executives and employees by Watanabe Makoto’s paid tax evasion guide and the practical work carried out by Makoto Shinzo.
They recommend ways to reduce taxes using losses that haven’t actually occurred, and then demand compensation for that guidance. What the Last Mile Workers Union understands is that the management didn’t just handle their own filing; there was a more serious problem: they were trying to lure others into fraudulent filing and use that proposal as a reward for themselves.
For several months, the union had been aware that Watanabe Makio, the listed company’s chief financial officer and certified public accountant, had been instructing the executives involved in the final mile role to evade taxes after the initial public offering. In the newly compiled information, it was revealed that Watanabe Makio’s guidance to the executives involved in the tax evasion scheme also included the use of the foreign exchange margin funds that Watanabe and Nakano had separately sold off in lieu of the Angel Tax scheme. The demands for compensation were also included in these instructions.
Moreover, the target wasn’t just the executives; they also directly instructed other employees and even told stories of heroic deeds to employees who didn’t benefit from the stock sales. While there were only a few executives who clearly refused to use the fractional method and scolded Watanabe for it, there are multiple executives who were convinced by clever rhetoric and acted accordingly. Our union has confirmed that Chizuko Shimizu was involved in the practical implementation of this system. We will pursue the responsibility of those who solicited members, those who moved the process, and those who demanded compensation.
Guidance on the Angel Tax System, which the three of us worked on together, and another business initiative that Watanabe Makoto left out the two of us from
To understand this issue, we need to look at two separate paths. One is the guidance regarding the Angel Tax system in which three people, Watanabe, Nakano, and Saito, were involved. The other is the scheme to evade taxes using the difference in exchange rates during foreign currency exchange that Watanabe used to persuade other executives at the same time to remove Nakano and Saito.
The important commonality that the union discovered this time is that in all cases, the person they were advising was demanding a reward. This was not limited to introducing a system they knew the company members were familiar with; rather, the parties involved in selling methods to reduce tax burdens sought a fee from the person instructing them on how to do so. This meant that the profits gained by the executives through the IPO were being used to fund other business activities.
The Angel Tax scheme itself is a special tax provision established by the government.System information from the National Tax AgencyThe requirements for the target company, investment, and application are also indicated. Explaining the use of that system and guiding fraudulent reporting using the name of the system are evaluated based on the described transactions.
What the union is pursuing is what the three men advised on the system, what practices they carried out, and what they demanded of whom as payment. In previous articles, I have also covered how Nakano’s practices and Saito’s expert explanation were used in the process leading to the investment and filing of the declaration.
On the other hand, in addition to the conversation they were having together, Watanabe was introducing his own sales strategy. The person who was proposing this to his colleagues and executives was actually replacing that person and selling the same product to another client using a different method. Even though it appeared to be one system from the outside, in reality they were promoting a separate business inside.
Instead of using the profits generated by the company’s listing to lead to the proper reporting by the directors, they were turning it into an opportunity to seek their guidance. With this perspective, the current issue appears not just as a mistake in tax knowledge, but as paid solicitation using the trust and human relationships built within the company. It means that someone who has achieved success in the company is waiting for someone else to seek a further share of the pie.
It is a system that uses the fractional change at foreign currency exchange to report losses that do not actually exist.
This fractional rounding scheme involves using foreign currencies with low unit prices in yen, such as rubles, and repeatedly exchanging yen for foreign currencies in large quantities. The aim was to focus on handling the fractions of a yen involved and artificially inflate losses that exceed actual asset decreases, thereby claiming annual foreign exchange losses in the hundreds of millions of yen.
Using securities companies’ trading reports and other documents as a basis to make losses that actually did not occur appear to be genuine losses. This is a malicious way to deceive the tax authorities, in which they try to inflate the reported losses to reduce taxes without actually reducing the amount of assets at hand. This also has the element of malice in that it uses the securities company’s documents to make fraudulent declarations appear more plausible.
What the union is trying to ascertain is not a discussion about applying for the regular preferential system; it is guidance on how to avoid paying taxes using losses that do not exist in reality. And the party offering that guidance was demanding a fee for it. Pretending to have losses that are included in the declaration is one thing; refusing to do so is a demand for a fee from them. Even when dealing with the finer details, the goal is not a minor issue.
It was Saito Goshi who was angry, not so much about the illegality as about the fact that he was the only one doing another business.
According to information, Saito stated to those around him that Watanabe was urging them to use a different method, implying that he was being unfair by pushing for other methods alone. Considering the circumstances surrounding this compensation request, this statement is extremely important in considering what he was dissatisfied with.
