Japan pressed on foreign bribery prosecutions

This October, three senior executives from Japan Transportation Consultants a Tokyo company that had won a bid for a Hanoi transportation project, admitted paying bribes of US$650,000 to Vietnamese officials.

Such admissions seldom happen in Japan, where law enforcement has been lax on foreign bribery, according to a Transparency International report, “Exporting Corruption” (Oct. 2014). The survey of 41 countries that have signed the Organisation for Economic Co-operation and Development’s anti-bribery convention ranked Japan in the bottom category, with “little or no enforcement” of laws against corruption overseas.

Japan’s anti bribery law, enacted in 1999, prohibits payments to foreign officials, but before the JTC case, Japan had pursued only three prosecutions in 15 years, according to the OECD.

The OECD has been pressing the Japanese government to take corruption seriously. In April, a plan to increase and improve enforcement and prosecution of foreign bribery cases was introduced. Steps outlining specific responsibilities for law enforcement officers and prosecutors were encouraging, said the OECD, but the plan “lacked important details,” such as clear guidelines for outlawing so-called “facilitation payments” to local officials by Japanese companies. The group expects to see a “more fully developed” plan by December and “a substantial increase in successful prosecutions and convictions in the near future.”

Continued pressure from the OECD has had some effect, says the OECD division of Japan’s foreign ministry: “The OECD has said it wants us to clarify ‘facilitation payments’ and improve the law on prevention of organized crime. We are planning to do so.”

Two of the four corruption cases prosecuted in Japan have been brought in the past year alone, in reaction to strong words from the OECD.

One reason for Japan’s laid-back approach might be that U.S. authorities have been vigorous in prosecuting Japanese corporations under the Foreign Corrupt Practices Act (1977). In the last few years, both Marubeni and Bridgestone have been heavily fined for FCPA offenses.

Japan has extended the statute of limitations for overseas bribery cases to five years from three. The government is also seriously considering a measure to allow plea-bargaining, to encourage parties to testify against partners in crime.

As the OECD turns up the heat, many Japanese companies are not waiting for their own government to act.

Transparency International reports a big increase in corporate requests for help on anti bribery programs. Companies do not want the stigma of being fined or seeing their corporate executives arrested.