Guidelines for the Prevention of Bribery ofForeign Public Officials

May 26, 2004
Revised: September , 2017
Ministry of Economy, Trade and Industry

TABLE OF CONTENTS
CHAPTER 1: BACKGROUND AND OBJECTIVES OF THESE GUIDELINES .. 2
1.1 Background to these Guidelines ..................................................................... 2
1.2 Objectives Behind the Development of these Guidelines ............................... 5
1.3 Structure of these Guidelines and Points to Note ........................................... 5
CHAPTER 2: COMPLIANCE SYSTEM FOR PREVENTION OF BRIBERY OF
FOREIGN PUBLIC OFFICIALS BY BUSINESS ...................................................... 7
2.1 Basic Views ..................................................................................................... 7
2.2 Desirable Preventive Systems Methodologies for Business ......................... 12
2.3 Parent Company's Assistance with the Preventive Systems of Subsidiaries 17
2.4 Response in an Emergency Situation ............................................................ 19
2.5 Other Matters ................................................................................................ 20
Chapter 3: Scope of Punishment under the Unfair Competition Prevention Act .... 22
3.1 The Elements of the Offense of Bribery of Foreign Public Officials (inRespect of Article 18(1) of the Act) .............................................................. 22
3.2 Definition of Foreign Public Official, etc. (in Respect of Article 18(2) of the
Act and the Government Ordinance) ............................................................ 30
3.3 Penalties (in Respect of Articles 21(2) (vii), 21 (8) and 22) ......................... 35
3.4 Cases of the Offense of Bribery of Foreign Public Officials ........................ 41
Chapter 4: Other Matters of Relevance ................................................................... 43
4.1 Relevant Measures Taken to Implement Obligations under the OECD
Convention .................................................................................................... 43
4.2 Other Relevant Actions in Japan ................................................................... 45
4.3 Trends of Legal Systems and Applications in Foreign Countries ................. 49

1

CHAPTER 1: BACKGROUND AND OBJECTIVES OF THESE
GUIDELINES
1.1

Background to these Guidelines

As corporate activities everywhere become increasingly global and extend beyond national
borders, the volume of international commercial transactions that Japanese companies engage in
is increasing steadily. In order to ensure the acquisition and maintenance of opportunities in
the conduct of business in overseas markets, fair competition based on prices and quality of
products and services should be the norm, and unfair competition through bribery of foreign
public officials should be prevented.
This understanding is shared globally, which led to the development of the Anti-Bribery
Convention (“Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions” 1), which was adopted by the OECD (Organisation for Economic
Co-operation and Development) in 1997. In accordance with this Anti-Bribery Convention,
signatory countries, led primarily by developed nations, have been working in concert towards
achieving mutually equivalent measures to prevent bribery of foreign public officials 2.
Main Points of the Convention(1) Elements of the Offence
The offence of bribery of foreign public officials is committed when the following
elements apply:
any person intentionally
offers, promises or gives any undue pecuniary or other advantage, whether directlyor through intermediaries,
to a foreign public official,for that official or for a third party,in order that the official act or refrain from acting in relation to the performance ofofficial duties,in order to obtain or retain business or other improper advantage in the conduct ofinternational business.
(2) Definition of Foreign Public Official"Foreign public official" means:any person holding a legislative, administrative or judicial office of a foreigncountry, whether appointed or elected (including a local public entity in a foreign
1

This Convention may hereinafter be abbreviated as the "OECD Convention" or, more simply, the "Convention."
For information regarding the Convention and the Commentaries adopted together with the Convention in November
1997, refer to: http://www.oecd.org/document/21/0,2340,en_2649_34859_2017813_1_1_1_1,00.html (text of theConvention and that of its Commentaries). For the Japanese translation of the text of the Convention, refer to:
http://www.mofa.go.jp/mofaj/gaiko/oecd/jo_shotori_hon.html.
2 This Convention is also open to non-OECD member countries, and the signatories as of July 2015 are 34 OECDmember countries (Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New
Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom,
United States) plus the seven other countries of Argentina, Brazil, Bulgaria, Colombia, Latvia, Russia and South
Africa (41 signatories in total).

(3)

(4)

(5)

(6)

country);
any person exercising a public function for a foreign country, including for a publicagency (i.e. an entity constituted under public laws to carry out specific tasks in the
public interest);

any person exercising a public function for a foreign country, including for a public
enterprise; andany official or agent of a public international organization.
Sanctions
The bribery of a foreign public official shall be punishable by effective,
proportionate and dissuasive criminal penalties;
The range of penalties shall be comparable to that applicable to the bribery of theParty's own public officials;
Legal persons shall also be held liable for the bribery of foreign public officials;

The bribe itself, the proceeds of the bribery of a foreign public official, or property
the value of which corresponds to that of such proceeds, shall be subject to seizure
and confiscation, or that monetary sanctions of comparable effect shall beapplicable; andThe imposition of additional civil or administrative sanctions shall also be
considered.
JurisdictionEach Party shall take such measures as may be necessary to establish its
jurisdiction over the bribery of a foreign public official when the offence iscommitted in whole or in part in its territory; andEach Party which has jurisdiction to prosecute its nationals for offences committed
abroad shall take such measures as may be necessary to establish its jurisdiction to
do so in respect of the bribery of a foreign public official, according to the same
principles.
Money LaunderingEach Party which has made bribery of its own public official a predicate offence
for the purpose of the application of its money laundering legislation shall do so on
the same terms for the bribery of a foreign public official, without regard to theplace where the bribery occurred.
MiscellaneousIn addition to the above, measures in such areas as accounting, mutual legal
assistance, extradition, and follow-up on the implementation of the Convention by
the signatory countries shall also be taken in conjunction in order to ensure theeffect of the Convention.

In concluding the OECD Convention, Japan has been taking actions including a revision to the
Unfair Competition Prevention Act in 1998 (which came into force in February 1999) 3 andeach signatory country is also working on measures including the creation of criminal penalties
3

A partial revision was made to the Unfair Competition Prevention Act in June 2001 in order to clarify the definitionof foreign public official, etc. and in May 2004 to provide that a Japanese national who commits an offense of briberyof foreign public officials outside of Japan is punishable in Japan.

3

for the bribery of foreign public officials 4. (For the details of the measures taken in Japan,
refer to Chapters 3 and 4.)
In recent years, worldwide concern for the problem of fraud and corruption including bribery of
foreign public officials has been showing a rapid increase. Calls have been made for enhanced
action to combat the problem of fraud and corruption, and the issue is specifically mentioned insummit-level documents, including those issued at the Evian Summit in June 2003 ("Fighting
Corruption and Improving Transparency: A G8 Declaration" 5), the APEC Leaders' Declarationin October 2003 ("Bangkok Declaration on Partnership for the Future" 6), at APEC in November
2004 (approval of the "Santiago Commitment to Fight Corruption and Ensure Transparency"and "APEC Course of Action on Fighting Corruption and Ensuring Transparency"), at APEC in
July 2007 (approval of "APEC Conduct Principles for Public Officials" and "APEC Code of
Conduct for Business: Business Integrity and Transparency Principles for the Private Sector "),at G20 in November 2010 (adoption of "G20 Anti-Corruption Action Plan" by G20 Leaders 7)
and in the APEC Leaders' Declaration in November 2014 ("Annex H – Beijing Declaration on
Fighting Corruption" 8 ). As another initiative, the United Nations hosted, with extensive
participation from developed countries and developing countries alike, the signing ceremony forthe "UN Convention Against Corruption" (UNCAC) in December 2003, which, among otherthings, includes provisions requiring legal measures against the acceptance of bribes bydomestic public officials, and against the bribery of domestic or foreign public officials. Japan isa signatory to UNCAC 9.
In consideration of these changes in the surroundings, all stakeholders in Japan are requested
again to make efforts to raise awareness regarding the issue of bribery of foreign public officials,
etc.

4

For the discussion on the bribery of foreign public officials at the time of development of these Guidelines (2004),
also refer to "Implementation of Measures for Effective Prevention of Bribery of Foreign Public Officials" (February
6, 2004; by the Subcommittee on Corporate Activities Related to International Commercial Transactions, of the Tradeand Economic Cooperation Committee, of the Industrial Structure Council) at:
http://www.meti.go.jp/policy/economy/chizai/chiteki/pdf/03zowaishoui.pdf.
5 Preliminary Japanese translation of the declaration is available at:
http://www.mofa.go.jp/mofaj/gaiko/summit/evian_paris03/fttk_z.html.
6 Preliminary Japanese translation of the declaration is available at:
http://www.mofa.go.jp/mofaj/gaiko/apec/2003/shuno_sen.html.
7 Preliminary Japanese translation of "Action Plan" is available at:
http://www.mofa.go.jp/mofaj/gaiko/g20/seoul2010/annex3.html.
8 For the details of the declaration, please refer to: http://www.mofa.go.jp/mofaj/files/000059616.pdf. APEC
member countries/economies have determined to strengthen practical cooperation with anti-corruption policies andthrough the use of anti-corruption mechanism and plat form such as APEC Network of Anti-Corruption Authorities
and Law Enforcement Agencies (ACT-NET), have committed to enhance cooperation with and arrangement ofdeportation and extradition of corrupt public officials as well as forfeiture and collection of proceeds from corrupt
practices.
9 In order to promote anti-corruption cooperation among signatory countries and to consider effective review process
for the enforcement of the convention, A conference of the Parties to the United Nations Convention is held every
two years. Please refer to https://www.unodc.org/unodc/en/treaties/CAC/country-profile/index.html.

4

1.2

Objectives Behind the Development of these Guidelines

Bribing a foreign public official can constitute a bribery offense both in the country of thatpublic official and can also violate the Unfair Competition Prevention Act of Japan. Whether
criminal penalties apply or not, however, companies engaging in international commercial
transactions are in any case expected to behave in a manner so as not to be mistaken for
fostering fraud or corruption, from the standpoint of corporate governance.
Taking a preventative approach is extremely important in addressing the issue of fraud andcorruption. Without this preventative approach, once a scandal has arisen, there is a likelihoodthat it will cause irreparable damage to the company's reputation.
In light of these concerns, the objective behind the development of these Guidelines is tosupport companies involved in international commercial transactions to voluntarily take apreventative approach to the prevention of bribery of foreign public officials. Specifically,
these Guidelines provide information that can be useful as a reference when taking measures forthe prevention of bribery of foreign public officials. It is our hope that companies can use thisinformation as a tool to improve their understanding and raise their ability to predict the offenseof bribery of foreign public officials.
Companies are expected to review existing measures and apply new measures as necessary withreference to these Guidelines, and to take specific actions such as dissemination of informationand internal training on issues targeting its departments pertaining to international commercial
transactions.
1.3

Structure of these Guidelines and Points to Note

In Chapter 2 of these Guidelines, the compliance system for the prevention of bribery of foreign
public officials that companies should be aiming for will be presented. In order for thecompany to smoothly develop specific prevention measures as thus presented, the scope of
punishable acts under the Unfair Competition Prevention Act will subsequently be discussed in
Chapter 3, which is followed by basic information on relevant issues in and outside of Japan in
Chapter 4.
Note that the internal control methodologies referred to in these Guidelines are based on the
results of analysis of the current situation as it stood when these Guidelines were developed orrevised. The level of internal controls required of a company necessarily is changing andevolving according to changes in the economic and social environment. Companies need toheed this fact and be continually reviewing internal measures for further refinement.
As there are also still very few court cases at this point in time that have ruled on the offense of
bribery of foreign public officials under the Unfair Competition Prevention Act, details will
have to be added later once there are more cases available to reference. For that reason,5

readers are asked to note that the interpretations, etc. of laws described in these Guidelines are
based on judgments made at this point in time.

6CHAPTER 2: COMPLIANCE SYSTEM FOR PREVENTION OF
BRIBERY OF FOREIGN PUBLIC OFFICIALS BY BUSINESSThis Chapter illustrates examples of measures, etc. that might be referred to for the purposes ofaugmenting the effect of preventative measures against bribery of foreign public officials at thelevel of the individual company and the company group and improving the effectiveness ofcompliance systems for prevention of bribery of foreign public officials ("Preventive Systems")
as part of an internal control system10.
2.1

Basic Views(1)

Background
Social responsibility of business is becoming increasingly weighty as consumerawareness increases and business operations become more and more internationalized, etc.
Companies across the board are making active efforts in the area of internal controls, intheir attempt to ensure statutory compliance and to add more efficiency to their operations,etc.
Such efforts in the area of internal control are also extremely effective in the preventionof bribery of foreign public officials. This point is clearly shown by the agreement
reached during the Evian Summit in June 2003 that governments should encourage theprivate sector to develop compliance programs in respect of bribery of foreign public
officials 11 and by the adoption of the "APEC Code of Conduct for Business: Business
Integrity and Transparency Principles for the Private Sector " 12 at the APEC Ministerial
Meeting in September 2007 and by the inclusion of the "Good Practice Guidance on
Internal Controls, Ethics, and Compliance" 13 in Annex II to the "OECD
Recommendation of the Council for Further Combating Bribery of Foreign Public
Officials in International Business Transactions " adopted in November 2009.

