OECD-Japan-Phase-4-Report-ENG.Pdf
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Japan This Phase 4 Report on Japan by the OECD Working Group on Bribery evaluates and makes recommendations on Japan’s implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions. It was adopted by the 44 members of the OECD Working Group on Bribery on 27 June 2019. The report is part of the OECD Working Group on Bribery’s fourth phase of monitoring, launched in 2016. Phase 4 looks at 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. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Table of contents EXECUTIVE SUMMARY ................................................................................................................... 4 INTRODUCTION ................................................................................................................................. 5 A. DETECTION OF THE FOREIGN BRIBERY OFFENCE............................................... 13 A.1. The Ability of the Ministry of Foreign Affairs (MOFA) to Detect and Report Foreign Bribery 14 A.2. Japan's Capacity to Detect Foreign Bribery through its Anti-Money Laundering (AML) Framework ......................................................................................................................................... 15 A.3. Detection and Reporting Foreign Bribery by Japan Tax Authorities ................................ 17 A.4. Detection of Foreign Bribery by METI ............................................................................. 19 A.5. Reports of Foreign Bribery from Whistleblowers and the Adequacy of Japan's Whistleblower Protections ................................................................................................................. 20 A.6. Prevention and Detection of Foreign Bribery through Official Development Assistance (ODA) and Export Credits ................................................................................................................. 24 A.7. Self-Reporting by Companies ........................................................................................... 27 A.8. The Ability of Japanese Accountants and Auditors to Detect and Report Foreign Bribery28 A.9. Other Sources of Foreign Bribery Allegations including Investigative Journalism .......... 29 B. ENFORCEMENT OF THE FOREIGN BRIBERY OFFENCE ....................................... 32 B.1. The Foreign Bribery Offence ............................................................................................ 32 B.2. Sanctions against Natural Persons for Foreign Bribery ..................................................... 36 B.3. Investigative and Prosecutorial Framework ...................................................................... 40 B.4. Conducting a Foreign Bribery Investigation and Prosecution ........................................... 45 B.5. Concluding a Foreign Bribery Case .................................................................................. 63 B.6. Mutual Legal Assistance and Extradition in Foreign Bribery Cases ................................. 67 C. RESPONSIBILITY OF LEGAL PERSONS .................................................................... 69 C.1. Scope of Corporate Liability for Foreign Bribery and Related Offences .......................... 69 C.2. Enforcement of Corporate Liability for Foreign Bribery .................................................. 72 C.3. Sanctions Available for Legal Persons for Foreign Bribery .............................................. 75 C.4. Engagement with the Private Sector .................................................................................. 78 D. OTHER ISSUES ............................................................................................................... 80 D.1. Money Laundering ............................................................................................................ 80 D.2. Accounting Requirements, External Audit, and Company Compliance and Ethics Programmes ....................................................................................................................................... 81 D.3. Tax Measures for Combating Bribery ............................................................................... 82 D.4. ODA Official Development Assistance (ODA) ................................................................ 83 CONCLUSION: POSITIVE ACHIEVEMENTS, RECOMMENDATIONS, AND FOLLOW-UP ISSUES .............................................................................................................................................. 87 ANNEX 1: Japan’s Foreign Bribery Enforcement Actions since Phase 3 ........................................ 95 ANNEX 2: Phase 3 Recommendations to Japan and assessment of implementation by the Working Group on Bribery in 2013 ................................................................................................................ 101 ANNEX 3: List of participants in the on-site visit ........................................................................... 105 ANNEX 4: List of abbreviations, terms and acronyms ................................................................... 107 Figures Figure 1. Japan’s Implementation of its Phase 3 Recommendations ...................................................... 5 Figure 2: Japan’s foreign bribery cases as of June 2019 ......................................................................... 9 Boxes Box 1. Previous Working Group on Bribery Evaluations of Japan ......................................................... 5 3 EXECUTIVE SUMMARY This Phase 4 report by the OECD Working Group on Bribery (WGB) evaluates and makes recommendations on Japan’s implementation and enforcement of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related instruments. It details Japan’s particular achievements and challenges in this regard, including with respect to enforcement of its foreign bribery laws, as well as the progress Japan has made since its Phase 3 evaluation in 2011. Twenty years after the Convention’s entry into force, the WGB remains concerned that Japan has still not given full effect to its foreign bribery offence. Overall, Japan has only detected 46 allegations of foreign bribery, half of which the WGB brought to Japan’s attention. Japan has investigated 30 of the 46 known allegations, resulting in the conviction of 12 individuals and 2 legal persons in 5 foreign bribery cases. This is particularly low given the size of Japan’s economy and the high-risk regions and sectors in which its companies operate. The police and the prosecution lack proactivity in their foreign bribery investigations. The MOJ’s role in transmitting or clarifying certain allegations may have contributed to unnecessary delays (between 1 to 9 years) in the opening of investigations. The WGB remains concerned by the police’s continued lack of involvement in foreign bribery cases. While welcoming the prosecutors’ decision to send MLA requests early in their investigations, the WGB is concerned that Japan’s law enforcement agencies do not routinely use available coercive measures, including search and seizure, in foreign bribery investigations. Japan should reduce its overreliance on voluntary measures and confession to a more proactive approach for gathering evidence in foreign bribery cases. Additionally, METI’s role in interpreting the foreign bribery offence and the MOJ’s involvement in specific foreign bribery cases raise concerns regarding the potential for undue influence based on considerations prohibited by Article 5 of the Convention. The WGB welcomes Japan’s June 2017 amendment enabling the confiscation of the proceeds of foreign bribery and criminalising the laundering of such proceeds. Japan also introduced a new “Agreement Procedure” in June 2018, which could potentially enable Japan to more effectively investigate and conclude foreign bribery cases by encouraging those with first-hand knowledge of the scheme to provide evidence or otherwise cooperate with authorities in resolving the matter. Certain legislative defects, however, remain. Nationality jurisdiction over Japanese companies only exists if the individual who paid the bribe is a Japanese national or is a non-Japanese who conspired with an individual in Japan or with a Japanese national. Japan should extend its limitation period as several foreign bribery cases have been discontinued as time-barred. Finally, the WGB is concerned that Japan’s sanctions for foreign bribery, both in law and in practice, do not sufficiently meet the standard under Article 3 of the Convention for either natural or legal persons. Japan has also shown progress in certain areas. METI’s efforts to engage with the private sector to promote awareness of Japan’s foreign bribery offence have been well received by Japan’s private sector, but more work is still needed for SMEs in particular. Whistleblowing is becoming more prevalent, though Japan needs to further align its law with the 2009 Recommendation