If the expert knows of a proposal to create nonexistent losses, they are expected to first ask the other party to stop it and provide the necessary explanation to those who have already been solicited. However, the protest being conveyed is directed at the fact that Watanabe is operating separately from the other companies. The issue is not the proper taxation of the companies, but rather the fairness of their business practices.
Since guidance was being given to demand compensation, this conflict cannot be dismissed as merely a shadow complaint directed at colleagues. Who introduced the client, who explained it, who handled the actual work, and consequently, who made the promise of compensation—all of these need to be explained. We need to be given an explanation of exactly what part of Saito’s actions Mr. Watanabe considered unfair.
Article 1 of the Certified Public Accountants Act defines the mission of certified public accountants as follows:
Certified public accountants, as experts in auditing and accounting, are tasked with ensuring the reliability of financial documents and other financial information in an independent position, thereby contributing to the sound development of the national economy by ensuring the fair business activities of companies and protecting investors and creditors.
Explanation from the Japan Institute of Certified Public AccountantsHowever, the role of ensuring the reliability of financial information is indicated. If the expert responsible for questioning the reality of losses were to protest against being sold another product outside of their own business, the gap between that responsibility and their duties would not be small.
Mr. Saito would like to answer what he learned about the fractional scheme, what he checked after learning about it, and who he complained to. If Mr. Watanabe had the courage to express his dissatisfaction, he will also be asked whether he used that courage to stop officers and employees from making fraudulent declarations.
Perhaps the alarm system used to detect fraudulent numbers has suddenly changed to one that alerts you that another product has been brought into your business. As an accountant, you are supposed to protect only your own client base. In a priority system where you care more about the actions of your colleagues than the hypothetical losses they might incur, who is the expert in protecting the interests of whom?
Only a few officers refused and were reprimanded; several officers were convinced and responded accordingly.
Not all officers took the same stance regarding the fractional-point scheme this time. Among those we know about, there were only a very small number of officers who explicitly refused and reprimanded Mr. Watanabe. Unlike the Angel Tax system, which has a basis in the system, the issue was that it was a method that forced the declaration of losses that did not actually exist, and that someone stood up and drew a line at the time.
On the other hand, there are several executives who were skillfully persuaded by Watanabe’s words to accept the proposal. The significance of this case goes beyond the fact that there was only one person who came up with an illegal method; it was that the explanation reached the company executives and actually led to someone accepting the proposal. The executives who should have been on the side that should have stopped the proposal were also on the receiving end.
The specific circumstances that led to objections being raised against Watanabe regarding the officer who refused and reprimanded him are that. Following those objections, what did Watanabe explain, how did he handle the proposal, and who else did he continue to solicit after that? By verifying his actions after the criticism, it is possible to verify whether it was merely a misunderstanding.
For officers who have agreed to the solicitation, it is necessary to individually confirm what explanations they received, what they believed, and what stage of the process they have reached. Accepting the solicitation, making a transaction, filling out a declaration form, and actually filing a declaration are separate acts that will be recorded separately. Please have each person explain what they knew and what they actually did.
The most important thing to avoid here is for the soliciting party to only forward the name of the person who finally wrote down their name on the declaration form. If there is a history of cleverly convincing someone, preparing a method, moving forward with the practice, and demanding payment, it is impossible to erase that previous step and present it as the person’s own choice.
The mere fact that the company as a whole responded appropriately to the presence of the employee who refused cannot be used as proof that the entire company acted appropriately. It remains to be seen whether the person’s solicitation of others stopped after the refusal, whether the company’s supervisory body was informed, or whether the person who already agreed to it was informed. Whether the fact that one person tried to stop it and the fact that the organization as a whole stopped it are separate issues that should be verified.
The self-purification of a company does not end with the recognition of the fact that even one disloyal officer exists. It is a question of whether that refusal is translated into a halt in solicitation, a fact-finding investigation, and the prevention of the spread of harm. Do not let the good sense of a few officers take over the governance of the entire company.
Not only the executives, but also the employees were directly guided. They even told heroic stories to employees who had no profit from the sale.
What we take particularly seriously as a labor union from this information is that the guidance was not limited to executives alone. They directly recommended the method to other employees, and they even used it as a brag story to talk about employees who had no capital gains.
People who receive proposals are asked for compensation, and those who do not have any benefits eligible for proposals are told that they know a special method and are teaching it to executives. This structure involved using the company’s relationships to act as a sales target on one hand, and as a platform to showcase their own abilities on the other.