(2)

Necessity of Establishing and Operating a Compliance System for Prevention ofBribery of Foreign Public Officials
The system for detecting the offense of bribery of foreign public officials has been

10

For the purpose of these Guidelines, the "internal control system" is used to mean the general term of the systems
such as the information storage system and risk management system stipulated in Article 362, paragraph 4, item 6,
Article 399-13, paragraph 1, item 1 (b) and (c) or Article 416, paragraph 1, item 1 (b) and (e) of the Companies Act,and Article 100, Article 110-4 or Article 112 of the Ordinance for Enforcement of the Companies Act, namely, a"system to secure the properness of operations."
11 "Fighting Corruption and Improving Transparency: A G8 Declaration" sets out, "2. We will strengthen theenforcement of our Anti-Bribery Laws and will encourage the private sector to develop related compliance programs.
We will … 2.2 encourage the private sector to develop, implement and enforce corporate compliance programs
relating to our domestic laws criminalizing foreign bribery."
12
The
gist
of
the
APEC
Joint
Ministerial
Statementisasfollows:
The content of such norm is as follows:
http://www.mofa.go.jp/mofaj/gaiko/apec/2007/kaku_ksk.html.
http://www.apec.org/Groups/SOM-Steering-Committee-on-Economic-and-Technical-Cooperation/Task-Groups/~/me
dia/Files/Groups/ACT/07_act_codebrochure.ashx.
13
The said guidance is described from pages 30 through 32:
http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf.

7strengthened in Japan. 14 Also, a number of cases have been detected overseas especiallyin the United States, including a case in which a penalty of nearly 100 billion yen was
imposed.
Further, if a company is actually charged with bribing foreign public officials, suchcompany will not only face criminal punishment but also be burdened with enormous loss
such as termination of business transactions with its customers or damage to its brandvalue. 15
Bribery of foreign public officials concerns not only overseas companies. We should
reaffirm that this is a material risk that Japanese companies now face in reality when
conducting business overseas.
In Japan, directors of companies are required by judicial precedents to establish internal
control systems to avoid fraudulent acts that are normally foreseeable 16 as a part of their
duty to give the due care of prudent manager, and in light of this, if a company is engaged
in any business in which there is an ordinarily foreseeable risk of bribery of foreign
public officials ("Bribery Risk") it must establish Preventive Systems necessary tocomply with domestic and foreign applicable laws and to protect its corporate value.
In addition, while establishment of Preventive Systems are positioned as part of internal
control systems, it can be expected to be taken into consideration when imposing criminal
punishment (dual criminal liability provision of juridical persons). That is, based on
judicial precedents, a juridical person can potentially be punished on the ground of"presumed negligence on the part of the enterprise in that it did not exercise necessary
care in selection and oversight or in the prevention of illegal acts" (so called "theory ofpresumptive negligence" 17). Therefore, the establishment of Preventive Systems can serve
as a piece of evidence to show that an enterprise has exercised such care.

14

A police officer in charge of measures to prevent bribery of foreign officials is designated at each prefectural
police department. Also, each special investigation division in district prosecutors’ offices with special responsibility
for economic and financial crimes similarly has a public prosecutor in charge.
15
For example, such company may be subject to sanctions such as suspension of transactions by international
financial institutions, or placed on an exclusion list by multilateral development banks such as the World Bank, or
refused trade insurance. Please refer to Chapter 4.2 ([page 43]) for further details.
16
In relation to Japan System Techniques case (Supreme Court Ruling issued by the First Petty Bench on July 9,
2009; Hanrei Jiho No. 2055-147) where the representative director was defendant, the Supreme Court ruled, withrespect to whether or not such representative director owed damages under Article 350 of the Companies Act, that the
representative director cannot be said to have been in breach of his obligation to have a risk management system inplace to prevent fraudulent acts that are normally envisaged, because a management system capable of preventing
such fraudulent acts was established, and that, therefore, such fraudulent act can be said to have been conducted in amanner that cannot easily be envisaged, and there appear to be no special circumstance that might have made such
fraud foreseeable.
17
In this regard, attention should be paid to suggestions that "providing general and abstract warning is not
sufficient for the non-existence of negligence exemption to be admitted; it is necessary to have actively provided
specific instructions for the purpose of preventing breaches in an active endeavor to prevent the breach. Consequently,
liability will be pursued strictly and it will be difficult in practice to obtain the exemption." Criminal law, General
Part [2nd Ed.]", page 41, by Atsushi Yamaguchi (in 2007, Yuhikaku).

8In the case of both a director's liability under the Companies Act (civil liability) or theapplication of dual criminal liability provision of juridical persons (criminal liability), thecompany is not necessarily accountable for an employee’s act of bribery.
(3)

Internal Control Concept Applied in these Guidelines
A variety of efforts are being undertaken both internally and externally to review
methodologies of corporate internal control 18. In particular, it is noteworthy that as partof a 2014 amendment to the Companies Act, provisions concerning improvement ofinternal control systems for corporate groups consisting of a stock company (kabushiki
kaisha) and its subsidiaries, which were previously stipulated in the Ordinance for
Enforcement of the Companies Act were upgraded to law and that it is also now required
to provide an overview of the status of internal control systems in business reporting.
The internal control methodologies discussed in this Chapter provide an illustration of
the target approach when establishing and operating the Preventive Systems,
focusing on the prevention of the bribery of foreign public officials, by referring toand respecting existing achievements in various areas.

(4)

Perspectives for Establishing and Operating Preventive Systems
When establishing and operating Preventive Systems, it is particularly important to keep
in mind (i) the importance of the attitude and message from top management, (ii) a
risk-based approach, and (iii) the need to take action at a subsidiary 19 level based on the
Bribery Risk.
(i)

Importance of the Attitude of and Message from Top Management
Looking at cases of punishment in Japan and foreign countries, typically
employees in the field have tended to "justify" their acts of bribery in terms of its
benefit to the company. Then, only top management can prevent such wrongfulperceptions from taking root. It is effective to show top management’s attitude to
the matter clearly and repeatedly with their own messages to all employees such as:"when you are faced with either complying with the law or using wrongful means
to obtain a profit, the former is always the better choice for the company in thelong run;" "employees that win profit for the company by wrongful means are notvalued by the company; conversely, they will be subject to severe punishment;" or"if there ever was a corporate culture of disrespect for compliance in the past, these18

One of the examples of such efforts is the "Study Group on Risk Management and Internal Control" of the
Ministry of Economy, Trade and Industry. This Study Group formulated and published the "Internal Control in the
New Era of Risks ~ Guideline for Internal Control That Function Together with Risk Management ~" in June 2003 to
assist the efforts of companies and industry. The text of those guidelines and a summary thereof are available on thefollowing website: http://warp.da.ndl.go.jp/info:ndljp/pid/1368617/www.meti.go.jp/kohosys/press/0004205/
19
For the purpose of these Guidelines, the term "subsidiaries" shall be used as a general term which includes thirdand fourth tier subsidiaries in line with the standard for de facto control under the Companies Act. For the definitionof the subsidiaries under the Companies Act, refer to Article 2, item 3 of the Companies Act, Article 2, paragraph 1,
Article 3, paragraph 1 and paragraph 3 of the Ordinance for Enforcement of the Companies Act.

9‘old attitudes’ must be weeded out."(ii)

Risk-based Approach
Business divisions, locations and business activities with a high Bribery Risk,
should take measures to reduce risk with a focus on formulating and implementing
approval rules for high-risk activities, educating employees and conducting internal
audits*, while business divisions, etc. with lower risk, may choose more simplified
measures.
* Note:These measures may include, for instance, requiring approval fromprogressively higher levels of management seniority as risk increases,or providing education, implementing audits or other similar measureswith a higher frequency and more broadly targeted as risk increases.
The degree of Bribery Risk should be generally assessed with overall considerationof key points such as the Bribery Risk of the relevant country, the Bribery Risk of
the relevant business area and the types of activities that have the potential to be
used for offering bribery.
As to the degree of country risk, Asia, Middle East, Africa, South America, etc. are
generally considered to have high Bribery Risk. 2021
As to business area, Bribery Risk is generally considered to be high when projects
tend to foster close relationships with foreign public officials, such as in cases
where projects require many permits and licenses from local governments, or
involve multiple dealings with foreign governments or state-owned companies.
The following are examples of types of activities that are considered to have highBribery Risk:(a) appointment and contract renewal of an advisor or negotiating enterprise(such as an agent or consultant) in relation to the obtaining of permits orlicenses, or winning orders from a local government, or having dealings witha state-owned company;(b) selection of a joint venture partner or utilization of an SPC in a country or abusiness area that is considered high-risk;

20

With respect to the assessment of the bribery risk for each country, an index such as, for example, the Doing
Business Report (http://www.doingbusiness.org/reports) annually published by World Bank Group, The Worldwide
Governance Indicators (http://info.worldbank.org/governance/wgi/index.aspx#home), Corruption Perceptions Index
of NGO/Transparency International (http://www.transparency.org/research/cpi/) will be used.
21
On the other hand, an 2014 OECD Bribery Report analyzing 427 cases that occurred in signatory countries to theOECD Anti-Bribery Conventions between February 1999 and June 2014 reports that two thirds of cases covered in
the report were cases in which payments were made to public officials of so-called developed nations, etc. (public
officials in 24 out of 41 of the said signatory countries, or 15 of 19 member countries of the G20 were involved inbribery). In response to this, Secretary-General Gurria stated that this dispelled the myth that corruption is confined
to developing countries: http://www.oecd.org/corruption/oecd-foreign-bribery-report-9789264226616-en.htm.

10

(c)

(d)
(e)

acquisition of a company (acquisition of shares, etc.) which has undertaken
many government-related projects in the past, in a country or a business areathat is considered high-risk;
participation in a public procurement that is assessed at high Bribery Risk
considering the amount of the order or the type of contract, etc.; andsocializing with direct or indirect payments to foreign public officials, etc.

In order that measures can be introduced effectively under a risk-based approach, it
is necessary for companies to collect sufficient information relating to applicableforeign laws (including laws and regulations relating to the offense of bribery andpractices and handling thereof) and to take appropriate actions 22 and to obtain asmuch information as possible in advance concerning any country in whichinternational commercial transactions will be newly commenced.
(iii)

Necessity of Taking Action at Subsidiaries Level Based on the Bribery Risk
Should a subsidiary (including an overseas subsidiary) be punished for the offenseof bribery of foreign public officials under applicable laws, whether domestic or
foreign, its parent company is likely to incur great loss that will affect not only thevalue of the shares of the subsidiary (its assets), but also damage the credit of theparent company itself, or worse, cause it to face criminal punishment.*
Therefore, parent companies need to ensure that subsidiaries within the corporategroup establish and operate Preventive Systems as appropriate to the degree ofrisk. 23
* Note:Although it is often the case that it is the overseas local entity that
actually engages in or perpetrates the act of bribery, if an employee orofficer, etc. of the parent company was involved, then that employee
or officer, etc. is likely to be culpable as an accomplice to an offenseof bribery of foreign public officials, and moreover, as stated in
Section (2) above, the parent company as a juridical person is likely tobe subject to punishment pursuant to dual criminal liability provisionsof juridical persons.

(5)

Other Points to Note
You should not forget that effectively functioning Preventive Systems are not only wellstructured but also well operated and evaluated at an appropriate frequency and by
appropriate approach.

22

If it is difficult to collect and process information on foreign laws, regulations, conventions and customs at anindividual company level, it is recommended that multiple companies operating in the same foreign country tocollectively conduct research and process information through, for instance, the use of the local chamber ofcommerce and industry that is well versed in affairs specific to that country.
23
If a parent company needs to secure the legal means to promote development/operation of the Preventive Systems
at its subsidiaries, there are means at its disposal. For example, the parent company and the subsidiary could enter
into a specific agreement aside from leveraging shareholder voting to appoint or remove officers of subsidiaries.

11Another point to note is that the status of establishment and operation of internal control
systems, including Preventive Systems, that are generally required of a company may beevaluated differently depending on the company size, business category, and thesurrounding economic and social circumstances, and the historical background, etc., and
it is accordingly difficult to define uniform criteria. Therefore, companies are required
to make constant efforts to regularly examine whether the level of Preventive Systems
that they have developed and are using are sufficient at that point in time, and work to
improve these systems with reference to those of its domestic and overseas companies inthe same industry, and guidelines issued from time to time by foreign authorities.
2.2

Desirable Preventive Systems Methodologies for Business 24

The following sections illustrate desirable methodologies for Preventive Systems thatcompanies engaged in international commercial transactions should aim for in order to prevent
bribery of foreign public officials 25 . These illustrations do not constitute statutory
requirements but companies are expected to refer to these illustrations and promptly start theprocess of examining and taking measures to properly structure and operate Preventive Systems.
Company officers,etc. have broad discretion in establishment and operation of specificPreventive Systems at each company, taking into consideration the degree of assessed risk basedon the actual situation in its business and the likelihood of having the desired effect.
In doing so, it is expected that companies will establish and operate a system that is objectively
considered highly effective with the support of external experts to an appropriate extent, by
supplementing their own experience and know-how, which can often be inadequate within asingle company. However, it must be noted that the goal is for companies to establish andoperate highly effective system at their own initiative, and this cannot be achieved simply byputting in place a superficial framework such as the introduction of rules or establishment ofcontact desks, or leaving the matter to experts.
By reference to the following examples, it is expected that measures will be implemented withdifferent intensity for each business division, location and business activity depending on therisk inherent therein. These efforts could reduce the possibility of a company being punishedor its corporate value being greatly damaged under domestic or foreign laws.

