This country-specific Q&A provides an overview of Bribery & Corruption laws and regulations applicable in Japan.
What is the legal framework (legislation/regulations) governing bribery and corruption in your jurisdiction?
In Japan, both domestic and foreign bribery and corruption are regulated. While the Penal Code (Act No 45 of 1907) (the “Penal Code”) regulates domestic bribery of public officials, the Unfair Competition Prevention Act (Act No 47 of 1993) (the “UCPA”) regulates bribery of foreign public officials.
Private bribery is not currently prohibited by these laws, but the Companies Act prohibits giving of a bribe to, or acceptance of a bribe by, a director or auditor; giving or accepting a bribe in relation to the exercise of rights of shareholders; and giving of benefits by a director or auditor at the cost of a company or its subsidiaries. In addition, the Financial Instruments and Exchange Act punishes the giving of a bribe to, or the acceptance of a bribe by, an officer or official of a financial instruments business operator. Furthermore, depending on the circumstances, private commercial bribery could fall under other categories of crime, such as breach of trust (Article 247 of the Penal Code). This article discusses bribery and corruption of public officials unless otherwise noted.
(B) Bribery of domestic public officials
Bribery of domestic public officials is prohibited mainly under the Penal Code. Under the Code, a public official shall be subject to criminal liability who, in connection with his/her duties: (i) accepts, solicits, or promises to accept a bribe (hereinafter simply referred to as “accept a bribe”) (Article 197); (ii) causes a bribe to be given to a third party (Article 197-2); (iii) acts illegally or omits to act appropriately after/before committing a crime under one of the preceding two Articles (Article 197-3); or (iv) accepts a bribe for exertion of influence on other public officers (Article 197-4). A person who gives, offers, or promises to give the bribe above (hereinafter simply referred to as “bribe”) also shall be subject to criminal liability.
The National Public Service Ethics Act, and regulations issued thereunder, provide guidelines regarding gifts and other kinds of benefits that a public official may accept. Members of the Diet and local assemblies are prohibited from accepting bribes for exerting influence in relation to transactions in which a governmental organization is a party, under the Act on Punishment of Public Officials’ Profiting by Exerting Influence. The Political Fund Control Act regulates political contributions (Please see Answer 8 for details). In addition, there are other laws and regulations regulating bribery of ‘quasi-public officials’ as well as private persons who are performing duties relating to the public interest, as explained in Answer 4.
(C) Bribery of foreign public officials
Bribery of foreign public officials is regulated under the UCPA. Under the UCPA, offering, promising, or giving bribes to foreign officials in order to obtain an improper business advantage in the conduct of international business is prohibited (Article 18). Under the UCPA, “the principle of territorial jurisdiction” is adopted; if any elements constituting bribery have been committed in Japan, or the result of bribery has occurred in Japan, regardless of the nationality of the person who commits the bribery, this will be subject to punishment as bribery of a foreign public official. In addition, “the principle of nationality” is also adopted; a Japanese person who bribes a foreign official outside Japan could be subject to punishment.
A bill to amend the UCPA was submitted to the Diet on March 10, 2023. The proposed amendments would increase statutory penalties for natural persons and legal entities and expand the scope of punishment to include bribery by non-Japanese officers and employees of Japanese companies overseas.
Which authorities have jurisdiction to investigate and prosecute bribery in your jurisdiction?
In general, penal cases are investigated by police agencies and, based on the investigation, prosecuted by the public prosecutor. Bribery cases, especially involving notable people such as members of the Diet are sometimes directly investigated and prosecuted by the public prosecutor.
How is ‘bribery’ (or its equivalent) defined?
Under court precedents, ‘bribery’ is defined to be a benefit as unjust remuneration for the services of a public officer. The ‘benefit’ is not limited to property benefits or tangible benefits but could include anything that satisfies one’s desires or demands such as hospitality, travel, and entertainment expenses in one’s professional position.
In accordance with the precedent cases, the benefits for public officials which could be within the extent of “social courtesy” would not fall under the bribery. However, there is no clear Safe Harbor Rules about social courtesy.
Does the law distinguish between bribery of a public official and bribery of private persons? If so, how is ‘public official’ defined? Are there different definitions for bribery of a public official and bribery of a private person?
The laws of Japan in principle distinguish between bribery of a public official and bribery of private persons.
A ‘public official’ is defined under the Penal Code as ‘a national or local government official, a member of an assembly or committee, or other employee engaged in the performance of public duties in accordance with laws and regulations (Article 7(1) of the Penal Code).’ Not only current public officials, but persons who have resigned as public officials or who will become public officials are subject to the criminal penalty if they are bribed in relation to their duties.