For employees without any capital gains from selling shares, that conversation is not even the kind of advice needed for their tax returns. Yet, if it is heard from the side of the company that runs the business, it is difficult to take it as just another conversation between acquaintances. The atmosphere of what is being discussed and who agrees and who disagrees is then carried over into the usual workplace relationships.
What the union is asking is the power dynamic that arises when someone in a position of authority makes private, paid offers to employees. Whether the employee can refuse them or whether they can consult with an expert privately to address the issue if they are concerned. The company should ensure that those freedoms are actually upheld.
People who gather to work for a company do not need to be turned into potential customers or interviewers for the CEO’s fraudulent tax-saving schemes. What the CEO needs is an environment where employees can work with peace of mind, and the revenue they earn from legitimate business activities. Displaying how much you know about ways to reduce taxes is not the same as demonstrating your track record of growing the company.
Notably, the fact that they demanded compensation in exchange for guidance changes the meaning of the conversation at work. What was being conveyed was not just an exchange of information based on goodwill, but a proposal by the management to earn income. Questions must be asked about what the company knew about and what controls it had in place regarding sales to counterparts with differing positions.
Make employees the customers, and employees who are not customers become the audience for heroic stories. We cannot call this kind of differentiation internal communication. Was the place for sharing work results not transformed into a place for expanding the paid guidance of management? Don’t just look into the proposals to the executives; check the extent to which they have spread to the employees as well.
Mr. Yuichiro Mashiko, who was involved in practical matters. We ask him about his role, which led from the Watanabe Seikyo office to financial transactions.
Regarding the fractional-decimal scheme in question, the information we have confirmed includes the fact that Mr. Shinoko was involved in the practical work of assembling and implementing the mechanism. While Mr. Watanabe promoted the method to those around him, the person actually implementing the proposal was Mr. Shinoko, who was also the head of the Watanabe Secretary’s Office.
Mr. Machi is the representative of LG Asset Co., Ltd.Official company profile of the companyFurthermore, the name of Representative Director Hiroshi Machi is listed, and the business description includes financial product intermediation and financial consulting. I would like you to explain how the company’s published operations relate to the work actually performed.
The union has previously raised concerns about Ms. Tamako’s past investment projects, citing her involvement in operational practices and participant handling under Mr. Watanabe’s instructions. The relationship between Mr. Watanabe, who explained the plans and profits in the table, and Ms. Tamako, who put them into practice, is not a new issue.
In the alleged financial instrument trading law violation case involving the alleged manipulation of other people’s assets without registration, Watanabe, Mashiko, and LG Asset are all being indicted. This issue follows the previous one, which concerned another transaction and the relationship between instructions and practice regarding tax guidance.
In the previous case, issues arose regarding fundraising, management, and handling of participants. This time, we need to track the steps involved in creating ways to cause losses, executing transactions, creating figures to be used in reporting, and the relationship between these and requests for compensation. Please provide specific details on which steps were handled by Shimako-san, what instructions were given by Watanabe-san, and how she understood the purpose of using baseless losses in reporting.
It is not possible to explain Ms. Machiko’s involvement as merely coordinating schedules or arranging communications. What the union knows is its involvement in the practical implementation of this method. Whether it was done as an individual’s work or as part of LG Asset’s operations, and what instructions were given to other staff members, and who requested and managed the compensation, are matters that should be clarified next.
While Watanabe boasts about his knowledge and connections, if the actual work was handled by the head of the secretarial department or an expert, that division of roles is the core of the article. Exposing only the people who talk about the idea ahead of time and leaving the work of the people who actually carried out the practical work vague prevents the same method from being brought back to another person.
Do not end the investigation by including the party that demanded the reward and the party that responded in faith.
This time, the union is pursuing not only those who made fraudulent declarations, but also those who set up the methods, recommended them, provided the practicalities, and demanded payment. Once we have finished looking into only the person who signed the declaration, the structure remains in place for those who adopt the same method with the next target.
The request for compensation is a specific example of the relationship. Who presented what amount and on what terms, what work was promised, and who was asked to pay? In cases where payment has actually been made, you need to verify the recipient and subsequent distribution. If you have designated a title such as guidance, referral, financial practice, or reporting support, please provide actual work that corresponds to that title.