24

Of the Preventive Systems, methodologies for individual company responses to emergency are described in
Chapter 2.4 below.
25
The internal control methodologies illustrated here follow the sequence of "development of a policy, etc. (=plan)," "implementation of specific measures (= do)", "audit of the state of implementation and management of themeasures (= check)" and "review existing policy, etc. based on the outcome of the audit (= act)." As management
methods of this type tend to result in continual improvements in internal control management, it is also used as astandard method by the International Organization for Standardization (ISO) and has already been applied by a large
number of companies as well.

12

(1)

Basic Components of Preventive Systems
Although the specific details will greatly vary depending on the size or corporate
structure of a company, among other factors, the following six elements are generally
considered to be desirable. 26
Incidentally, when establishing specific Preventive Systems suitable for a particularcompany, the COSO (Committee of Sponsoring Organizations of the Treadway
Commission) framework 27 is also a useful reference:-(2)

Formulation/announcement of Basic Policies 28 (described in Section (2)below);
Formulation of Internal Rules (approval rules for high-risk activities such as
act of socializing or appointment of agency or rules for disciplinary
punishment, etc.) (described in Section (3) below);
Development of organizational frameworks (described in Section (4) and
Chapter 2.4 below);
Implementation of educational activities in the company (described in
Section (5) below);
Audit (described in Section (6) below);
Review by the management, etc. (described in Section (7) below)

Formulation/announcement of Basic Policies
Basic Policies incorporating the following factors should be formulated in order toprevent acts of bribery of foreign public officials which violate domestic or foreign laws.
(As stated in Chapter 2.1 Section (4) Part (i) above) Have a fundamental attitude of
the management clearly, "compliance over immediate profit".
Avoid engaging in any acts of bribery of foreign public officials, etc. that could
constitute the offense of bribery under the laws of the relevant country or constitutethe offense of bribery of foreign public officials under the Unfair Competition
Prevention Act.

It is important that a company's Basic Policies and Internal Rules are shared internally26

The guidelines of the U.S. Foreign Corrupt Practices Act (the "FCPA") illustrate, as the hallmarks of effective
compliance programs, commitment from senior management and a clearly articulated policy against corruption, codeof conduct and compliance policies and procedures, oversight, autonomy, and resources, risk assessment, training andcontinuing advice, incentives and disciplinary measures, third-party due diligence and payments, confidential
reporting and internal investigations, continuous improvement (periodic testing and review), etc.
http://www.justice.gov/sites/default/files/criminal-fraud/legacy/2015/01/16/guide.pdf
27
COSO framework was published in 1992 as a guideline for assessing the structure, development and effectivenessof internal controls. Thereafter, in response to reflecting changes in business and the environment in whichbusinesses operated, and to the expansion of businesses and the purposes of reporting, etc., "financial reporting" wasredefined simply as "reporting" in 2013 in order to effectively apply to not only to the disclosure of financial
information, but also the practices of reporting purposes, operational purposes, compliance purposes pertaining to
non-financial information.
28
Indicates polices, codes of conduct, and compliance policies.

13and thoroughly enforced, along with corporate ethics that support prevention of bribery of
foreign public officials. From this perspective, it is effective if not only the management
but also the Compliance Supervisors 29 at each business division and location, etc., who
are closer to employees in the field, send messages to the same effect over and over fromthe same eye-level as those from management.
In addition, it is desirable to announce the Basic Policies that have been formulated forexpressing the company's intention to prevent bribery within and outside the company,
and also translate such policies where necessary so that they may be used not only when
thoroughly informing foreign employees of the company in and out of Japan, but also
when seeking understanding from foreign governments, foreign investors and business
partners and customers.
(3)29

Formulation of Internal Rules
Internal Rules incorporating the following factors should be formulated in order to ensure
careful consideration of high-risk business activities within the company:In light of the fact that contacts with foreign public officials, etc. 30 may take place
not only overseas but also in Japan, put together or organize the measures that need
to be put in place for each case and compile internal procedures and judgment
criteria 31, etc. in a manual.
In particular, using a risk-based approach, it is desirable to establish rules regarding
approval requirements, decision-making procedures and recording methods, etc.
for the following high-risk activities:(i)
Any activity that could be suspected as providing an improper benefit toforeign public officials, etc. such as paying for business meals or travel
expenses for visits:
Internal Rules consisting of approval requirements, approval
procedures, recording and after-the-fact verification procedures should
be formulated for each type of activity (the specific approval
procedures should be ultimately decided by a person of theappropriate level of management seniority depending on the risk of
the activity); andWhen it is externally announced and widely known that payments toforeign public officials, etc. are recorded in detail at a company, thisFor a definition of "Compliance Supervisor," refer to Section (4) Part (i) below.

30

Contacts with foreign public officials include the welcoming or seeing-off of arriving or departing officials,
dining occasions, inspection trips, golfing and other entertainments, gift exchanges, hiring of persons associated withforeign officials such as children of them, and speech occasions, etc.
31
Internal procedures include prior inquires with authorized personnel such as a Compliance Supervisor, andnotification from overseas subsidiaries to the consultation desk (hotline) or reporting desk in the main office.
Possible judgment criteria might take the form of, for example, a prior decision on the amount and frequency ofappropriate gift offering (for ceremonial occasions, etc.) to and entertainment of foreign public officials, etc. within
the scope of law, or common sense of the respective countries, the establishment of limits to entertainment applicableat each specific stages of negotiation in respect of international commercial transactions, and clarification of the
stance taken towards foreign public officials, etc. as well as their family members and family-run companies.

14



(4)

could be expected to act as a warning also to foreign public officials,
etc. who may otherwise wish to demand bribes from the company’s
employees.
(ii) The types of activities with high risk listed in Chapter 2.1 Section (4) Part(ii) above 32
Pre-contract confirmation procedures (representations and warranties,
covenants and due diligence) and procedures during the term ofcontracts, etc. (audit, requests for reference documents, cancelation
without warning or suspension of payment) should be provided.
It should be clearly ruled that employees who have engaged in the act of bribery or
violated Internal Rules will incur personnel sanctions (including, disciplinary
measures) 33. When a company has related Internal Rules such as employment
rules, decision-making rules or rules on request for decision already in place, one
option for the company is to stipulate that these rules apply to the act of bribery, inorder to clarify they apply to payments to and dealings with foreign public officials,
etc.

Development of Organizational Frameworks
An organizational framework for internal control purposes that is commensurate with thecompany size, etc. should be established, so that duties within the company and theauthority and responsibility of relevant personnel are clearly delineated. When doing so,
the following points should be noted, in particular:
(i)





Appointment of a Compliance Officer or Compliance General Supervisor toOversee Compliance Personnel
A compliance officer or a compliance general supervisor should be appointed tooversee the whole company (collectively referred to as "Compliance
Supervisor") 34 . In addition to properly comprehending and understanding
applicable laws and regulations as well as various information from thegovernment such as these Guidelines, the Compliance Supervisor should sort out asis found appropriate the issues arising in the conduct of business.
The Compliance Supervisor should regularly report to the management and theboard of directors.
In order to ensure the effectiveness of the Preventive Systems, it would be effective
to appoint a Compliance Supervisor at each large-scale business location or eachregional division with management oversight.

32

Taking into account the fact that using a capable agent, etc. that does not engage in act of bribery at all in a highrisk country/region will lead to strengthening the competitiveness of a company, it is desirable to discover andeducate appropriate agents. In addition, in relation to appointment/contract renewal of an agent, it is desirable to keep
records of the facts regarding the reasons (necessity) for appointment/contract renewal of the agent, the agent's
quality/aptitude, appropriateness of fees, etc. have been fully considered.
33
In the event of a violation, personnel sanctions are necessary to deal with the matter strictly and in accordancewith the prescribed rules.
34
Some companies have a system of coordination between compliance staff in operational, management andfinancial divisions, etc., or set up a "compliance committee."

15

(ii)









(iii)

Development of a Follow-Up System after Suspicion, etc. is Brought to LightAs stated in "Chapter 2.4 Response in an Emergency Situation"(iv)


Other Points to Note
In the operation of the Preventive Systems, "openness" should be maintained
within the organization which allows personnel in the field to casually consult with
the Compliance Supervisor so that any sign of bribery in the field could be dealt
with at an early stage.
Consideration should be made for avoiding giving the sales division or sales
personnel including those of subsidiaries any incentive to engage in acts of bribery
by demanding unrealistic sales targets, etc.

(5)Establishment of Internal Consultation Desks (Hotlines), Reporting Desks, etc.
A consultation desk (help line) should be set up to deal with cases where ajudgment needs to be made on a particular case, such as in the face of a demand fora bribe from a foreign public official or a request from an agent or consultant for
additional expenses that suggests a possible bribe. 35
In addition to a consultation desk, a reporting desk should also be set up to receive
whistle-blower reports, etc. 36
Confidentiality should be ensured for the consultation and reporting desks andadvice from external specialists including lawyers, etc. should be actively utilized.
Content and status of consultations and reports should be appropriately reported to
the Compliance Supervisor and decisions on handling policy or improvements tothe consultation and reporting desks function should be sought as needed.
Opportunities to keep adequate mutual communication among persons involved inthose desks should be ensured.
Face-to-face consultation on reports and investigation by hearing, etc. should also
be available where appropriate.

Implementation of Educational Activities in the Company
Appropriate educational activities should be conducted within the company to promote
the improvement of employees' ethical awareness toward prevention of bribery and toenhance the effectiveness of the operation of internal control with attention to thefollowing:
Officers and employees involved in international commercial transactions shouldbe thoroughly versed in and aware of the purpose and contents of the Basic Policies
and the Preventive Systems.

Education should be offered to employees, etc. involved in international

35

Depending on whether the risk is high or low, a consultation desk that specializes in cases of bribery of foreign
officials is expected to be set up, though in some cases utilization of an existing internal consultation desk might beadequate (such as a desk where the legal division or internal audit division or other divisions receive consultation).
36
On the subject of safeguards against unfair treatment such as removal of employees who disclose information in
the public interest, including whistle-blowing, the Whistleblower Protection Act was enacted on April 1, 2006.

16







commercial transactions at the time of hiring or transfer to a relevant department.
In offering education and training, the company should make efforts to offer
effective education considering the possibility of future contact with foreign public
officials and training methods (such as lecture-based training and education using
written information and e-mail, etc.).
Education should be provided in relation to specific points that employees should
pay attention to, such as how to respond in the case of receiving a demand forbribes, taking into consideration the local circumstances, after organizing not only
the contents of the relevant laws and regulations but also previous cases of giftexchanges and entertainment, etc.
As another awareness-raising effort, it is also useful to cause employees involved
in international commercial transactions who have received the education ortraining discussed above to submit a written oath not to engage in act of bribery of
foreign public officials.

(6)

Audit
Regular or irregular audits should be conducted to assess whether the Preventive Systems
are actually functioning, including the status of compliance with Internal Rules, and theresults of audits should be reflected in the reviews described in Section (7) below asneeded.
The person in charge of the audit (Compliance Supervisor, person in charge oflegal affairs/accounting, or corporate officers and employees, etc. responsible for
auditing such as company auditor, etc.) should regularly audit whether thePreventive Systems are effectively functioning or not and evaluate the status of
implementation. In doing so, it is desirable that the person in charge of the audit
evaluates the information subject to the audit with skepticism37.
Efforts should be made to have audit results shared widely among the management,
Compliance Supervisor, the responsible persons at legal, accounting and audit
division and related employees.

(7)

Review by the Management, etc.
In order to facilitate continual and effective measures and operation, the effectiveness of
the Preventive Systems should be evaluated and reviewed based on the results of regular
audits, where appropriate, with the involvement of the management or Compliance
Supervisor, etc.

2.3

Parent Company's Assistance with the Preventive Systems of Subsidiaries 38

A parent company should encourage its subsidiaries within the group of companies under its
37

Although it is in the case of an accounting audit, the "emphasis on professional skepticism" under the Standards
to Address Risks of Fraud in an Audit (Business Accounting Council, Financial Services Agency) will serve as a
useful reference, in terms of its three step process: maintaining, exercising and increasing skepticism.
38
Parent company's response in the case of Emergency Situation of subsidiaries is described in Chapter 2.4 below.

