Business / Corporate

Yamato admits it intentionally overcharged clients for moving services

Kyodo, JIJI

Yamato Holdings Co. said Friday an internal probe found a moving service subsidiary intentionally overcharged customers, with the misconduct carried out systematically in some cases.

The parcel delivery and moving service company said its five board members, including President Masaki Yamauchi, will return part of their salaries to take responsibility for the overcharging, which totaled ¥1.7 billion and covered about 48,000 contracts with 2,640 companies, signed from May 2016 until June this year.

The subsidiary, Yamato Home Convenience, will stop taking new orders for moving services until it introduces measures to prevent such misconduct.

Yamato Holdings said the probe found about 16 percent of all the cases of overcharging were conducted intentionally.

Some employees admitted the overcharging was aimed at improving business results, according to the probe, which concluded that the company’s internal audit and governance were not sufficient to detect such behavior.

“We deeply apologize for betraying the trust of all our customers and causing inconvenience and anxiety,” Yamauchi said at a news conference.

In early August, the transport ministry conducted an on-site inspection of Yamato’s headquarters in Tokyo and other offices on suspicion of violation of the trucking business law. The practice occurred at 123 of Yamato Home Convenience’s 128 offices, according to the ministry.

Yamato Holdings said it has apologized to its clients and plans to reimburse customers who were overcharged.

The company said it is unclear what impact the scandal will have on earnings for the current fiscal year.

Meanwhile, sources said Thursday that Yamato Holdings overcharged Nippon Telegraph and Telephone East Corp. for its moving service some 20 years ago.

Yamato returned the overcharged fees, believed to have totaled tens of millions of yen, to NTT East, a fixed-line telephone service unit of Nippon Telegraph and Telephone Corp., at the time, the informed sources said.

A former branch manager of the subsidiary who blew the whistle on the overcharging scandal has said that the malpractice started around 2010. But the misconduct may have begun even a decade before that, the sources said.

According to them, Yamato inflated moving service bills for an NTT East unit around 1998-1999 by padding the number of workers engaged in the service. Yamato returned the padded fees after NTT East officials pointed out the problem, the sources said.

A Yamato public relations official refrained from commenting about the case, saying that the company has not confirmed the matter. An NTT East spokesman also declined comment.

In July, Yamato said that it had overcharged corporate clients ¥1.7 billion in a total of some 48,000 cases during the period of two years and two months through the end of June this year, for which related data still exists.

The company later said that it needs to refund a total of ¥3.1 billion over bill-padding during the past five years.

The NTT East case was not included in the Friday report that Yamato submitted to the transport ministry due to a lack of data, the sources said.

The ministry will decide its administrative penalties on the company based on the results of its on-site inspection conducted at the beginning of August.