In the case of a private person performing a particular service related to a public interest such as the Bank of Japan, such person is treated as a ‘quasi-public official’ and regulated in accordance with the same laws and regulations that are applicable to public officials, including the Penal Code.
Other than those above, examples of such quasi-public officials include officers and employees, national universities, state-owned enterprises, and notaries public.
‘Foreign Public Officer’ under Article 18 of the UCPA is defined as (i) a person engaged in public service for the national or local government of a foreign state, (ii) a person engaged in the business affairs of an entity established under a special foreign law to carry out specific business affairs in the public interest, etc.
Besides, even if a private person is not categorized as a public official or quasi-public official, bribes to directors, auditors, and others may be prohibited. This is addressed in Answer 1.
What are the civil consequences of bribery in your jurisdiction?
An officer or employee of a company who bribes a public official has violated the law and is subject to dismissal, termination or other disciplinary actions. This officer or employee is also subject to civil liability for damages caused to the company as a result of the bribe. Public officials who take bribes will be punished according to the rules of their organization.
What are the criminal consequences of bribery in your jurisdiction?
Under the Penal Code,(i) a public official who accepts a bribe is subject to imprisonment for not more than seven years (aggravated types of bribery stipulated in Article 197-3(1) and (2) of the Penal Code are punishable by imprisonment from one year to twenty years) with forfeiture of such bribe or collection of an equivalent amount; and (ii) a person who bribes shall be punished by imprisonment for not more than three years or a fine not exceeding JPY 2.5 million.
Under the UCPA, a natural person who bribes a foreign public official shall be subject to (a) imprisonment for not more than five years or a fine not exceeding JPY 5 million (or both). In addition, the UCPA provides for “dual criminal liability”, so a fine not exceeding JPY 300 million for a legal entity (when an officer, etc. of a legal entity commits the crime in relation to the business of the entity) (Article 21(2) of the UCPA).
Does the law place any restrictions on hospitality, travel and entertainment expenses? Are there specific regulations restricting such expenses for foreign public officials? Are there specific monetary limits?
As explained in Answer 3, under the Penal Code, hospitality, travel, and entertainment may fall within the definition of “bribery” under Japanese laws: on the other hand, benefits for public officials such as these could be within the extent of the “social courtesy” and therefore would not be bribery. However, laws that regulate bribery, including the Penal Code, do not set quantitative or qualitative limitations on such benefits.
Other than the Penal Code, the National Public Service Ethics Act, and regulations issued thereunder, place restrictions on national public officials regarding hospitality, travel, and entertainment from interested parties. Under the Act, such officials may not accept entertainment or treats from interested parties or travel (excluding business travel for public service purposes) with interested parties.
In addition to these, national public officials are prohibited from playing golf or traveling with interested parties with even if splitting the bill with each other.
Are political contributions regulated? If so, please provide details.
Political contributions are regulated under the Political Fund Control Act(the “PFCA”). Under the PFCA, only political parties, branches of political parties, and political fund-managing organizations appointed by political parties are eligible to accept contributions in relation to political activities from corporations and other organizations.
The PFCA requires political organizations to submit annual reports on revenue and expenses to the Ministry of General Affairs or a Local Election Management Council (depending on whether the elections are parliamentary or local).
In addition, the PFCA places a limitation on the annual amount of such contributions in relation to the political activities according to the size of the corporation or organization. Individuals can donate a political contribution to candidates for elected public office and/or political organizations, and the total annual amount of such donations is similarly limited to a certain amount.
Non-Japanese citizens and entities, and organizations in which the majority of members are non-Japanese citizens or entities (with the exception of Japanese listed companies listed for more than five consecutive years), are prohibited from making donations in connection with any political activity.
Are facilitation payments regulated? If not, what is the general approach to such payments?
There are no laws or regulations that specifically address ‘facilitation payments’ in Japan. Therefore, ‘facilitation payments’ are regulated as bribery as long as the elements of bribery are met under the relevant laws, including the Penal Code and UCPA.
According to the Guidelines for the Prevention of Bribery of Foreign Public Officials (the “METI Guidelines”; most recently revised in May 2021) published by the Ministry of Economy, Trade and Industry, a (small) facilitation payment, even for the purpose of avoiding discriminatory disadvantages, is likely to constitute the giving of benefits ‘to obtain a wrongful gain in businesses for oneself. Therefore, it is desirable that internal rules specify that (small) facilitation payments are basically prohibited.