17direct or indirect control to establish and operate necessary Preventive Systems based on
Chapter 2.1 and 2.2 above and confirm the status thereof on a regular or irregular basis. In
doing so, the following key factors should be kept in mind:

Risk-based approach should be applied to the scope and details of subsidiaries thata parent company should encourage establishment and operation of Preventive
Systems. As to the scope of applicable subsidiaries, it is desirable that Preventive
Systems are established for the following subsidiaries:(i)
subsidiaries considered important in light of not only current and future
corporate value but also the degree of Bribery Risk or the nature of its
business; and(ii) subsidiaries that carry out projects for which the parent company issubstantially involved by giving approvals with regard to important matterson the projects, etc.

As a rule, each subsidiary should autonomously establish and operate its own
Preventive Systems. However, if a subsidiary lacks the ability or experience to do
so in reality, the parent company should supplement insufficient resources and if
necessary, take a leading role in establishing and operating such subsidiary's
Preventive Systems*.
When confirming the status of the foregoing, it is important that the parent
company confirm not only the status of the introduction of rules 39 but also whether
the Preventive Systems including such rules are really functioning in the field ornot. Depending on the circumstances, the parent company may use such means as
exchanging opinions with the subsidiary's employees in the field or confirming
how the rules have been operated in the past (sample checking, etc.).
*Note:
Many overseas subsidiaries of Japanese companies may lack theability or experience to prevent bribery of foreign public officials due
to limited human resources and other reasons. For this reason, inmany cases where it is difficult for a subsidiary to autonomously
establish and operate its own Preventive Systems, the compliancedivision of the parent company or regional company withmanagement oversight needs to assist those subsidiaries.
The following factors should also be noted depending on the type of risk:
A corporate group should jointly offer educational programs for employees inrelation to prevention of bribery or jointly operate audit or whistle-blower
systems 40, etc.
39

There are some subsidiaries that just "copy" rules of their respective parent companies on an as is basis. It is
desirable, however, that each subsidiary structure functional regulations addressing risks, with respect to the decision
and approval process, etc., depending on the organization/system, manpower, business category of the relevant
subsidiaries, while based on its parent company’s rules.
40
In the case of overseas subsidiaries, there is another measure to set up a local desk and have it provide feedback
to the main office regarding the current state of affairs. However, EU Personal Data Protection Directive (Directive
95/46/EC of the European Parliament and of the Council of October 24, 1995 on the protection of individuals withregard to the processing of personal data and on the free movement of such data) restricts the transfer of personal data
to a third country. Attention must be paid to relevant laws and regulations such as this when processing information

18





2.4

The aforementioned joint program or joint operation is effective in that it isexpected to ensure a certain standard in terms of content and operation, and in that
it will enable quick and better response in an emergency situation.
In the case of a joint venture within a corporate group over which a company does
not have direct or indirect control, the company should make reasonable efforts totry to establish and operate necessary Preventive Systems to a possible extent.

Response in an Emergency Situation

If a foreign public official, etc. does demand (solicit or extort) bribes in reality or it is found by
an internal audit or a whistle-blower report that local staff may have paid bribes to a foreign
public official, etc. (collectively, referred to an "Emergency Situation"), it is necessary tostrictly comply with applicable laws and regulations and to expeditiously take action tominimize any harmful effect including economic damage to the company (and ultimately to its
shareholders).
In the case of an Emergency Situation at a subsidiary that lacks the ability to cope with thesituation, one of the likely options for the parent company is to get actively involved in order toensure appropriate response, as is commensurate with the impact such an event would have on
the parent company.
In particular, it should be also noted that, in the case of an Emergency Situation, a conflict ofinterest may arise between the subsidiary and its officers, etc. in which case, there is a risk of abreakdown in appropriate internal investigation or in reporting to the parent company (forinstance, given that the corporate officers, etc. at the subsidiary are at risk of being dismissed by
the parent company if the act of bribery is revealed, they may fail to investigate or report thematter to protect themselves).
In relation to systems for dealing with an Emergency Situation, the following matters should be
noted:


Rules should be put in place in advance with regard to selection of responsible
directors/persons in charge, cooperation with company auditors, establishment ofinvestigation team, reporting systems for information on an Emergency Situation
between the parent company and subsidiaries, and other systems necessary to copewith an Emergency Situation. In particular, a system to expeditiously pass on
information regarding any Emergency Situation to the Compliance Supervisor or
the management should be established in advance.
In the case of a demand for bribes from a foreign public official in particular, theprocess for handling such situations should be established in advance, such as thefirst action to take in the field and establishing an emergency response team at thehead office, etc., as appropriate corresponding to the severity of the situation, etc.

about whistle-blower reports within the entire corporate group.

19







Independent outside directors should also be appropriately provided with necessary
information regarding any Emergency Situation. They should appropriately
supervise conflicts of interest between the company and the management from a
position independent from management.
Upon preservation of relevant evidence including circumstances that are
disadvantageous to the company and the corporate group, interviewing those
involved, and other related research or investigation, if it appears highly likely thatthe act of bribery did take place, reporting to criminal investigation agencies orsurrender should be considered.
After the situation comes to an end, the causes should be investigated andrecurrence preventive measures should be considered by the corporate group as awhole.

When companies consider introduction or conduct a major review of Preventive Systems withreference to the suggestions above, the company may run into difficulties implementing it
across the board. In such cases, the company should, at its own responsibility and as aprovisional extraordinary measure, give preference to measures that it finds particularly
necessary upon considering its company size and business category, existing systems, relevanceto its international commercial transactions, and effectiveness, etc. as well as consideration of
the extent of risk that the company may be charged with the offense of bribery of foreign public
officials 41.
2.5

Other Matters

In many cases, it is difficult for a single company to cope with issues of bribery of foreign
public officials by, for example, accepting risk of being treated disadvantageously by refusing
continuous demands (solicitation or extortion) for bribery by foreign public officials, etc.
In such cases, it can be fruitful to consult with the business support desk for Japanese companies
at the local Japanese Embassy or consular office, Japan External Trade Organization (JETRO)or local chamber of commerce, etc., or leveraging such organizations to demand the local
government stop explicitly or implicitly demanding bribes through specified or unspecified
public officials. This can be one both before and after the fact.
Further, in relation to development cooperation projects, there is an option to consult with theconsultation desk for information on fraud and corruption established within the Ministry ofForeign Affairs of Japan and Japan International Cooperation Agency (JICA) or to have suchinstitutions negotiate with the local government based on information provided 42.
41 A survey conducted by the Quality-of-Life Policy Bureau of the Cabinet Office indicates that the ratio ofcompanies which introduce a whistle-blower system is on the increase, showing a mounting awareness of theimportance of such systems.
42 Information about the fraud and corruption information consultation desk of Ministry of Foreign Affairs of Japan
can be found here: https://www3.mofa.go.jp/mofaj/gaiko/oda/fusei/. Information about the fraud and corruption
information consultation desk of JICA can be found here: https://www2.jica.go.jp/ja/odainfo/index.php.

20

On the other hand, in the light of assisting Japanese companies, the Japanese government is
expected to promptly propose to the local government if requested by a local Japanese company
and to consider with the relevant governmental agencies disclosing the status of such proposals
and the status of action taken for each country so that Japanese companies may assess country
risk.

21

CHAPTER 3: SCOPE OF PUNISHMENT UNDER THE UNFAIRCOMPETITION PREVENTION ACT
The action that Japan has taken in connection with the acceding to the OECD Convention is
implementing the offense of bribery of foreign public officials, among other things, through arevision to the Unfair Competition Prevention Act in 1998 43.
This Chapter provides an article-by-article explanation of the relevant articles of the Unfair
Competition Prevention Act from the perspective of further understanding and better
predictability regarding the bribery of foreign public officials.
As an additional note, readers are reminded that it is the criminal investigation and prosecution
agencies that are actually in charge of the application of the Act with respect to each individual
and specific case and that the final interpretation of the Act is left to the courts.
3.1

The Elements of the Offense of Bribery of Foreign Public Officials (in Respect ofArticle 18(1) of the Act)

Article 18(1) of the Unfair Competition Prevention Act
No person shall give, or offer or promise to give, any money or other benefit to a Foreign
Public Official, etc. in order to have the Foreign Public Official, etc. act or refrain fromacting in relation to the performance of official duties, or in order to have the Foreign
Public Official, etc., use his/her position to influence another Foreign Public Official, etc.
to act or refrain from acting in relation to the performance of official duties, in order toobtain a wrongful gain in business with regard to international commercial transactions.

(1)

Overview (the subscript numbers in bracket each refer to the Item in this Section in which the terms
are explained)

Article 18(1) of the Unfair Competition Prevention Act provides, "(2)No person shall(9)give, or offer or promise to give, any (8) money or other benefit, to a (refer to "2. Definition of
Foreign Public Official, etc.") Foreign Public Official, etc., in order to have the Foreign Public
Official, etc. (7)act or refrain from (6)acting in relation to the performance of official duties,
or in order to the Foreign Public Official, etc., use his/her position to influence anotherForeign Public Official, etc. to act or refrain from acting in relation to the performance ofofficial duties, (4)in order to obtain a wrongful gain in business with regard to (3)international commercial transactions."
This paragraph is intended to assure the provisions of paragraph 1 of Article 1 of theAnti-Bribery Convention. In other words, it prohibits the giving, offering or promising
43

The Preamble of the Convention sets out, "achieving equivalence among the measures to be taken by the Parties
is an essential object and purpose of the Convention," and, in line with this view, requires, for example, that measures
be taken including the criminalization of the bribery of foreign public officials.

22

of any improper benefit in order to cause an act of commission or omission, etc. in
relation to the performance of official duties of foreign public officials, etc., committed inorder to obtain a wrongful gain in business with regard to international commercial
transactions.
Incidentally, this paragraph does not intend to punish any conduct of offering any benefit
that is not prohibited under the local law (meaning statutory laws and case law) 44.
(2)

Interpretation of Terms(i)"No person"
If someone commits the whole or part of an act subject to this offense in Japan, theAct will apply irrespective of the nationality (in other words, whether the person isJapanese or a non-Japanese). If a Japanese national commits a prohibited act
outside of Japan, the Act will also apply to that person.
→ [Refer to "(3) Geographical Scope of Application" in Chapter 3.3:
Penalties.](ii)"International commercial transactions"This offense is to prohibit bribery to foreign public officials in the conduct ofinternational business (Article 1-1 of the Convention)).
Within this paragraph, "international commercial transactions" means the act of
economic activity beyond national borders such as trade and foreign investment.
Concretely, "international" means (i) "international relations" 45 among the trading
parties, or (ii) "international relations" in the content of business activities.

1.

Specific examples regarding "international commercial transactions"
Where a trading company of Japan bribes a public official of Country A in order
to win an order for bridge construction under an ODA project in Country A:→ As international relations exists between trading parties, this would beconsidered to be the "international commercial transactions."
Where a Japanese-run construction company located in Country B bribes a public
official of Country B in Japan in order to win an order for repair work for theembassy of Country B in Tokyo:→ As international relations exists in the business activity, this would beconsidered to be the "international commercial transactions."

2.

(iii)


"Wrongful gain in business"
Concept of "gain in business"

44

The Commentary 8 of the OECD Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions sets out, "It is not an offence, however, if the advantage was permitted or required by thewritten law or regulation of the foreign public official’s country, including case law."
45"International relations" means relations beyond national borders.

23Judicial precedents have, in light of the legislative intent to secure fair competition
among enterprises, defined the term "business (eigyo)" to mean not only activities
conducted simply for profit but also any activities that involve economic
calculations of income/expenditure more broadly (such as hospital management,etc.).
Therefore, it is understood that the term "gain in business" refers to a tangible orintangible economic value or any other gain in a general sense that an enterprise
can gain in carrying out such "business."Concept of "wrongful gain"
The term "wrongful gain" means any gain obtained in a manner running counter topublic policy or principle of good faith. Specifically, it is interpreted as referringto:(a) any gain obtained for oneself through the giving, etc. of an improper benefit
to a foreign public official, etc., and having the said foreign public official,etc. exert his/her discretion in a manner favorable to oneself, or(b) any gain obtained for oneself through the giving, etc. of an improper benefit
to a foreign public official, etc., and having the said foreign public official,etc. commit an illegal act.
Being compelled to give, etc. a benefit for the purpose of avoiding danger to one’s
own life or body may, in some cases, be determined as not given with the intention
to obtain a "wrongful gain."(3)

Typical Behaviors subject to Punishment, etc.
Specific criminal cases:(i)
giving a benefit to an official of the Ministry of Health of Country A with theintention of obtaining minimum bid price information that is not released inadvance, in order to win a bid for a national hospital construction project inCountry A;(ii) giving a benefit to an official of the inspection agency of Country B with theintention of obtaining a license to install equipment at a chemical plant
constructed in Country B that does not satisfy environmental standards;(iii) giving a benefit to an official of the customs agency of Country C with theintention of obtaining an illegal reduction of import duty on building
materials; and(iv) giving a benefit to a public official of Country D with the intention of getting
preferential treatment in commodity export approval procedures with an aim
of gaining an advantage over competitors.

