Is Japan Finally Moving Forward on Anti-Bribery Enforcement?

Officials at a Japanese company were convicted of paying bribes for a railway contract in Vietnam in one of Japan’s first successful foreign bribery prosecutions.

Japan is one of the oldest signatories to the OECD Convention on Combating Bribery of Foreign Public Officials — and also one of the worst performing. Since signing the Convention in 1999, the Japanese government has only prosecuted three bribery cases. In addition, the Japanese Diet has yet to ratify the 2003 UN Convention against Corruption, making it one of the two remaining industrialized economies that has not committed to taking basic steps to fighting corruption. As the world’s third largest economy, the Japan’s abysmal track record at  tackling bribery and corruption has been a serious drag on global efforts to boost business integrity and transparency.

But, against a background of international pressure, this attitude may be changing. This past summer, the OECD Working Group on Bribery scolded Japan for not taking proper measures to proactively detect, investigate, and prosecute cases of foreign bribery by Japanese companies. Pointing out that Japan’s low level of enforcement is a serious concern, the OECD set specific deadlines for the government to take action towards changing the status quo.

Also since the summer,  the Japanese judiciary has been unusually busy on the anti-corruption front. Prosecutors took on three executives of a local railway consulting company for allegedly bribing civil servants in Vietnam, Indonesia, and Uzbekistan with over $1.5 million in payments aimed at winning contracts for Japanese international development projects in those countries. And at the first hearing for this case, one of the defendants – the former president of the company – admitted to court that he was involved in the bribes. In a separate case in July,  a Tokyo judge gave a former Japanese salesman for Deutsche Bank a suspended prison sentence of three years for bribing clients.

Such actions are a good start, but not enough to prove that Japan has changed course to begin fulfilling its commitment to the OECD Convention on Combating Bribery. To catch up with the rest of the world’s advanced economies, the Japanese government should strategically engage with local multinational companies and civil society to enforce both the UN and OECD conventions. “Many Japanese global companies are already working hard on anti-corruption issues internally,” said Aki Wakabayashi, the Chairperson for Transparency International-Japan (TI-J). “And they’re eager to do more. TI-J, along with the Japanese business society, strongly urge our government to move rapidly and meet its commitments it has already taken as a member of the G20.”

Japan’s anemic approach to corruption stands in contrast to its neighbor and fellow G20 member, China. Asia’s other big economic player has been proactively pursuing anti-corruption cases. Ever since the President Xi Jinping announced the Communist Party’s intention to crack down on corruption, the Chinese authorities have been taking serious steps.

Taken at face value, Chinese prosectors’ recent actions put the country in the lead in Asia when it comes to anti-corruption enforcement actions. Just last month China fined the British company GlaxoSmithKline nearly $500 million. The Party is also addressing domestic corruption issues: they put the country’s third most powerful leader – Zhou Yongkang, the former head of security – under investigation for illegal business operations this past summer. A senior official with China’s economic planning ministry and his son are also under the spotlight for taking kickbacks for helping open a Toyota dealership in Guangzhou.

While cynics have questioned China’s anti-corruption agenda – arguing that it’s a way to discriminate against multinational companies and help domestic Chinese corporations compete in the market – there is no doubt that Beijing officials are showing signs they are taking serious steps to curb corruption in the country. Could Japan learn a lesson or two from its giant neighbor?

Maiko Nakagaki is a Program Officer for Global Programs at CIPE.