Bribery & Corruption

Bribery & Corruption First Edition Contributing Editors: Jonathan Pickworth & Deborah Williams Published by Global Legal Group CONTENTS Preface Jonathan Pickworth & Deborah Williams, Dechert LLP Albania Silva Velaj & Sabina Lalaj, Boga & Associates 1 Argentina Marcelo den Toom & Mercedes de Artaza, M. & M. Bomchil 7 Australia Justin McDonnell, David Eliakim & Natalie Caton, King & Wood Mallesons 15 Bangladesh Dr. Kamal Hossain, Dr. Kamal Hossain and Associates 25 Belgium Joost Everaert, Nanyi Kaluma & Anthony Verhaegen, Allen & Overy LLP 30 Brazil Maurício Zanoide de Moraes, Caroline Braun & Daniel Diez Castilho, Zanoide de Moraes, Peresi & Braun Advogados Associados 36 Canada Mark Morrison, Paul Schabas & Michael Dixon, Blake, Cassels & Graydon LLP 44 Cayman Islands Martin Livingston & Brett Basdeo, Maples and Calder 52 China David Tiang, King & Wood Mallesons 60 Czech Republic Helena Hailichová & Eva Haisová, Johnson Šťastný Kramařík, advokátní kancelář, s.r.o. 70 France Julia Minkowski & Romain Fournier, Temime & Associés 78 Germany Sascha Kuhn, Simmons & Simmons LLP 87 Hong Kong Kyle Wombolt, Robert Hunt & Janice Tsang, Herbert Smith Freehills 95 India Siddharth Thacker, Mulla & Mulla & Craigie Blunt & Caroe 105 Indonesia Kyle Wombolt, Charles Ball & Narendra Adiyasa, Hiswara Bunjamin & Tandjung (HBT) in association with Herbert Smith Freehills 113 Ireland Megan Hooper & Heather Mahon, McCann FitzGerald 121 Italy Roberta Guaineri & Francesca Federici, Moro Visconti de Castiglione Guaineri 131 Japan Daiske Yoshida & Junyeon Park, Latham & Watkins 142 Mexico Edgar M. Anaya & Paula Nava González, Anaya Abogados Asociados, S.C. 151 Singapore Ing Loong Yang & Tina Wang, Latham & Watkins 160 South Africa Dave Loxton, Werksmans Attorneys 168 Spain Esteban Astarloa & Patricia Leandro, Uría Menéndez Abogados 176 Switzerland Grégoire Mangeat & Fanny Margairaz, Eversheds Ltd 186 Thailand Kyle Wombolt, Chinnawat Thongpakdee & Michelle Yu, Herbert Smith Freehills (Thailand) Ltd 197 Turkey Gönenç Gürkaynak & Ç. Olgu Kama, ELIG, Attorneys-at-Law 206 United Kingdom Jonathan Pickworth & Deborah Williams, Dechert LLP 211 USA Cheryl A. Krause & Elisa T. Wiygul, Dechert LLP 220 Japan Daiske Yoshida & Junyeon Park Latham & Watkins Background Japan is widely perceived to be one of the least corrupt countries in the world. Transparency International ranked Japan as the 17th least corrupt country out of 176 in the most recent Corruption Perceptions Index – third highest in Asia – and Japanese companies as the fourth least likely to pay bribes overseas.1 Global Integrity reported Japan’s overall anti-corruption performance as “solid”,2 and the U.S. State Department has characterised the direct exchange of cash for favours from Japanese government offi cials as “extremely rare”.3 However, corruption was a prevalent feature of Japan’s postwar economic boom, which was built on a close-knit alliance known as the “iron triangle” between Japanese businesses, politicians of the ruling Liberal Democratic Party (“LDP”), and elite bureaucrats.4 This close coordination guided Japan to its growth as the world’s second-largest economy, but it also created a culture of secret, backroom dealings which, when exposed, shocked the public. Some of the most notorious scandals of that era include: the Lockheed case (1976), which led to the conviction of former Prime Minister Kakuei Tanaka (and was partly responsible for the creation of the U.S. Foreign Corrupt Practices Act); the Recruit case (1989), which brought down the administration of Prime Minister Noboru Takeshita; the Zenecon (general contractors) cases (1993-1994), which resulted in several prefectural governors along with dozens of others being convicted, and one governor committing suicide; and the Bank of Japan / Ministry of Finance cases (1997-1998), which led to the arrests, resignations and suicides of several high-ranking fi nance offi cials.5 The type of conduct in these cases included fi rms seeking to win lucrative contracts through massive cash payments (Lockheed, Zenecon); fi rms offering highly lucrative insider stock information to win infl uence (Recruit); and offi cials receiving lavish entertainment, sometimes of a sexual nature, in exchange for favours (BoJ/MoF).6 Japan’s economic downturn through the 1990s soured the public’s patience for such behaviour, and increasingly became the focus of blame for the nation’s woes.7 In particular, one type of entertainment – “no-pan shabushabu” (referring to an establishment where a type of hot pot was served by women wearing no underwear) – became synonymous in the public imagination with high-level corruption.8 In response, the Japanese government enacted various reforms, including requiring disclosure of politicians’ assets,9 bringing more