24
In case of receiving unreasonably disadvantageous discriminative treatment 46
There are cases where, in a customs setting for instance, an enterprise has taken all thenecessary procedures under local laws and regulations, yet will experience delays or otherunreasonably disadvantageous discriminative treatment by the local government,
effectively until money or goods are provided to the local government officials.
(i)An official who simply receives an application form from a company but
who is not actually in charge of the examination refuses to affix a seal ofreceipt on the application despite there being no inadequacies with the form.
(ii) An enterprise is entitled to a tax refund under the local laws and regulations,but the tax office fails to process the refund without giving any reasonablegrounds.
(iii) An enterprise has an obligation to have its fire protection equipment
inspected by the fire department under the local laws and regulations, but thefire department is not willing to cooperate and conduct the inspection.
Any payment, whether it is for the purpose of avoiding discriminatory disadvantages suchas the above, is itself likely to be considered to be the giving of money or other benefit"to obtain a wrongful gain in business" for oneself. Moreover, whatever the purpose,
once such a payment has been made to a foreign public official, etc., the practice is likely
to persist as a convention, so the fundamental principle should always be to refuse suchdemands for money, etc.
In situations where for instance demands for a bribe persist in spite of repeated refusal,
there may be cases where a payment is ultimately made, but not treated as the giving ofmoney or other benefit "to obtain a wrongful gain in business" for oneself because it was
accepted as unavoidable in order to avert foreseeable damage to the company or its
employees. While that may be the case, from the perspective of preventing any further
encouragement to form such persistent conventions, in all cases where it has alreadybecome a convention to demand a payment in relation to a particular permit and license,
etc., it is nevertheless desirable to clearly convey the intention of refusal, either
independently or through the local Japanese Embassy, consular office or the local
chamber of commerce, etc. as stated in Chapter 2.5 above.
(4)

Handling of Acts of Socializing, etc.

Burden of expenses such as expenses for travel or meals or gift-giving for a foreign
public official, etc. can be a typical form of bribery. However, if it is purely for
general socializing or for fostering understanding of the company's products orservices and not for any unjust purpose such as for preferential treatment from the46

Even if no imminent danger to human body/life exists, if, for example, security is poor and personal protection,etc. by local police or armed force is needed, rather than providing money, etc. directly to an individual police officer
or individual military personnel, it might be possible to execute a service agreement for personal protection, etc. withthe police or military organization itself, to the effect that expenses will be covered. Naturally, however, the givingof improper benefit to the police, etc. on the pretense of executing an agreement would be considered to constitute thegiving of "improper benefit".

25

relevant foreign public official, etc. in the course of his/her duties, such acts may
not be necessarily considered an act of bribery aimed at obtaining a "wrongful gain
in business".
Specific examples of this might be gift-giving, paying for travel expenses or theprovision of entertainment in small amounts that, in light of the timing, type of
item, amount of money, frequency or other factors, be regarded as purely for the
purpose of socializing or for fostering understanding of the company's products orservices. As stated in Chapter 2.2 Section (3) above, it is desirable that these acts
are made only after careful consideration based on the company's internal standards,
which themselves are formulated from the perspective of ensuring careful internalconsideration and with consideration for local laws and regulations, and that theoutcome is appropriately recorded to allow for later audit.**Note:
Unofficial approval procedures or false records would be indicative ofa payment to obtain a "wrongful gain in business".
(i)

The following are highly likely to be considered payments to obtain a"wrongful gain in business":
providing a sports car to a foreign public official, etc.;
providing gifts, even those of low cost, frequently to a foreign public
official, etc.;
giving a merchandise coupon that is cash convertible to a foreign
public official, etc.;
a group company preferentially employing the family member or
relative of a foreign public official, etc.;
inviting the family members of a foreign public official to a resort thathas little relationship with the company's products or services;
engaging a company associated with a foreign public official, etc. as
agent or consultant; andpaying money or providing goods immediately before public bidding
regardless of the amount or economic value thereof.

(ii)

The following may not be necessarily always considered payments to obtaina "wrongful gain in business":
giving promotional giveaways or commemorative gifts for general
distribution, such as publicity calendars;
providing appropriate refreshments or simple food and drink at abusiness meeting;riding with a foreign public official in a company car when it isnecessary to visit the company's office due to transportation
conditions;providing an appropriate seasonal gift of low cost in accordance withlegally accepted case law;

26

-

-



in cases where presenting of the company's products or services at an
exhibition only is inadequate to understand the company's products orservices, and a visit to the company's factory/laboratory (including any
local one and those in Japan or a third country) is required, paying thecost of travel expenses of foreign public officials, etc. who are
selected under certain internal standards (actual cost based on thecompany's internal standards formulated in accordance with the local
laws and regulations); andproviding reasonable and appropriate meals (if any anti-corruption
laws exist in the country of visit or the country of the relevant foreign
public officials that stipulates standards regarding the amount, thenwith reference to the cost stipulated in such standards) and sightseeing
during spare time in connection with the foregoing visit.

There may be cases where an enterprise makes a donation; however, it should be
noted that any payment to a foreign public official, etc. is in most cases a typicalact of bribery. Even if it appears to take the form of a donation to a non-profit
organization, if such donation is in fact made to a foreign public official, etc., thenit would also constitute a typical act of bribery.
In fact, even a donation made to a non-profit organization purely for the purpose offulfilling the company's corporate social responsibility as a "good corporate
citizen" can constitute an act of bribery.
For these reasons, it is necessary to confirm prior to making a donation whether
any officer of the recipient, or any family member or relative thereof, is related to aforeign public official, etc. involved with the company's project, and on top of that,to confirm that money donated is not flowing back to any person related to theforeign public official, etc.* to a reasonable extent, such as inspection of theaccounting books of the recipient after donation.
*Note:
Unofficial approval procedures or false records would be indicative of
payment to obtain a "wrongful gain in business".

(5)

Averting Present DangerIn the case of acts that are found to be averting present danger as stipulated in
Article 37 of the Penal Code, illegality will be rejected and no penalty will be
imposed*.
*Reference: The requirement for "averting present danger" is met if "an act isunavoidably performed" (the only way to preserve legal benefit and there isno other way) to "avert" (intention of averting is required) a "present danger"(infringement of legal benefit to be preserved actually exists or is pressing)to "the life or body of oneself or any other person" (legal benefit to be27

preserved), etc. "only when the harm produced by such act does not exceed
the harm to be averted" (the relative merits of legal benefits should bedetermined based on conventional wisdom depending on specific case).

(6)In a relation to foreign public officials, etc., for instance, the aforesaid requirement
for averting present danger may be met when a person is in danger of being
assaulted if he/she fails to make payment and has no choice but to make aminimum payment necessary to avert actual infringement of life or body.

An example of when the requirement for averting present danger is met:
When a person pays money to a policeman carrying a gun on regular duty
who expressly or implicitly demands payment and refuses to leave his/her
office, with the imminent threat of physical restraint.

Notes regarding "acting in relation to the performance of official duties" in the Act"Acts in relation to the performance of official duties" naturally includes any act within
the scope of official authority of the said Foreign Public Official, etc., but also includes
acts closely connected to his/her official duties.
Note that the definition of "official duty (shokumu)" here is the same as that for "official
duty (shokumu)" in the provision of Article 197 (Acceptance of Bribe) of the Penal Code.
Judicial precedents concerning acts closely connected to official duties in the context ofthe offense of giving or taking bribes under the Penal Code include cases in which it was
found that acts conventionally taken by a public official or acts preliminary to legitimate
official duty were acts closely connected to official duties.

(7)"…act or refrain from (acting in relation to the performance of official duties), or inorder to have the Foreign Public Official, etc. use his/her position to influenceanother Foreign Public Official, etc. to act or refrain from (acting in relation to theperformance of official duties)…"
The requirement here is that the purpose of the giving, etc. of an improper benefit shouldbe the commission or omission of a certain act by a Foreign Public Official, etc., or
causing the commission or omission of a certain act by another Foreign Public Official,etc.
As stated in Section (6) above, acts by a Foreign Public Official, etc. himself/herself refer
to an act within the scope of official authority of the said Foreign Public Official, etc. andan act closely connected to his/her official duties.
Also, to "influence ~ to act (assen)" includes having the said Foreign Public Official, etc.
use his/her position, influence upon another Foreign Public Official, etc. to act in relation
to the performance of official duties, even if that action is beyond the scope of official

28

authority of the former official, etc.
(8)

Notes regarding "any money or other benefit" in the Act
The term "any money or other benefit" can mean not only economic benefit, but any
benefit that serves to satisfy a demand or desire of a person. Accordingly, it would beconsidered to cover, naturally, money and property, as well as any economic benefit suchas financial benefit, free renting of a house or building, entertainment and paid dining,offering of a collateral or guarantee, but also cover any and all other tangible andintangible benefits including non-economic benefits such as a sexual relationship or
occupational position.

(9)

Notes regarding "…give, or offer or promise to give (to a Foreign Public Official,etc.)" in the Act
To "give (kyoyo)" does not only mean simply providing any money or other benefit as abribe, but also must be accompanied by the acceptance of such benefit by a Foreign
Public Official, etc. on the other side.
To "offer (moshikomi)" is an act of prompting a Foreign Public Official, etc. to accept any
money or other benefit in a situation where it can be recognized as a bribe, and does notneed to be accompanied by any reaction on the part of that official, etc.
To "promise (yakusoku)" means an agreement on the giving/acceptance of any money orother benefit between parties of bribery.
In the case of giving, or offering or promising to give any money and other benefit to athird party other than a Foreign Public Official, etc., it would constitute an offense of
bribery of Foreign Public Officials as well, if:there is a conspiracy between the said Foreign Public Official, etc. and the said
third party;
it is obvious that the money or benefit has been given to the said Foreign Public
Official, etc., such as where it is directed to a relative of that official, etc.; orthe Foreign Public Official, etc. has used the third party as a tool and had him/her
receive the money or benefit.

29

3.2

Definition of Foreign Public Official, etc. (in Respect of Article 18(2) of the Act and
the Government Ordinance)

2.

Article 18(2) of the Unfair Competition Prevention Act
The term "Foreign Public Official, etc." as used in the preceding paragraph means any of thefollowing persons:(i)any person who engages in public service for national or local foreign government;(ii)
any person who engages in the business affairs of any entity established under foreign
special laws to carry out specific business affairs in the public interest;(iii) any person who engages in the business affairs of an entity in which one or more of thenational or local governments of foreign states directly owns a number of voting sharesor an amount of capital subscription that exceeds 50 percent of that enterprise's total
issued voting shares or total amount of capital subscription, or in which the majority of
the Officers (meaning directors, auditors, council members, inspectors, liquidators, andother persons engaged in management of the business) are appointed or designated by
one or more of the national or local foreign governments, and to which special rights
and interests are granted by the national or local government of the foreign states for
performance of its business, or a person specified by Cabinet Order as an equivalent
person;(iv) any person who engages in public service for an International Organization (meaning aninternational organization which is formed by governments or intergovernmental
international organizations); or(v)
any person who engages in the business affairs under the authority of the national or
local government of a foreign state or an International Organization and is delegated by
them.

(1)

Purposes
A definition of a "Foreign Public Official, etc." who can be a party to bribery is provided
in Article 18(2) of the Unfair Competition Prevention Act and the "Government ordinanceto define 'such person as defined in the government ordinance as a Foreign Public Official,
etc.' provided for in Article 18(2) (iii) of the Unfair Competition Prevention Act".
Foreign public officials, etc. subject to the application of this Act can be divided into thefollowing five categories:(i)
Any person who engages in public services for a national or local foreign
government (Item 1)(ii) Any person who engages in services for an agency affiliated with a foreign national
government (Item 2)(iii) Any person who engages in services for a foreign public enterprise (Item 3)(iv) Any person who engages in public services for an International Organization (Item4)(v) Any person who exercises a public function on behalf of a foreign national
government, etc. as delegated (Item 5)
Note that those countries which Japan has not recognized as countries are also covered by
the concept of "foreign."

30

(2)

Item 1: Person who engages in public services for a national or local foreign
government (Foreign Public Official)
A person who engages in public services for a national or local foreign government refers
to a person who occupies a position in an administrative or legislative body, or a judicial
agency.
* Note that political party officials and candidates for public office are not subject to theapplication of this Act because they are not included in the definition of foreign public
official under the Convention.

(3)

Item 2: Person who engages in services for an agency affiliated with a foreign
national government
An agency affiliated with a foreign national government refers to an organization
constituted under special laws to carry out specific tasks concerning public interest, whichis the equivalent of a public corporation (tokushu hojin) or special company (tokushu
gaisha) in Japan.
Note that an organization constituted under special laws does not include any corporation
organized under civil law, such as a public interest corporation or a commercial company,that can, under the rule-based (as opposed to permission-based) principle, be constituted
if certain requirements are met.
A "person who engages in services" refers to a person who is determined, in terms of thefunction fulfilled by him/her, to perform services for the said agency.
(4)

Examples of agency affiliated with a foreign national government
Government corporations in the United States:
Specific examples include Tennessee Valley Authority and National Railroad
Passenger Corporation (a.k.a. Amtrak).
Établissements publics in France:
Specific examples include France Télécom, Bibliothèques nationales, anduniversity.

