OECD presses Japan to step up bribery investigations

The OECD Working Group on Bribery in International Business is pressing Japan to step up investigations and prosecutions of companies using bribery in the course of foreign business.

Japan is a party to the OECD Anti- Bribery Convention and has enacted legislation making bribery a serious criminal offence, but there is much more to be done.

The OECD Working Group has major concerns about the extremely low level of enforcement of Japan’s laws against bribing foreign public officials – just three prosecutions since 1999. In December last year the Working Group recommended that Japan establish an Action Plan to organise police and prosecution resources to detect, investigate and prosecute cases of foreign bribery by Japanese companies.

Japan responded with an Action Plan, which became operational in April this year. The plan creates newly specialised resources for detecting and investigating cases of foreign bribery in the three largest district prosecutors’ offices and each prefectural police office. Although the Action Plan still lacks important details, it marks the first time that prosecutors and police in Japan have ever been assigned responsibility for specific crimes of these kinds.

However, the Working Group has criticized the Action Plan for failing to rectify misleading information on “facilitation payments” in guidelines to companies about bribery that are issued by Japan’s Ministry of Economic Trade and Industry (METI). The Group has asked METI to make it clear that “facilitation payments” are a form of bribery under Japanese law.

On the positive side, the Group has commended Japan’s National Tax Agency (NTA) for its contribution to the Action Plan. The NTA has provided training and guidance to tax inspectors on detecting bribe payments disguised as “miscellaneous expenses,” and strengthened arrangements for reporting suspicious payments.

The Group says that Japan should close the gaps and remedy the weaknesses in its Action Plan by the end of this year. It also expects to see a major increase in the number of foreign bribery cases detected and investigated and a substantial increase in successful prosecutions and convictions in the near future, according to a statement on its website.

The Working Group will be monitoring Japan’s progress in enacting the legislation required for it to fulfil its obligations under the Convention and on implementing the Action Plan. In December 2014, the Working Group will also assess implementation of other outstanding recommendations, including METI’s role in enforcing Japan’s foreign bribery offence.

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