Are there any defences available to the bribery and corruption offences in your jurisdiction?
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. According to the METI Guidelines, in a relation to foreign public officials, for instance, the 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 a minimum payment necessary to avert actual infringement of life or body.
As explained in Answer 6, the UCPA provides for “dual criminal liability”. The legal entity, a member of which bribed a foreign official, is exempt from legal liability if the legal entity is not negligent.
According to the METI Guidelines, a legal entity may not be found to be non-negligent merely by taking general or abstract preventive measures. In order for a corporation to be found non-negligent, it is required to have taken the necessary precautions such as actively and specifically instructing its employees to prevent violations.
Are compliance programs a mitigating factor to reduce/eliminate liability for bribery offences in your jurisdiction?
There is no statute that explicitly provides that compliance programs should be considered as a mitigating factor to reduce or eliminate individual criminal liability for bribery for domestic public officials in Japan.
As explained in Answer 10, the requirement for a legal entity to be found non-negligent is stringent and just the introduction of a compliance program in a legal entity does not enable it to reduce or eliminate its legal liability under the UCPA.
Who may be held liable for bribery? Only individuals, or also corporate entities?
Under Japanese law, in general, only a natural person is subject to criminal liability or equivalent, and only when dual criminal liability (which is explained in Answer 6) is provided, can the legal entity be held liable.
A legal entity is not criminally liable for bribery of domestic public officials because the dual criminal liability as to bribery is not provided under the Penal Code. On the other hand, a legal entity can be subject to bribery of foreign public officials because dual criminal liability for bribery is provided under the UCPA.
Has the government published any guidance advising how to comply with anti-corruption and bribery laws in your jurisdiction?
As explained in Answers 9 and 12, the METI Guidelines have been published with respect to anti-corruption and bribery of foreign public officials. The METI Guidelines show the compliance system for prevention of bribery of foreign public officials by business. These perspectives are (i) the importance of the attitude and message from top management, (ii) a risk-based approach, and (iii) the necessity of taking action at a subsidiary level based on the bribery risk.
Does the law in your jurisdiction provide protection to whistle-blowers?
The Whistleblower Protection Act (the “WPA”) protects whistle-blowers. The WPA is to protect whistle-blowers by providing for nullity of dismissal and prohibition of disadvantageous treatment of whistleblowers on the grounds of whistleblowing disclosure. In addition, the WPA provides for various measures that an enterprise or administrative organ should take concerning whistleblowing disclosures.
How common are government authority investigations into allegations of bribery? How effective are they in leading to prosecutions of individuals and corporates?
In recent years, the police have investigated around 40 domestic bribery cases per year. Because of the Covid-19 pandemic, the number of arrests had been sluggish in recent years. However, 2021 had the highest number of arrests of the last 10 years.
Even though investigations of foreign bribery cases have been rare in Japan, authorities are now paying more attention to them than ever before. In 2022, a large-scale bribery case related to the Olympic Games was uncovered.
What are the recent and emerging trends in investigations and enforcement in your jurisdiction? Has the Covid-19 pandemic had any ongoing impact and, if so, what?
In June 2018, the amendment to the Code of Criminal Procedure (the “CCP”) came into effect and the procedures for agreement and consultation (“the Japanese Plea-Bargaining System”) was introduced in Japan.
Under the Japanese Plea-Bargaining System, a prosecutor may enter into an agreement with the suspect or defendant, including legal entities, with the consent of the attorney, under which the prosecutor is authorized to agree to drop or reduce criminal charges or provide favorable treatment with respect to certain types of crimes. The Japanese Plea-Bargaining System can be used for both domestic bribery and bribery of foreign public officials. However, the Japanese Plea-Bargaining System has been used in just a few cases.
Bribery and corruption are case types for which objective evidence is difficult to discover. In addition, during the COVID-19 pandemic, investigators were required to refrain from long interrogations and domicile searches. This made investigations into bribery and corruption even more difficult. However, with the recent easing of the COVID-19 epidemic, investigations into bribery and corruption are expected to become more active.
Is there a process of judicial review for challenging government authority action and decisions? If so, please describe key features of this process and remedy.
Regarding the prosecutor’s decisions, the prosecutor has broad discretion to decide whether to prosecute a bribery case. However, the Prosecutorial Board, the judicial review board of the prosecution, can review the prosecutor’s decision of non-prosecution and recommend that the prosecutor prosecute the case.
Regarding the judgment by the court, a defendant may appeal a conviction rendered by the court.