Item 3: Person who engages in services for a foreign public enterpriseA "public enterprise" in this Item covers any enterprise for which:(i)a majority of its voting shares are owned by;(ii) a majority of its total capital is contributed by; or(iii) a majority of its officers are designated or appointed by;
one or more national or local foreign government (including public interest corporations),
and such enterprise equivalents as defined by government ordinance.
An enterprise defined by government ordinance as equivalent to any of the foregoing31refers to an enterprise:(i)a majority of the voting rights of all shareholders of which are owned by;(ii) which is under the control of, through the holding of golden shares that require
permission, license, approval or consent, etc. in order for all or some resolutions at
general shareholders' meetings cannot be effective; or(iii) which is under the control of, via indirect ownership of a majority of its stock, etc;
one or more national or local foreign governments.
Any person engaging in services for such "public enterprises" as are given special privileges
by national or local foreign governments to do the public enterprises’ business falls under thedefinition of foreign public official, etc. under the Unfair Competition Prevention Act.


Example of "public enterprise" 1: Control through golden shares
The articles of incorporation of Company B in Country A, a private company thatwas formerly state-owned, had provisions requiring the consent of the government,i.e., the golden share owner, for a resolution of a general shareholders' meeting toamend certain articles to take effect, including articles such as:(i)
No one may own 15% or more shares or exercise 15% or more voting rights,
either separately or jointly; and(ii) No non-citizen of Country A may serve as the chairman of the Company or
the chief executive of the Company.
In this case, Company B would be considered to be a "public enterprise" under this
Item.



Example of "public enterprise" 2: Indirect control
Companies D1 and D2 are both 70%-owned subsidiaries of Company D, astate-owned electricity power company in Country C (the government owns 80%
of its shares). Company D1 generates power mostly in the northern part ofCountry C while Company D2 conducts the same operation mostly in the southernpart of Country C.
In this case, Companies D1 and D2 would each be considered to be a "public
enterprise" under this Item.

32The government ordinance to define “such person as defined in the government
ordinance as Foreign Public Official, etc.” provided for in Article 18(2) (iii) of the Unfair
Competition Prevention Act

1.

Such person as defined in the government ordinance as Foreign Public Official, etc. provided
for in Article 18(2) (iii) of the Unfair Competition Prevention Act (hereinafter, referred to as
the “Act”) means any person engaging in services for any of the following enterprises(excluding the enterprises stipulated in Article 18(2) (iii) of the Act) which are given special
privileges by national or local foreign governments to do its business:(i)

any enterprise of which one or more national or local foreign governments directly
own more than half of all the shareholders’ rights to vote;(ii)

any enterprise which requires permission, approval, consent of, or other similar acts by
any national or local foreign government in order for all or part of the resolutions ofgeneral meetings of shareholders cannot be effective, or whose such resolutions can beinvalidated by a national or local foreign government; or(iii)

any enterprise (excluding any enterprise described in 1(i) of this government
ordinance), of which one or more foreign governments, whether national or local, or
public enterprises directly own more than half of (a) the total issued shares with theright to vote, (b) the total subscribed capital, or (c) all the shareholders’ voting rights ,or the majority of whose Officers (meaning directors, auditors, council members,
inspectors, liquidators, and other persons who engaged in management of the business;“Officers” in the next paragraph shall mean the same) are designated or appointed or
named by one or more foreign governments, whether national or local or public
enterprises.

2.

“Public enterprise” stipulated in 1(iii) of this government ordinance shall mean any enterprise
stipulated in Article 18(2) (iii) of the Act and those described in 1(i) and (ii) of thisgovernment ordinance. In this case, any enterprise of which one or more foreign
governments, whether national or local, or public enterprises directly own more than half of(a) the total issued shares with the right to vote, (b) total subscribed capital, or (c) all theshareholders’ voting rights, or the majority of whose Officers are designated or appointed by
one or more foreign governments, whether national or local, or public enterprises, shall bedeemed to be a public enterprise.

(5)

Item 4: Person who engages in public services for an International Organization
An "International Organization" in this Item refers to an international organization
organized by a nation state, government or any other public body, irrespective of theorganizational form or the scope of authority.
Incidentally, it does not include international organizations constituted by a private body,such as the IOC (International Olympic Committee).


Examples of International Organizations
United Nations, UNICEF (United Nations International Children's Emergency
Fund), ILO (International Labour Organization), WTO (World Trade
Organization), etc.

33

(6)

Item 5: Person who exercises a public function on behalf of a foreign national
government, etc. as delegatedThis refers to a person to whom privileges are delegated by national or local foreign
governments or an international organization and who engages in services as delegated.
In other words, it is intended to mean a person to whom privileges are delegated by aforeign national government, etc. or an International Organization over services that fallunder the competence of the said foreign national government, etc., such as inspection
and testing services, etc., and who engages in the said services.
It does not include those persons who process some work ordered by a foreign national
government, etc. without any delegation of authority, such as staff, etc. of construction
companies contracted for public works projects.


Example of person who exercises a public function on behalf of a foreign national
government, etc. as delegated"Foreign public officials, etc." includes staff of a designated inspection agency ordesignated testing agency delegated to conduct inspections and testing operations,etc. for a chemical plant construction to check in advance if it meetsenvironmental criteria for permission, etc. for equipment installation, etc.
pursuant to the laws of the country in which the construction takes place.

34

3.3

Penalties (in Respect of Articles 21(2) (vii), 21 (8) and 22)Articles 21 and 22 of the Unfair Competition Prevention Act (abbreviated)
Article 21(omitted)2.
Any person who falls under any of the following items shall be punished by imprisonment
with work for not more than five years, a fine of not more than five million yen, or both:(i) to (vi)(omitted)(vii)
a person who violates any provision of Article 16, 17, or 18, paragraph (1).
3. to 7. (omitted)
8.
The offence prescribed in paragraph (2), item (vii) (limited to the part under Article 18,
paragraph (1)) shall be governed by Article 3 of the Penal Code (Act No. 45 of 1907).
9. to 12. (omitted)
Article 22
1.
When the representative of a juridical person, or the agent, employee, or other worker of ajuridical person or of any person has committed the violation listed in any of theprovisions of following items with regard to the business of said juridical person or said
person, in addition to the offender being subject to punishment, said juridical person shallbe punished by the fine prescribed in said items, and said persons shall be punished by thefine prescribed in the relevant Article:(i) and (ii)(omitted)(iii)
paragraph (2) of the preceding Article - fine not more than three hundred
million yen.
2.
(omitted)3.
The period of prescription for the punishment by fine to which a judicial person or person
is subject pursuant to the provisions of paragraph (1) in regard to violation under(omitted) paragraph (2) (omitted), is the same as that for the offences referred to in theprovisions of the same Article.

(1)

Penalties for Perpetrators (natural person)(i)
Article 21(2) (vii) of the Unfair Competition Prevention Act provides that a person
who gave, etc. an improper benefit to a foreign public official, etc. in violation of
Article 18(1) shall be subject to imprisonment with work for a period notexceeding five years or for a fine not exceeding 5,000,000 yen.
(ii)

By imposing a penalty at least equal to "imprisonment with work for not more than
three years or for a fine of not more than 2,500,000 yen" provided as imposable inthe case of a bribery offense committed with respect to a public official of Japan(Article 198 of the Penal Code), this provision fulfills a requirement under theConvention regarding the severity of penalty, which sets out that "the range ofpenalties shall be comparable to that applicable to the bribery of the Party's own
public officials" (Article 3-1).

(iii)Also, the provision of Article 21(8) sets out that the offense of bribery of foreign
public officials is subject to Article 3 of the Penal Code.

35

As Article 3 of the Penal Code provides that Japanese nationals who havecommitted certain offenses outside of Japan shall be punishable under the Code,this forms the basis for punishment of a Japanese national for an offense committed
outside of Japan with regard to the offense of bribery of foreign public officials aswell (i.e., a Japanese national who has given an improper benefit to a foreign
public official, etc. outside of Japan will also be punishable) 47.
→[Refer to "(3) Geographical Scope of Application" in this Chapter 3.3:
Penalties.】(iv)

Note that a person who has been convicted of a bribery offense in the country ofoffense may still be punishable under the offense of bribery of foreign public
officials, as provided for in Article 5 of the Penal Code 48.
If, however, the person has actually served a sentence either in whole or in part inthat foreign country, execution of a sentence in Japan will be mitigated ordischarged pursuant to the provision of the said Article.

(v)

(2)

The statute of limitation is five years 49. Under Article 255(1) of the Code of
Criminal Procedure, however, the statute of limitation does not run during theperiod for which the offender is outside of Japan.

Penalties for Juridical Persons(i)Dual Criminal Liability Provision
Article 22 of the Unfair Competition Prevention Act provides that where arepresentative, agent, employee or any other staff, etc. of a juridical person 50 has
committed a violation in connection with an operation of the said juridical person,a fine not exceeding 300,000,000 yen will be imposed on that juridical person,
which is in addition to punishment for the offender himself/herself.
This article was created because the Convention requires that juridical persons thatengage in international commercial transactions should also be held liable for theforeign bribery offense.

47

The "Bill for Partial Revision of the Unfair Competition Prevention Law," by which punishment of a Japanesenational for an offense committed outside of Japan is established with regard to the offense of bribery of foreign
public officials, was passed by the Diet on May 19, 2004 and came into force as of January 1, 2005.
48
Article 5 of the Penal Code: Even when a final and binding decision has been rendered by a foreign judiciary
against the criminal act of a person, it shall not preclude further punishment in Japan with regard to the same act;
provided, however, that when the person has already served either the whole or part of the punishment abroad,
execution of the punishment shall be mitigated or remitted.
49
As provided for in Article 250 of the Code of Criminal Procedure; further, the statute of limitations for penalties
to be imposed on the juridical person was amended to five years under the “Bill for Partial Revision of the Design Act,etc. (Act No. 55 of 2006)” (came into force on January 1, 2007).
50
The dual criminal liability provision may also be applied to sole proprietor businesses. However, the fine islimited to 5,000,000 yen.

36

(ii)

Presumption of Negligence on the Part of a Juridical Person
The Supreme Court has previously ruled that the legislative intent with respect to a
provision of penalties for juridical persons is that the business proprietor cannot
be discharged from criminal liability because of a presumption of negligence of thejuridical person in its failure to appoint and oversight of the perpetrating employee,etc. and to exercise other caution necessary to prevent violation unless it is foundthat such caution was exercised 51.
While this ruling is not about the Unfair Competition Prevention Act, in order forthe exemption from the dual criminal liability of juridical persons to be applicableon the basis of non-existence of negligence, it is also likely that the Act also
requires that such caution be exercised as necessary to prevent violation, not justsimply in the form of general and abstract advice but in the form of proactive andspecific instruction.
From this perspective also, it is necessary to augment the effect of measures forpreventing bribery of foreign public officials and to improve the effectiveness ofinternal controls by, for instance, establishing and operating a system capable ofappropriate prevention of bribery of foreign public officials as illustrated in
Chapter 2 and conducting dissemination of knowledge and education activities,
regarding the offense of bribery of foreign public officials, using these Guidelines,
etc.
Whether the dual criminal liability provision will be applied to the main office of aJapanese company where a Japanese employee of its overseas subsidiary gave an
improper benefit to a foreign public official, etc. would be judged in light of theindividual and specific circumstances, including the degree of involvement of themain office in the regular business activities of the bribe-giver (the Japaneseemployee), and the state of appointment and oversight of the bribe-giver (theJapanese employee) by the main office. If the bribe-giver (the Japaneseemployee) can be considered to be virtually an employee of the main office inJapan, then the dual criminal liability provision should be applicable to the main
office in Japan.

(3)

Geographical Scope of Application of Penalties(i)
The geographical scope of application means the scope in terms of exercise ofjurisdiction within which cases that have occurred in a given geographical area canbe governed by criminal laws of that country and be treated pursuant to those laws.
(ii)

In principle, the Penal Code of Japan applies the "principle of territorial
jurisdiction" in Article 1 under which the criminal legislations of Japan apply to51

Supreme Court Ruling on March 26, 1965. Supreme Court Criminal Case Reports, Volume 19, Issue 2, page 83(for a case of violation of the Foreign Exchange and Foreign Trade Control Act).

