Japan must urgently address long-standing concerns over foreign bribery enforcement

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Japan must step up enforcement of its foreign bribery laws and strengthen the capacities of its law enforcement agencies to proactively detect, investigate and prosecute the foreign bribery offence, according to a new report by the OECD Working Group on Bribery. According to the Working Group, which is composed of 44 member countries, Japan continues to demonstrate a particularly low level of anti-bribery enforcement. Since 1999, it has only prosecuted 5 foreign bribery cases and sanctioned 12 individuals and 2 companies. Japan’s enforcement rate is not commensurate with the size and export-oriented nature of its economy or the high-risk regions and sectors in which its companies operate. The Working Group has just completed its Phase 4 evaluation of Japan’s implementation of the Convention on Combating Bribery of Foreign Public Officials and related instruments. The Phase 4 evaluation report reiterates concerns already identified in previous evaluation phases of Japan. In order to improve Japan’s implementation of the Convention, the Working Group has recommended that Japan take certain measures, including that it should:

• Improve key elements of its legislative framework, in particular to increase the level of sanctions and the limitation period for foreign bribery;
• Broaden its framework for establishing nationality jurisdiction over legal persons;
• Encourage its agencies with potential for detecting foreign bribery to become more proactive in this respect;
• Ensure that the Ministry of Justice’s role in transmitting and clarifying certain allegations does not create unnecessary delays in opening investigations;
• Ensure that the prosecution’s role in conducting investigations and prosecutions is exercised independently of the executive, and in particular the Ministry of Justice and the Ministry of Economy, Trade and Industry; and
• Ensure that both the police and the prosecution are more proactive and coordinated when investigating foreign bribery, including by reducing the reliance on voluntary measures and confession.

At the same time, the Working Group notes a number of positive developments since its previous evaluations. Most notably, Japan’s 2017 amendment of its Act on Punishment of Organised Crimes and Control of Crime Proceeds (AOCL) introduced the possibility to confiscate the proceeds of foreign bribery and criminalised the laundering of the proceeds of foreign bribery, thus closing a significant loophole in Japan’s implementation of the Convention. Japan also introduced a new Agreement Procedure in June 2018, which could potentially enable Japan to more effectively investigate and conclude foreign bribery cases. Finally, Japan’s ODA agency (JICA) has developed and enforced a rigorous debarment policy for companies implicated in foreign bribery offences, which constitutes a potentially powerful tool in the sanctioning of the foreign bribery offence. Japan’s Phase 4 report was adopted by the OECD Working Group on Bribery on 27 June 2019. The report lists the recommendations the Working Group made to Japan on pages 88-94, and includes an overview of recent enforcement activity and specific legal, policy, and institutional features of Japan’s framework for fighting foreign bribery. In accordance with the standard procedure, Japan will submit a written report to the Working Group within two years (June 2021) on its implementation of all recommendations and its enforcement efforts. This report will also be made publicly available. Japan will also submit a written report in one year (June 2020) on four recommendations concerning key amendments to its legislation and its enforcement efforts. Unless Japan has demonstrated sufficient progress by that time, the Working Group will arrange a technical mission to explore solutions for enhancing Japan’s enforcement of its foreign bribery offence. The report is part of the OECD Working Group on Bribery’s fourth phase of monitoring, launched in 2016. In Phase 4, the Working Group examines the evaluated country’s particular challenges and positive achievements. It also explores issues such as detection, enforcement, corporate liability, and international cooperation, as well as covering unresolved issues from prior reports.