OECD urges Japan to step-up efforts to fight bribery of foreign officials

The Organisation for Economic Cooperation and Development ("OECD") has urged Japan to make combatting foreign bribery a priority following a series of high-level meetings in June between an OECD working group and officials from the Japanese ministries of justice, foreign affairs and trade.

The chairman of the working group, Drago Kos, described the mission as a "last resort" to convince the government to increase its efforts to stamp out corruption by Japanese companies in their overseas business dealings. Japan is the second country after Argentina to receive such a visit.

Japan has only prosecuted four cases of international bribery since 1999 when it implemented the 1997 OECD Anti-Bribery Convention by criminalising bribery of foreign public officials. Kos, commented that "[b]earing in mind how big the Japanese economy is, for us [this] is a clear signal that something is wrong". Kos noted that the government has failed to introduce laws which give authorities powers to confiscate the profits of bribery or to hand-out large fines for bribery offences.

Following the mission, Deputy Chief Cabinet Secretary Koichi Hagiuda stated that the government has been dealing with the matter "actively", and that it would like to make efforts to pass legislation in the future.

Japan Federation of Bar Associations releases guidance on foreign bribery prevention

In a positive sign that bribery of foreign officials by Japanese companies is coming under increasing scrutiny, the Japan Federation of Bar Associations released a new guide to preventing foreign bribery on 15 July.

The guidance is designed to supplement the Unfair Competition Prevention Act, which prohibits persons from offering bribes to foreign public officials (Article 18). While the guidance is not legally binding, it sets out best practices for Japanese Companies to follow when doing business abroad. Among other safeguards, the guide recommends that:

  • Boards of directors adopt a company policy on bribery prevention, to be signed by top management;
  • Companies allocate a sufficient budget for the effective implementation of anti-bribery policies;
  • Committees tasked with oversight of bribery prevention measures be installed and headed by senior executives;
  • Personnel who are involved in bribery be strictly disciplined, regardless of their level of seniority; and
  • Companies implement a system to prevent third party bribery (that is to say, bribes offered via an agent, consultant, JV partner or contractor).

The guidance also sets out practical tips on how companies can address facilitation payments, respond to illegitimate requests from public officials, manage subsidiaries and set up crisis management plans.

The new guidance is unlikely to substantially alter the anti-bribery landscape in Japan as many companies will already have implemented some of its recommended safeguards and measures. However, it may prove to be a helpful starting point for companies who do not currently have comprehensive bribery prevention policies in place.