37

offenses committed within the territory of Japan, irrespective of the nationality ofthe offender; however, it applies the "principle of nationality jurisdiction" to certain
offenses, including murder, assault and fraud, etc., in Article 3 under which thecriminal legislations of Japan also apply to, in addition to offenses committed
within the territory of Japan, offenses committed by Japanese nationals,
irrespective of the place of crime.
As the principle of nationality jurisdiction is applied to the offense of bribery of
foreign public officials pursuant to Article 3 of the Penal Code, Japanese nationals
who have committed act of bribery outside of Japan are punishable also, in addition
to those who have committed act of bribery in Japan.
(iii)

Under the principle of territorial jurisdiction, the criminal laws of Japan will beapplicable to an offense if any "act" constituting a necessary element of the offense,
has been committed in Japan, or the "result" constituting another necessary elementof the offense, has occurred in Japan.
In respect of the offense of bribery of foreign public officials, this can possibly leadto the conclusion that if any improper benefit is offered or promised to a foreign
public official via e-mail or fax, etc. from a location in Japan, then even if thebenefit is subsequently given in a location overseas, the offense as a whole isconsidered to have been committed in Japan.

(iv)

(4)

In the case of non-Japanese corporations, the dual criminal liability provision in
Article 22 of the Unfair Competition Prevention Act would be applicable to, forinstance, a foreign company (gaikoku gaisha) as defined under the Companies
Act 52.

Giving of an Improper Benefit Using an Overseas Subsidiary (Branch) or Agent
It is common practice to use an overseas subsidiary (branch) or agent in the conduct ofinternational business such as foreign trade and overseas investment.
As an accomplice to an offense of bribery of foreign public officials is also subject topunishment according to the Convention, companies should be aware of the potential forcomplicity of an employee of the company's main office in Japan in cases where an
employee of an overseas subsidiary (branch) or agent has committed act of bribery to a
Foreign Public Official 53.

52

Article 823 of the Companies Act provides, "With regard to application of other acts, a foreign company shall bedeemed to be the same kind of company or the most similar kind of company in Japan." See "Organization Criminal
Liability Theory" by Kensuke Ito, page 76-79, (2012, Seibundo).
53
Article 1-2 of the Convention sets out, "Each Party shall take any measures necessary to establish that complicity
in, including inducement, aiding and abetting, or authorization of an act of bribery of a foreign public official shall bea criminal offence."
The respective provisions for co-principals, inducement and aiding and abetting, etc. in Articles 60 through to

38

The applicability of the Unfair Competition Prevention Act is summarized below withrespect to typical examples of bribing a foreign public official by an employee of an
overseas subsidiary (branch) or agent where an employee of the company's main office inJapan is or is not involved.
(i)Case of co-principals in conspiracy 54, based on the existence of conspiracy
between an overseas subsidiary (branch) employee and a main office employee
If the conspiracy between an overseas subsidiary (branch) employee and a main
office employee took place in Japan, one necessary element of an offense byco-principals in conspiracy would be considered to have occurred in Japan;
therefore, the offense is considered to be committed in Japan even if the improper
benefit was actually given in an overseas location.
Therefore in this case, both the overseas subsidiary (branch) employee and themain office employee would be culpable of the offense of bribery of foreign public
officials. (In such cases, that chargeability against the employee of the overseas
subsidiary (branch) would not be limited only to Japanese nationals.)(ii)

Case of a main office employee inducing 55 or aiding and abetting 56 theoffense and an overseas subsidiary (branch) employee perpetrating the act
In case the principal offender perpetrated the act (such as the giving of an improper
benefit) outside of Japan, but the inducement, or aiding and abetting took place
within Japan, then the Japanese employee of the overseas subsidiary (branch)should, as with the main office employee who induced or aided and abetted the act,
also be culpable of the offense of bribery of foreign public officials.

(iii)

Case of an overseas subsidiary (branch) employee giving an improper benefit
at his/her own decision or upon instruction from that overseas subsidiary(branch) alone
The perpetrating Japanese employee of the overseas subsidiary (branch) who gave
improper benefits and the Japanese employee of the overseas subsidiary (branch)
who gave the instruction thereof would be culpable of the offense of bribery of
foreign public officials. On the other hand, any employee of the main office inJapan who has no involvement in the giving of the improper benefit would not be
culpable of the offense of bribery of foreign public officials.

65 of the Penal Code are applied to these matters.
54
Co-principals (Article 60 of the Penal Code) are "two or more persons who have jointly committed an offense."
A "person who had no role in the act of actual perpetration of an offense where several persons had conspired tocommit the offense and some of them actually perpetrated it" may also be punished as a principal offender, whichconstitutes a case of co-principals in conspiracy.
55
Inducement (Article 61 of the Penal Code) is the "act of inducing another person to decide to perpetrate an
offense."56
Aiding and abetting (i.e. "accessoryship (houjo)" per Article 62 of the Penal Code) is the "act of assisting a
principal offender in a manner other than perpetration of an offense."

39

(iv)

Case of giving an improper benefit through the use of an overseas agent
Cases where an employee of an overseas agent, rather than an overseas subsidiary(branch), gave an improper benefit are as with the cases under (i) and (ii) thatinvolve an overseas subsidiary (branch) employee.
Examples aside, the question of whether there is a conspiracy with an employee
from the main office in Japan falls to a judicial decision based on the particular
facts and circumstances of each case.
Even when an employee from an overseas subsidiary (branch) or from an overseas
agent is not culpable of the offense of bribery of foreign public officials, he/she
may not be exempt from being charged for a bribery offense under the criminal lawof the country of his/her location, which is a matter left to judicial decision of thatcountry based on the facts of each case.

40

3.4

Cases of the Offense of Bribery of Foreign Public Officials

Cases that have been prosecuted so far since the establishment of the offense of bribery of
foreign public officials under the Unfair Competition Prevention Act in 1998 are as follows (asof September 2017):(1)

Case of giving improper benefits to Filipino public officials (Fukuoka Summary
Court,March 2007)
The case: Two employees who had been loaned to a local corporation of a Japanese stockcompany in the Philippines gave improper benefits such as golf club sets (equivalent toapproximately 800 thousand yen) to two senior officials of the National Bureau of
Investigation (Philippines) (NBI) in order to promptly conclude a contract for a business
which NBI was planning.
In this case, the two defendants received fines of 500,000 yen and 200,000 yen,respectively.

(2)

Case giving improper benefits to a Vietnamese public official (Tokyo District Court,
January and March 2009)
The case: Four persons who had been employees, etc. of the defendant company whose
head office is located in Tokyo gave improper benefits on two separate occasions, worth
around US$600,000 and US$200,000, respectively, with the intention of mainly
expressing their gratitude for having been able to receive an order for the consulting
business related to main roads construction project in Ho Chi Minh City in Vietnam to asenior official in charge of this project.
In this case, the four defendants were sentenced to imprisonment with work for two years
and six months, two years, one year and six months, and one year and eight months,
respectively (each with a suspension of execution of the sentence for three years; however,for one of them, including separate charge of fraud). The defendant company received afine of 70 million yen. This was the first case where dual criminal liabilities provisionapplied for the offense of bribery of foreign public officials.
* The prosecutors, on the day on which this case was prosecuted, requested a change inthe count to exclude cash worth US$600,000 that had been accounted for as consignment
fees such as designing from tax deductible expense in accordance with the Act on Special
Measures concerning Taxation in relation to a case of violation of the Corporate Tax Act
against the defendant company, etc. for which prosecution had already been instituted,
and increase the evaded income and the evaded tax for the year ended in September 2004
by approximately 66 million yen and 20 million yen, respectively.

(3)

Case of giving improper benefits to a Chinese local government official (Nagoya
Summary Court, October 2013)41

The case: The former executive director of a stock company engaged in the
manufacturing of automobile parts, etc. with its head office in Aichi gave money (inHong Kong dollars) equivalent to approximately 420,000 yen and a ladies' handbag(approximately 140,000 yen in value) to a senior official of the local government in orderto have illegal operations of its local factory in China overlooked.
A fine of 500,000 yen was imposed on the defendant in this case.
(4)

Cases of giving improper benefits surrounding yen-loan projects in Indonesia,
Vietnam and Uzbekistan (loan assistance projects) (Tokyo District Court, February
2015)
The case: The former president, the former international division manager and the former
accounting director of a stock company engaged in railway consultancy business with its
head office in Tokyo gave money to persons related to public railway corporations inrelation to ODA projects in Indonesia, Vietnam and Uzbekistan.
Specifically, with the aim of gaining advantages for themselves, the defendants gavearound 70 million yen (in Japanese yen) to persons related to Vietnam Railways inconnection with a yen-loan to Vietnam for "Hanoi City Urban Railway No.1 Construction
Project", and around 20 million yen (in Japanese yen and rupiah) in total to persons
related to Directorate General of Railways of Indonesia's Department of Transportation inconnection with a yen-loan to Indonesia for "Railway Double Tracking on Java SouthLine Project", and around 54.77 million yen (in US dollar) to persons related to The
Uzbekistan Railways in connection with a yen-loan to Uzbekistan for "Karshi-Termez
Railway Electrification Project".
In this case, the three individual defendants were sentenced to imprisonment with workfor two years (with a suspension of execution of the sentence for three years), three years(with a suspension of execution of the sentence for four years) and two years and six
months (with a suspension of execution of the sentence for three years), respectively, andthe defendant company received a fine of 90 million yen.
In sentencing, the court gave the following facts as favorable to the defendant company:(i) the company was socially punished (it was forced to withdraw from overseas
operations and was also excluded from the nomination in nominated competitive tenders
for a certain period of time by many local governments, etc. in Japan), (ii) the company
incurred a huge loss due to non-payment of completed construction as a result of
becoming unable to continue the contract, (iii) the company had declared the paid bribery
as expenditure for a secret purpose and had paid tax thereon, and (iv) the company
reviewed its compliance system and took preventive measures, etc.

42

CHAPTER 4: OTHER MATTERS OF RELEVANCE
This Chapter provides information on measures taken in Japan with regard to the bribery of
foreign public officials other than the Unfair Competition Prevention Act, and relevant
information from other countries. The information provided here is also expected to be
utilized as basic information, etc. for companies to refer to in examining its measures.
4.1

Relevant Measures Taken to Implement Obligations under the OECD Convention

In implementing the obligations under the OECD Anti-Bribery Convention, statutory measures
have been taken through other laws and regulations, etc. in addition to those under the Unfair
Competition Prevention Act. The overview of the measures taken in accordance with articlesof the OECD Convention is as follows:(1)

Notification (Article 1 of the Convention)
Article 1 of the Convention states the measures should be taken to punish bribery of
foreign public officials under their own country laws.
Regarding the measures, the Unfair Competition Prevention Act is listed among the laws
which the law for Whistleblower Protection Act 57 is applied. The Whistleblower
Protection Act protects the employee who provided whistle-blowing appropriately fromdisadvantageous treatment such as dismissal by the Japanese company, so that the offenseof bribery of foreign public officials can be discovered.

(2)

Confiscation of Proceeds (Article 3 of the Convention) - Money Laundering (Article
7 of the Convention)
Article 3.3 of the Convention sets out, "Each Party shall take such measures as may benecessary to provide that the bribe and the proceeds of the bribery of a foreign public
official, or property the value of which corresponds to that of such proceeds, are subject
to seizure and confiscation or that monetary sanctions of comparable effect are
applicable."
In Japan in addition to monetary sanctions under the dual criminal liability provision in
the Unfair Competition Prevention Act mentioned above, Article 2(2)(i)(a)of the "Act on
Punishment of Organized Crimes and Control of Crime Proceeds" (hereinafter referred toas the "Organized Crime Punishment Act") sets out that the property which is produced
by a criminal act which is punishable by imprisonment with work for a maximum periodof four years or more, obtained through the crime act, or acquired as a reward for thecriminal act will be considered “proceeds of crime” subject to confiscation under article
13 of the Organized Crime Punishment Act.
Article 21(2)(ⅶ)of the Unfair Competition Prevention Act sets out that a person who
have interfered with a bribery to public official shall be punished by imprisonment with

57

Please refer to the Whistleblower Protection website for details(http://www.caa.go.jp/seikatsu/koueki/index.html).

43

work for five years or less, so property acquired by bribe-giver’s side will be considered"proceeds of crime" and subject to confiscation.
Article 2(2)(ⅲ)(b) of the Organized Crime Punishment Act sets out that the "property
given" to a foreign public official, etc. (which is property given to the bribe-taker's side)
will be considered "proceeds of crime" subject to confiscation
Article 7 of the Convention sets out that "Each Party which has made bribery of its own
public official a predicate offence for the purpose of the application of its money
laundering legislation shall do so on the same terms for the bribery of a foreign public
official, without regard to the place where the bribery occurred." Article10 of theOrganized Crime Punishment Act sets out that a person who have concealed proceeds ofcrime shall be punished.
(3)

Accounting (Article 8 of the Convention)
Article 8 of the Convention requires signatories to take such measures as may benecessary regarding inadequate and false entries in books and records, and financial
statements, etc. for the purpose of, for example, hiding the giving of an improper benefit
to a foreign public official.
In Japan, false entries, etc. are prohibited under the general principles of the "Accounting
Principles for Business Enterprises" and Article 5 of the "Ordinance on the Terminology,
Forms and Preparation Methods of Financial Statements, etc." In addition, violations
may be subject to civil damages under Articles 18, 21, 22 and 24-4 of the Financial
Instruments and Exchange Act, or administrative or criminal sanctions under Article 976of the Companies Act, Articles 10, 24-2, 172, 172-2, 172-3, 172-4, 197, 197-2 and 207 of
the Financial Instruments and Exchange Act, and Articles 30, 31-2, 34-21 and 34-21-2 of
the Certified Public Accountants Act.

