Cracking Down on Foreign Bribery: Japan Strengthens Laws and Prosecutions

TOKYO, JAPAN – The Unfair Competition Prevention Act (UCPA) in Japan prohibits bribery of foreign public officials, and recent trends show that Japanese authorities are paying more attention to corruption than ever before. The UCPA considers bribery of foreign public officials punishable when it is related to an international commercial transaction. This includes activities such as international trade and cross-border investment. The bribe must be provided to foreign public officials or others, and it must be made with the intention of obtaining illicit gains in business.

To establish a case of bribery, prosecutors must prove that the bribe was intended to influence the foreign public official’s actions or decisions in connection with their duties. The UCPA not only punishes the act of giving a bribe but also the offering or promising of a bribe. While there is no provision that holds companies liable for failing to prevent bribery of a foreign public official, prosecutors may consider such failure as a disadvantageous factor when deciding whether to prosecute the company.

Under the UCPA, a foreign public official is defined as someone who engages in public service for a foreign state, local authority, or an entity established under a special foreign law. Employees of state-owned or state-controlled companies may fall into this category as well. However, private organizations and international organizations constituted by private organizations are not covered by the UCPA’s foreign bribery regulations.

The UCPA does not differentiate between gifts, travel expenses, meals, or entertainment and considers the provision of any such benefits to foreign officials as illegal bribery. Facilitating or “grease” payments to foreign officials are not permitted under the UCPA either. Similarly, the laws prohibit payments through intermediaries or third parties to foreign public officials.

Both individuals and companies can be held liable under the UCPA for bribery of foreign public officials. The UCPA does not explicitly prohibit private commercial bribery. There are also no statutory defenses or exemptions available to those accused of foreign bribery violations.

Enforcement of the foreign bribery laws is carried out by the public prosecutor’s offices and police departments of each prefecture in Japan. Recent landmark cases have highlighted the prosecution of individuals and companies for foreign bribery. The penalties for individuals can include imprisonment for up to five years or fines of up to ¥5 million, while companies can be fined up to ¥300 million. However, recent amendments to the UCPA have increased the penalties, with individuals facing imprisonment for up to ten years or fines of up to ¥3 million, and companies facing fines of up to ¥1 billion.

Foreign companies can be prosecuted for foreign bribery if the act occurred within the territory of Japan or if a Japanese national commits the bribery on behalf of the foreign company. The jurisdictional basis for prosecuting foreign companies may pose procedural difficulties if the company has no place of business or business activities in Japan.

In response to recommendations from the OECD Working Group, Japan has made efforts to detect and investigate foreign bribery cases more proactively. The country aims to strengthen its enforcement and punishment of foreign bribery violations. Recent investigations have also involved foreign companies and resulted in significant fines under the US Foreign Corrupt Practices Act (FCPA). The enforcement of foreign bribery laws continues to evolve, with a focus on increasing transparency and combating corruption.