## (2) Ensuring Appropriate Procedures

When aid is provided, confirmation is made to ensure appropriate consideration has been paid to the impact that project-implementing organizations elicit on the environment and local society, such as the relocation of residents and the violation of the rights of indigenous people and women. Previously loan aid and technical cooperation, the Guidelines for Environmental and Social Considerations had been established based on the views of advisors such as academics and NGOs, and had been applied to those projects to protect the environment and local society. As for grant aid as well, assistance had been provided in accordance with the Grant Aid Screening Guidelines. In line with the launch of the new JICA in

## (3) Prevention of Fraud and Corruption

Given that Japan’s ODA is funded by taxpayers’ money, fraudulent use of funds provided through aid must not be allowed under any circumstances. Accordingly, the government and JICA work to ensure the transparency of procurement and other procedures.

At the procurement stage for ODA projects, tendering procedures are conducted by developing countries in accordance with the guidelines. After the verification of the results, to increase transparency JICA discloses information not only on the name of the contractee but also the contract amount. In case frauds are discovered relating to procurement or other stages of ODA project implementation, measures are to be taken to exclude companies engaged in the frauds from bidding or receiving contracts for projects for a certain period.

Efforts are also being made for auditing. These efforts include expanding external auditing, implementing spot audits, and taking measures to improve auditing based on audit results. With regard to external audits, they are being implemented at JICA by accounting auditors. Regarding grant aid, external audits of Grant Assistance for Grass-roots Human Security Projects worth ¥3 million or more must be conducted by outside auditors, and are being steadily implemented.

As for loan aid, a mechanism has been introduced for audits that can be conducted where necessary for projects agreed upon by the governments. For technical cooperation, JICA conducts internal audits via sampling. JICA also conducts technical audits of grant aid.

Japan has ratified the OECD Convention on October 2008, the previous guidelines of JICA and JBIC were integrated, and on April 1, 2010, the new JICA Guidelines for Environmental and Social Considerations were issued. These efforts make it possible to ensure transparency, predictability, and accountability related to consideration of environmental issues.

In addition, meetings of the Committee for the Appropriate Implementation of Development Cooperation, at which knowledgeable and experienced experts exchange views at the project screening stage, are open to the general public to improve the effectiveness of ODA projects, and to increase transparency.

Combating Bribery of Foreign Public Officials in International Business Transactions, and is strict in its fair handling of fraudulent business with foreign government parties, including the application of the Unfair Competition Prevention Act, in order to ensure trust toward ODA projects which use taxpayers' money as their main financial resource.

Improprieties were discovered in ODA loan projects in Vietnam and in 2008 persons concerned in a relevant Japanese company were prosecuted and convicted. To prevent the recurrence of similar fraud and corruption, an exploratory committee was established under the supervision of the Minister for Foreign Affairs, composed of external specialists. The committee submitted its report in September 2009. Based on this report, MOFA and JICA reviewed their guidelines to determine how measures should be imposed against companies engaged in fraudulent practices. In addition, a support structure was established to support overseas arms of Japanese companies through embassies and local JICA offices, thereby urging adherence to laws in related industries. Other initiatives include hosting seminars concerning international contract terms and conditions for Japanese companies, through the cooperation of industry associations, enhancing the involvement of JICA during the selection of consultants by partner countries, and holding discussions to prevent fraud and corruption with other donor countries. These efforts were compiled in February 2011.