(4)

Mutual Legal Assistance (Article 9 of the Convention) and Extradition (Article 10 of
the Convention)
Article 9 of the Convention lays down a requirement for mutual legal assistance such as
the provision of prompt and effective legal assistance to other signatory countries.
This requirement can adequately be met through the relevant procedures provided in the"Act on International Assistance in Investigation and Other Related Matters" and the "Acton Assistance Based on Commission by Foreign Courts".
Article 10 of the Convention requires that bribery of a foreign public official should be
included as an extraditable offense under the internal laws of each country and thecriminal extradition treaty of the signatory countries 58, the country's own nationals should
be extraditable or, when the country declines a request to extradite a person for bribery of58

According to the Convention, any signatories where the extradition of a criminal is conditional upon the existenceof a criminal extradition treaty may deem the OECD Convention on Combating Bribery of Foreign Public Officials inInternational Business Transactions to be the legal grounds for the extradition of a criminal in connection with thebribery of foreign public officials (Article 10-2 of the Convention).

44

a foreign public official solely on the ground that the person is its national, the caseshould be submitted to its competent authorities.
As the offense of bribery of foreign public officials under the Unfair Competition
Prevention Act falls under an offense punishable by imprisonment with work for three
years or longer, it is an extraditable offense under the "Act of Extradition".
(5)

Monitoring and Follow-Up (Article 12 of the Convention)
Based on the awareness of the need to achieve equivalence among the measures to betaken by signatory countries, Article 12 of the Convention requires cooperation among
signatory countries for the purpose of monitoring and promoting the full implementationof the Convention.
In response to this requirement, the OECD Working Group on Bribery in International
Business Transactions has been conducting a sequenced series of evaluations after theConvention came into force in February 1999, i.e., the evaluation of the consistency ofsignatory countries' implementation of the Convention by reference to their relevant laws
(Procedure of Self- and Mutual Evaluation - Phase 1), the follow-up evaluation on theissues pointed out in the Phase 1 evaluation (Phase 1 bis), and the evaluation of the stateof operation (effectiveness) of the relevant laws (Procedure of Self- and Mutual
Evaluation - Phase 2), and follow up on the Phase 2 evaluation and the evaluation withemphasis on the aspect of enforcement (Procedure of Self- and Mutual Evaluation - Phase3), and thereby continually monitors the systems and applications of all signatory
countries.
Further, the Phase 4 evaluation(which is related to the main cross-cutting problem in
the OECD Working Group on Bribery in International Business Transactions, and theprogress about matters pointed out between Phase 1 and Phase 3) was started in 2016．
For Japan, the Phase 1 evaluation was conducted in October 1999, the Phase 1 bis
evaluation in April 2002, Phase 2 evaluation in December 2004 and January 2005, Phase
2 bis evaluation in June 2006, Phase 2 follow-up evaluation in October 2007, Phase 3
evaluation in December 2011 and Phase 3 follow-up evaluation in February 2014 59.

4.2

Other Relevant Actions in Japan

In addition to the measures in accordance with the OECD Convention, the Japanese governmentand governmental agencies have taken actions that contribute to preventing corruption,
including prevention of bribery of foreign public officials. Among these actions, the following
two are of particular relevance.

59

http://www.oecd.org/daf/anti-bribery/japan-oecdanti-briberyconvention.htm

45

(1)

Actions in relation to Export Credits
The OECD Export Credit Group adopted "Action Statement on Bribery and OfficiallySupported Export Credits" (December 2000, OECD Working Party on Export Credits andCredit Guarantees (OECD-ECG)), which stipulates, among others, that appropriate steps
be taken to deter bribery in officially supported export credits and, in the case that bribery
was involved in the award of the export contract, appropriate measures be taken.
Subsequently, as means to further promote the efforts stipulated in this Action Statement,
the OECD Council adopted the “OECD Council Recommendation on Bribery and
Officially Supported Export Credits” in December 2006. As a result, agencies of theOECD member countries that are involved in export credits are required to takeequivalent action.
In Japan, Nippon Export and Investment Insurance and Japan Bank for International
Cooperation are in the process of taking relevant actions in compliance with the said
Statement.
Nippon Export and Investment Insurance has been making efforts in the following
matters since December 2006:

Companies applying for an insurance contract are required to take an oath that they
are not and will not be involved in any bribery that would violate the Unfair
Competition Prevention Act by submitting a written oath, and also that suchcompanies and their officers, employees, etc. have not previously been indicted fora crime of violating provisions concerning the bribery of the Act, or been convicted
in court for the past five years.

If a company applying for an insurance contract is indicted because of a crime inviolation of provisions concerning bribery under the Unfair Competition
Prevention Act, more strict due diligence than usual is conducted, and it will be
confirmed that appropriate internal corrective measures and preventive measures
are taken and maintained, and that rules are documented.

If there is evidence of involvement of bribery in a transaction covered by aninsurance contract prior to its execution, approval shall be withheld, and if it is later
found that bribery did indeed occur, then the transaction is not underwritten.

If evidence of bribery by an insured in connection with an insured transaction is
uncovered after the conclusion of an insurance contract, appropriate measures shallbe taken, such as rejection of insurance claims, return of paid insurance andcancellation of the insurance contract.
Japan Bank for International Cooperation has likewise taken the following measures
regarding export credits:In registering a loan project, confirmation should be obtained in writing that theregistrant is not and will not be involved in bribery in respect of the Unfair
Competition Prevention Act. The bank makes companies applying for loans, andtheir officers and employees, etc. give assurances that they have not been indicted

46




(2)

on suspicion of violation of provisions on bribery in respect of the Act and thatthey have not been convicted for the past five years.
In the case of an indictment on suspicion of bribery, the loan can be refused.
If indicted on suspicion of committing the offense of bribery after entering into theloan agreement, a borrower may be subject to acceleration of the loan.

Actions in relation to ODA (Official Development Assistance)
The "Development Cooperation Charter" which was decided by the Cabinet in February,
2015, also refers to "Prevention of fraud and corruption" as one of the general rules fordevelopment cooperation, as shown below. Bribery of foreign public officials is one of
the key items in that policy.
(1)
B.
(g)

Implementation Principles
Principles for securing the appropriateness of development cooperation
Preventing fraud and corruption
It is necessary to prevent fraud and corruption in implementing development
cooperation.
While taking measures to encourage establishment of acompliance system by bid winners, Japan will work with recipient countries tocreate an environment conducive to preventing fraud and corruption, including
the strengthening of governance in these countries. In this context, Japan will
ensure adherence to appropriate procedures and strive to ensure transparency inthe implementation process.

The government and relevant governmental agencies, including the Ministry of Foreign
Affairs of Japan and Japan International Cooperation Agency (JICA) are committed totaking disciplinary actions against persons involved in bribery of foreign public officials
in relation with development cooperation, on a case-by-case basis within a predetermined
scope.
With the implementation of these measures, attention is paid so that no bribery of foreign
public officials should take place in connection with development cooperation by theJapanese government.
[Reference 1]"Toward Preventing a Recurrence of Corruption Related to Official Development Assistance(ODA)" (September 2009)
As a result of the occurrence of cases of giving improper benefits in relation with ayen-loan-financed project 60, the following main proposals were made by the "Study Panel for
Preventing a Recurrence of ODA-Related Corruption" 61 comprised of outside specialists, set upby the Minister of Foreign Affairs:

60

See Chapter 3.4, Section (2)61

http://www.mofa.go.jp/mofaj/gaiko/oda/seisaku/f_boushi.html

47

1.

2.

3.

4.
5.

Efforts that have been taken by the Ministry of Foreign Affairs of Japan and JICA(i)
Strengthening rules on punitive measures for businesses(ii) Making good use of points of contact for information on corruption(iii) More involvement of JICA in the selection and contract processes(iv) Closer monitoring of ODA projects
Measures for firms(i)Recommendations for enhancing compliance(ii) Recommendations for familiarizing firms with international competition
standards
Measures for recipient countries(i)
ODA policy for recipient countries where a corruption case has occurred(ii) Recommendations for enhancing governance(iii) Recommendations for capacity building
Efforts towards an International Framework
Follow-up on Recommendations[Reference 2]"Anti-Corruption in Official Development Assistance (ODA) Projects (Strengthening ofPreventive Measures)" (October 2014) 62
As a result of revelation of cases of giving improper benefits surrounding ODA projects inIndonesia, Vietnam and Uzbekistan 63, it has been decided to take the following actions with an
aim to further strengthening the foregoing preventive measures in order to inhibit similar cases
from happening in the future:
1.

2.
3.
4.
5.
6.

Improvement of the Consultation Desk on Anti-Corruption(i)
Improvement of "consultation" function and online receipt of reports in
English and in the local language;(ii) Introduction of a system whereby companies that voluntarily reportfraudulent practices can benefit from a reduction in or exemption from themeasures of exclusion from bidding for a certain period
Further strengthening of the Measures against companies engaged in fraudulent
practices;"JICA Anti-Corruption Guidance" 64;
Measures for strengthening compliance by companies;
Further encouragement to the government of partner countries; andStrengthening of partner countries' system of governance and support for the
improvement of their capabilities to prevent fraud and corruption

62

http://www.mofa.go.jp/mofaj/gaiko/oda/kaikaku/f_boshi/201410_kyouka.html

63

See Chapter 3.4, Section (4)64

http://www2.jica.go.jp/ja/odainfo/pdf/guidance.pdf

48

4.3

Trends of Legal Systems and Applications in Foreign Countries(1)

Overview of Legal Systems and Applications in Foreign Countries
As legal systems of and the state of applications in signatory countries to the Convention
are followed up on by the OECD as required, information on countries of interest can beobtained via the OECD 65.
Additionally, the Ministry of Foreign Affairs of Japan conducted an investigation on therelevant legal systems of several countries in June 2003. As a result, it was found thatindictments had been reported in five countries, namely, the United States, Korea, Poland,
Canada and Sweden 66.

(2)

OECD Guidelines for Multinational Enterprises 67
In May 2011, the "OECD Guidelines for Multinational Enterprises" was adopted by thegovernments of the 42 member countries that participate in the "OECD Declaration andDecisions on International Investment and Multinational Enterprises" at the 2011 OECD
Ministerial Council Meeting. The OECD Guidelines also refer to seven items of actionthat multinational enterprises should take to prevent bribery.
For example, the OECD Guidelines set out the following matters as recommendations
which can serve as reference for enterprises in their attempt to combat bribery:
Not offer, promise or give undue pecuniary or other advantage to public officials or
the employees of business partners. Likewise, enterprises should not request,
agree to or accept undue pecuniary or other advantage from public officials or theemployees of business partners. Enterprises should not use third parties such as
agents and other intermediaries, consultants, representatives, distributors, consortia,
contractors and suppliers and joint venture partners for channelling undue
pecuniary or other advantages to public officials, or to employees of their business
partners or to their relatives or business associates.

Develop and adopt adequate internal controls, ethics and compliance programmes
or measures for preventing and detecting bribery, developed on the basis of a risk
assessment addressing the individual circumstances of an enterprise, in particular
the bribery risks facing the enterprise (such as its geographical and industrial sectorof operation). These internal controls, ethics and compliance programmes ormeasures should include a system of financial and accounting procedures,

65

For information on the evaluations by the OECD, refer to: http://www.oecd.org/document/21/0,2340,en_26
49_34855_2022613_1_1_1_1,00.html (Phase 1 evaluation)
http://www.oecd.org/document/27/0,2340,en_2649_34855_2022939_1_1_1_1,00.html (Phase 2 evaluation)
http://www.oecd.org/document/31/0,3343,en_2649_34859_44684959_1_1_1_1,00.html (Phase 3 evaluation)
66
According to this study, they include 45 indictments in the United States, two in Korea, one in Sweden and one in
Canada (as of March 2003 for Korea and January 2002 for the rest).
67
http://www.mofa.go.jp/mofaj/gaiko/csr/housin.html. The provisional translation of the said policy is available at:
http://www.mofa.go.jp/mofaj/gaiko/csr/pdfs/takoku_ho.pdf. The brochure of the said policy is available at:
http://www.mofa.go.jp/mofaj/gaiko/csr/pdfs/takoku_pa.pdf.

49

including a system of internal controls, reasonably designed to ensure themaintenance of fair and accurate books, records, and accounts, to ensure that theycannot be used for the purpose of bribing or hiding bribery. Such individual
circumstances and bribery risks should be regularly monitored and re-assessed asnecessary to ensure the enterprise’s internal controls, ethics and complianceprogramme or measures are adapted and continue to be effective, and to mitigate
the risk of enterprises becoming complicit in bribery, bribe solicitation andextortion.
END OF THE DOCUMENT.

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