Due to serious concerns about the extremely low level of enforcement of Japan’s offence of bribing foreign public officials – just three prosecutions since 1999 – the OECD Working Group on Bribery recommended in December 2013 that Japan establish an Action Plan to organise police and prosecution resources to be able to proactively detect, investigate and prosecute cases of foreign bribery by Japanese companies.
Japan’s Action Plan, which became operational in April 2014, 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 lacks important details, it marks the first time that prosecutors and police in Japan have been assigned responsibility for specific crimes. By December 2014, the Working Group expects the Action Plan to be much more fully developed. 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.
The Action Plan fails so far to rectify misleading information on “facilitation payments” in guidelines to companies on the foreign bribery offence issued by Japan’s Ministry of Economic Trade and Industry (METI). The Working Group therefore expects that METI will not delay any further in making it clear in its Guidelines that “facilitation payments” are not exempted by Japan’s foreign bribery offence. The Working Group commends Japan’s National Tax Agency (NTA) for its substantial 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 the channel for reporting suspicious payments to NTA Headquarters.
Since 2005, the Working Group has repeatedly recommended to Japan that it establish the legal authority to confiscate the proceeds of foreign bribery, which is required by the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and punish those who launder such proceeds. In the absence of these measures, the Working Group questions whether Japan can effectively implement the Convention, including sanctioning companies that bribe overseas. The Working Group will continuously monitor Japan’s progress on enacting the required legislation 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.