Just explaining that the person who made the declaration is the one who did it does not remove the actions of the person who recommended the method for a fee. On the other hand, it is necessary to verify which explanation was believed by the officers and employees who received the proposal, what they recognized at what stage, and how much they implemented it. Instead of placing those who were solicited on the same footing as the ones who believed it from the beginning, it is necessary to clearly identify the actions and perceptions of each person.
This case is a matter that requires prosecution, including criminal liability, as guidance intended to avoid tax payment through the use of fictitious losses. To do this, it is necessary to compile the explanations given during solicitation, the responses following rejection or reprimand, the actual transaction, the declaration of information, the impact on the tax amount, and the demands for compensation into a chronological sequence.
Information Guide on Tax and Collection Deficiencies by the National Tax AgencyIn addition to fraudulent declarations made by accounting departments that are fictitious or inconsistent with fact, we are also receiving information about those who form and sell trading methods, as well as their accomplices. It is important to investigate not only who makes the declarations, but also who makes the sales and who provides the actual work.
The board of directors and the audit committee should not simply outsource the collective tax treatment of individual directors; instead, they should investigate how the company’s positions, personnel, reputation, meetings, and secretarial functions are used. If the recruited director is responsible for the investigation, a system is needed to verify their interests and not leave the evaluation of relevant facts to the individual themselves.
JPX's principles for handling scandalsWe prioritize investigations that have the necessary scope, independence, neutrality, and expertise, and effective measures to prevent recurrence. In this case, it is important that we can hear the stories of the few officers who refused, the officers who agreed, the employees who were approached, and the people who requested services from us individually.
The company’s supervisory body should not be the place where all stakeholders meet to discuss management matters. Those who demand compensation create narratives, those who are responsible for the practical work create numbers, and after a problem arises, the company creates a single explanation. In this way, the investigation becomes a product after-sales service.
Open questions to the company from Mr. Watanabe Makoto, Mr. Nakano Yoshikazu, Mr. Saito Goshi, and Mr. Machi Yuji
The Last Mile Labor Union requests answers to the following questions regarding paid guidance, solicitation of officers and employees, and the execution of duties: In addition to the explanation provided by those who presented the methods, please clarify what was communicated to those who received the proposals and what was actually done based on the records of the time.
- Regarding the guidance of the three individuals regarding the Angel Tax system, please clarify the names of the individuals who requested the respective responsibilities, explanations, practices, and compensation. What guidance did Watanabe provide to Saito regarding the share sales gains of officers immediately after the IPO?
- Please indicate the time when you started proposing the fractional scheme, the scope of the proposal, the explanation of its effectiveness, the compensation requested, and the contact details for the implementation. How did you recognize the difference between the actual losses and the losses used to justify the declaration?
- To what extent does the company know about the fact that not only executives but also employees were directly instructed and that the heroic deeds were told to employees without any capital gain? Please check the company’s positions, working hours, contact channels, and the personnel and expenses used.
- Regarding the remarks made by the officer who clearly rejected the fractional system and reprimanded Mr. Watanabe, how did Mr. Watanabe respond? Please indicate whether the solicitation, business practices, or explanations were changed or stopped afterwards.
- For the multiple officers who agreed to the proposal, have you reviewed the explanations received, the person’s understanding, the transactions they executed, the amounts used to declare them, and their impact on the tax amount using appropriate authority and procedures? Please investigate the solicitation and declaration stages separately.
- Please explain the circumstances under which Mr. Saito accused only Mr. Watanabe of engaging in other business activities in a malicious manner. At the same time, please answer whether warnings were given to those who received the proposal, the implementation was stopped, and the relevant parties were informed.
- Please clarify the duties in which Ms. Machiko was involved in the composition and execution of this mechanism, instructions from Mr. Watanabe, the processes she handled, the management of the accounts and documents used, and the relationship between her duties and those of other staff members.
- Regarding the remuneration related to the guidance, can I confirm the amount requested, the nominal value, the actual receipt, the recipient, the distribution, and the accounting procedures? Please indicate the relationship between the services and the money between Mr. Watanabe, Mr. Nakano, Mr. Saito, and the affiliated entity.
- Does the Board of Directors and the Audit and Supervisory Committee establish an independent investigation system from stakeholders, and do they consider reporting to the relevant authorities, consulting with accounting auditors, etc., and considering necessary disclosure? How do you prevent any adverse treatment against those who refuse or consult, or those who cooperate with the investigation?
We will stop the solicitation, check the declaration, and pursue the responsibility of the party who demanded the reward.
