Revision of Guidelines to prevent bribery of foreign officials

On 30 July 2015, the Japanese Ministry of Economy, Trade and Industry (METI) revised its Guidelines to Prevent Bribery of Foreign Public Officials. This document provides guidance in respect of bribery of foreign public officials in international business transactions under the Unfair Competition Prevention Act (UCPA).  The revisions are made in response to the increasing exposure of Japanese companies' overseas operations to the risk of foreign bribery. 

The UCPA prohibits individuals and corporations from giving, offering or promising any money or other benefit to a foreign public official for the purpose of inducing him/her to act, or not to act, with respect to his/her official duties or to use his/her influence in order to obtain or retain business or other improper advantage in the conduct of international business.

The revised guidelines clarify the legal interpretation of “to obtain or retain business or other improper advantage in the conduct of international business”. It is explained that any demand by a foreign public official that amounts to a request for a bribe must be rejected, even in a situation where a Japanese company is being forced or extorted to pay a bribe in order to avoid being treated unreasonably or in a discriminatory manner by the foreign public official.

The revised guidelines also state that if Japanese companies offer to foreign public officials small gifts, business entertainment or travel expenses for the sole purpose of building relationships and creating a better understanding of their products, such behaviour may not amount to bribery.  However, each case will be judged on its merits, and Japanese companies should continue to exercise caution when offering such benefits.  

A list of internal anti-corruption controls constituting good practice has also been introduced. Japanese companies are advised to take a "risk-based approach" which assesses risks associated with target countries, sectors and types of activities. The guidelines also emphasise the importance of parent company support to overseas subsidiaries. Such support should extend to introducing internal control systems and creating a system for reviewing decisions relating to high-risk activities such as hiring local agents, acquiring local companies and conducting business entertainment overseas.

Bitcoin exchange company CEO arrested in Tokyo

The CEO of Mt. Gox, the failed Japanese bitcoin exchange company, was arrested in Tokyo on 1 August 2015. It is alleged that Mark Karpeles, a French national, inflated his cash account through unauthorized access to the computer system of the exchange in February 2013, increasing the balance of his dollar account by a total of US$1 million. He could face imprisonment for up to five years or a fine of up to JPY 500,000 (approximately US$ 4,000).

Three weeks later, on 21 August 2015, Tokyo police served another arrest warrant on Karpeles, alleging that he had embezzled JPY 321 million (approximately US$2.6 million) worth of funds entrusted by clients.

Mt. Gox, based in Tokyo and once the world's biggest bitcoin exchange, collapsed in February 2014 after announcing the loss of about 850,000 bitcoins, worth around JPY 48 billion (approximately US$390 million) at the time, from customers' accounts and its own reserves. When it went bankrupt, Mt. Gox had some 127,000 creditors in more than 100 countries.