transparency to political contributions,10 and imposing stricter ethical rules on public offi cials.11 In addition, especially over the past 10 years, Japanese companies have begun instituting codes of conduct that prohibit giving or receiving inappropriate payments, gifts or entertainment, not only to government offi cials, but in business transactions generally.12 Today, the websites of nearly every listed Japanese company trumpet their commitment to compliance and corporate social responsibility. As a result, while some issues remain as discussed in the ‘Current issues’ section below, bribery is now widely understood in Japan to be impermissible, and corruption is no longer as prevalent a feature of the Japanese political and business landscape as it was 20 years ago. In October 2012, the LDP-led coalition won back the lower house of the National Diet and the upper house in July 2013, effectively bringing Japan back to one-party dominance. It remains to be seen whether the combination of a reinvigorated LDP, chastened bureaucrats, and long-suffering fi rms GLI - Bribery & Corruption First Edition 142 www.globallegalinsights.com © Published and reproduced with kind permission by Global Legal Group Ltd, London Latham & Watkins Japan eagerly backing the LDP’s pro-business policies, will bring back the “iron triangle” and the ways of the past, or whether the reforms of the past 20 years have fi rmly taken root. Legal overview Bribery of Japanese public offi cials Article 197 of Japan’s Penal Code13 prohibits a public offi cial, defi ned as “a national or local government offi cial, a member of an assembly or committee, or other employees engaged in the performance of public duties in accordance with laws and regulations”,14 from accepting, soliciting or promising to accept a bribe in connection with his or her duties.15 It also prohibits a person who is to be appointed as a public offi cial to do likewise, in the event that he or she is appointed.16 Furthermore, it is an offence to give, offer or promise to give a bribe to a public offi cial or a person to be appointed a public offi cial.17 Legal persons (i.e., fi rms and organisations) are not liable for bribery under the Penal Code. Non-Japanese nationals are liable for bribery under the Penal Code only if the crime is committed within Japan.18 Japanese public offi cials are liable for accepting bribes outside Japan.19 The punishment for acceptance of a bribe by a public offi cial (or a person to be appointed a public offi cial) is imprisonment with work for not more than 5 years,20 plus confi scation of the bribe or its monetary value.21 Where a public offi cial agrees to perform an act in response to a request, the sanction is imprisonment with work for not more than 7 years.22 Further, where such public offi cial consequentially acts illegally or refrains from acting in the exercise of his or her duty, the sanction is imprisonment with work for a period within a range of one to 20 years.23 The sanction for offering or promising to give a bribe to a public offi cial is imprisonment with work for not more than 3 years, or a fi ne of not more than 2.5 million yen.24 As part of the reforms of the late 1990s, the Japanese government established the National Public Service Ethics Board, which provides a website with the ethics code applicable to bureaucrats, as well as detailed guidelines.25 “Deemed public offi cials” Japan privatised many state-owned enterprises during the 1980s, including Japan Tobacco, Inc. (1985), Nippon Telegraph & Telephone Corporation (1985), and the various railway companies constituting the JR Group (1987). Japan Post was also broken up and privatised in 2007. However, under various laws specifi c to those former SOEs, their employees have the status of “deemed public offi cials” (minashi koumuin), and it is expressly forbidden to give bribes to such persons, or for such persons to accept bribes.26 The same is true for employees of enterprises that are still predominantly state-owned, such as: the national broadcaster NHK and the Narita International Airport Corporation; national universities, including affi liated research facilities and hospitals; international organisations, such as the International Criminal Court; and private fi rms that perform public functions, such as driving schools.27 The penalties for bribery of “deemed public offi cials” are largely identical to those for bribery of public offi cials. Bribery of foreign public offi cials Japan has been a member of the Organisation for Economic Co-operation and Development (“OECD”) since 1964. It implemented the 1997 OECD Anti-Bribery Convention in 1998, by amending the Unfair Competition Prevention Law (“UCPL”)28 to add Article 18, which criminalised bribery of foreign public offi cials.29 Additional law

Load more