## (2) Ensuring Appropriate Procedures

In the implementation of aid, confirmation is made on whether consideration has been paid to the impact that project-implementing organizations elicit on the environment and local society, such as on the involuntary relocation of residents or infringements on the rights of native populations and women. For loan aid and technical cooperation, a vast range of views are acquired from advisors such as academics and NGOs, and guidelines are created in order to confirm considerations paid to the local environment and society. For grant aid, as well, assistance is provided based on the Grant Aid Screening Guidelines. In line with the launch of the new JICA in October 2008, efforts are being conducted to unify the structures of the old JICA and old JBIC guidelines (as of December 2009). These undertakings

## (3) Prevention of Fraud and Corruption

Given that Japan’s ODA comes from taxpayers’ money, fraudulent use of the funds provided for assistance must be avoided. Accordingly, the government and JICA work to ensure the transparency of procurement and other procedures.

During the procurement stage for ODA projects, tenders have been submitted by developing countries in accordance with guidelines. The results of these are verified by JICA, and steps are taken to increase transparency; not only is the name of the business receiving the order made public, but so too is the contract amount. In case improprieties are discovered relating to procurement or other stages of ODA project implementation, a mechanism has been set in place whereby firms that commit improprieties are disqualified 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, external audits are being implemented at JICA by accounting auditors. For grant aid, external audits for Grant Assistance for Grassroots Human Security Projects worth ¥3 million or more are obligatory in principle and are steadily implemented. lead to ensuring transparency, predictability, and accountability related to considerations of environmental problems.

In addition, a meeting of the Committee for the Appropriate Implementation of Grant Aid is held for grant aid projects to achieve more efficient and transparent ODA projects. The meeting consists of specialists from the fields of international finance, development economics, law, accounting, and information, as well as NGO-related parties. The opinions of these third parties are incorporated into the selection processes for grant aid projects. As well, for the effective and efficient implementation of aid, much effort is exerted for the appropriate and efficient procurement of equipment and consulting services in terms of quality and price.

With respect to the implementation of spot audits of 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, internal audits are conducted at JICA via sampling. For grant aid, as well, technical audits are being conducted.

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

Improprieties were revealed in ODA loan projects in Viet Nam, and in 2008 concerned parties in Japan were prosecuted and convicted. As a result, the issue was responded to harshly so as not to lose trust in ODA loans and ODA projects. The government and the former JBIC announced measures to disqualify the applicable firm as a tenderer for loan and grant aid projects for a period of 24 months. In addition, by that point JICA had already taken it off the list of registered consultants.

In response to this incident, the governments of Japan and Vietnam set up the Japan-Vietnam joint committee for