The union will not end this information with internal discussions among executives. Since direct solicitation has been made to employees and heroic stories have been told even to those who have no interest in the matter, this is a problem related to the current workplace and management of the company. We will demand the following actions not only from those who used the method but also from those who sold it and provided practical assistance.
- Stop proposing to take advantage of losses that do not exist and demanding corresponding compensation, and ensure that those who have been briefed are able to check transactions and declarations at an independent consultation point. Do not make compliance with management explanations a condition for maintaining relationships at work.
- Discourage solicitation, rejection, reprimand, instruction on business practices, transactions, profit and loss accounting, reporting, and record keeping of compensation requests and payments. Do not alter the original records; keep them separate so that past and subsequent explanations can be identified and verified.
- Independently examine the roles of designers, promoters, practitioners, reporting participants, and beneficiaries, and use this information to provide information to the relevant tax authorities, correct the reporting, and consider criminal liability. Also, please confirm the impact on the use of company resources and internal control.
- Consider the return of compensation and the restoration of damages based on the contract, the explanation provided, the person’s understanding, and the actual damage. Protect the person seeking guidance from imposing all responsibility on those who believed the proposal, and protect the person seeking consultation and the person assisting with the investigation.
For those who have received a proposal, please organize the details of who explained what, what compensation was requested, what was requested, and what was carried out. If you declined, it is also important to list what issues you raised and what subsequent interactions took place. For those who heard a heroic tale, please separate the words you heard from what you verified directly.
If you have already submitted a declaration, please show the transaction documents and the declaration to a different lawyer or tax advisor who is not involved in solicitation or in the actual practice of the profession.The National Tax Agency is in the process of correcting the declaration content.The procedures for correcting the declaration and the procedures for examining the responsibility and compensation of the guide are to be carried out separately.
Other organizationsThe Saito Goshi Victims' AssociationIt also compiles information about the work the person in charge handled and their accountability. When consulting with them, organizing the specific explanation, the request, payment, actual work, and the subsequent follow-up are important elements to consider when considering responsibility and damage recovery.
When explaining that it is legitimate business activity, it is necessary to determine what information was provided to employees who followed the instructions and to what extent they were given authority. The roles of those who made the decision to demand compensation and those who processed the documents should not be the same. What the company should protect is an environment where employees can speak about what they actually experienced, rather than following the instructions as decided above.
Explain the credibility of the system, the title of the expert, and the practicalities of the secretarial office. Then explain the compensation you have requested.
When it came to advancing the Angel Tax System, it was supported by Nakano’s practical experience and Tsuji’s title as a Certified Public Accountant. Even when it came to discussions about the government establishing the system as a policy and setting out requirements for its implementation, Watanabe’s position was not one that could be taken forward without the practical experience of those around him, which is what the union has come to understand.
Even so, when recommending the separate method to the executives, they would try to sell it as if they alone knew the special method and demand a fee. In fact, Hiroshi Mashiko, who was also the secretary general of Watanabe Makoto’s office, was involved in the practice. We must link the explanation of the plan boasted by the official with the behind-the-scenes work that transformed that plan into a real transaction.
With this new twist of claiming compensation, the details of the issue became even clearer. This is not a story of a manager advising their inner circle about the tax issue. Instead, it is a problem of several executives engaging in soliciting officers and employees, even when criticized by some, and then linking that guidance to a demand for compensation. The fact that they even told stories of heroic deeds to employees who had no capital gains also shows how the company viewed this action.
The Last Mile Union strives for the sustainable and healthy survival of the company and the employment, livelihood, health, dignity, and well-being of workers. If managers allow employees to become clients of private guidance and use the company’s reputation to advance their own demands for compensation, that goal cannot be achieved. We need to ensure that those who refuse to work with peace of mind and those who trust and respond are transformed into companies where independent advice can be received and those who carry out practical work can speak with accuracy about the facts.
Mr. Watanabe will be asked to explain the content of the sales pitch and the compensation demands, Mr. Saito the content of the guidance and the reasons for the protest, Mr. Nakano the practical application of the guidance they carried out together, and Ms. Machi the work of compiling and implementing the fractional-decimal scheme. We will not allow any rhetoric about the tax that we tried to reduce; we demand an explanation that weighs heavy when it comes to being the compensation we have demanded. We are not asking for a scheme to create fictitious losses; we are asking for an explanation that holds real responsibility.
Furthermore, we asked Mr. Watanabe Makoto, the man who recklessly pressured other companies to disclose information in a manner that was out of line with the island nation concept, through the final mile official website whether he has any responsibility for disclosing this matter.