Specifically, a judgment rendered by a district court may be appealed to a higher court. Appeals to the higher courts are allowed for improper judgments, such as failure to follow procedural law, errors in fact-finding, or errors in the application of the law.
A judgment rendered by the higher courts may be appealed to the Supreme Court, which is the highest court of appeal. Appeals to the Supreme Court are allowed only in cases of constitutional or precedential violations, but the Supreme Court has the discretion to set aside decisions of the higher courts for errors of law, errors in fact-finding, and improper judgments.
Are there any planned developments or reforms of bribery and anti-corruption laws in your jurisdiction?
There are no specific plans to amend the Penal Code regarding bribes to domestic public officials.
On the other hand, the UCPA on bribing foreign public officials is likely to be amended in the future. Under Article 12 of the OECD Convention, the implementation of the Convention by OECD countries is regularly reviewed. Japan has accepted a recommendation that (1) how sanctions should be applied to natural persons, (2) how sanctions should be applied to legal entities, (3) how the statute of limitations for prosecution should be applied, and (4) how jurisdiction should be applied to legal entities, should all be reviewed as soon as possible. In response to the recommendation, Japan has held several study groups to review the UCPA. Therefore, it is likely that the UCPA will be revised in the future. In fact, a bill to amend the UCPA has already been submitted to the Diet. Please see Answer 1 for details.
To which international anti-corruption conventions is your country party?
In 1997, Japan ratified the Convention on the Prevention of Bribery of Foreign Public Officials in International Business Transactions (OECD Convention) of the Organization for Economic Cooperation and Development (OECD).
When Japan ratified the OECD Convention, the UCPA was amended in 1998 to treat bribery of foreign public officials as a crime. Japan is also a signatory to the United Nations Convention Against Corruption (UNCAC), which includes provisions requiring legal action against the acceptance of bribes by domestic public officials and bribery of domestic and foreign officials.
Do you have a concept of legal privilege in your jurisdiction which applies to lawyer-led investigations? If so, please provide details on the extent of that protection.
In Japan, records of confidential communications between a company and an attorney that meet specified conditions are exempted from investigation in administrative investigation procedures by the Fair-Trade Commission, but there is no so-called attorney-client privilege in any legal process including criminal procedures.
However, attorneys are given the right to refuse seizure or testimony and can utilize these rights for protecting attorney-client communications. More specifically, the CCP provides that an attorney (including a foreign attorney registered in Japan) may refuse the seizure of articles containing confidential information concerning others which he/she has been entrusted with and retains or possesses in the course of his/her duties, and may refuse to give testimony in a trial on matters pertaining to confidential information concerning others which he/she came to know through entrusted professional conduct.
How much importance does your government place on tackling bribery and corruption? How do you think your jurisdiction’s approach to anti-bribery and corruption compares on an international scale?
According to Corruption Perceptions Index 2022, Japan is the third cleanest country in Asia and the 18th cleanest in the world. Therefore, Japan does place high importance on tackling bribery and corruption compared with other countries.
In addition, as explained in Answer 18, Japan is preparing to amend the UCPA in response to recommendations made under the OECD. Therefore, Japan is expected to become an even cleaner country in the future.
Generally how serious are organisations in your country about preventing bribery and corruption?
With growing consumer awareness and the internationalization of corporate activities, corporate social responsibility is becoming increasingly important. Accordingly, corporate compliance awareness has been further fostered. In fact, quite a few companies in Japan have established internal rules and implemented internal training about preventing bribery and corruption. Some large companies have implemented more effective preventive measures, including the global compliance programs, the global whistle-blowing systems, and the global auditing systems.
Nevertheless, a large-scale bribery case related to the 2022 Olympic Games has been uncovered.
It is expected that companies will take bribery and corruption more seriously and implement effective preventive measures against them.
What are the biggest challenges enforcement agencies/regulators face when investigating and prosecuting cases of bribery and corruption in your jurisdiction?
There are some difficulties when investigating and prosecuting cases with bribery and corruption issues, but we believe that one of the biggest challenges is the clandestine nature of bribery and corruption.
In recent years, the legality of long-term detention and interrogation and the credibility of statement evidence in such cases have been called into question. For this reason, investigative authorities have placed a greater emphasis on objective evidence. However, it is difficult to discover objective evidence in the cases of bribery and corruption because of the clandestine nature thereof. Therefore, bribery and corruption are difficult to uncover and prosecute.
In addition, bribery cases involving foreign public officials generally involve evidence located overseas, since the crime scene is often overseas. Japanese investigative authorities do not have the authority to investigate overseas. This makes bribery cases against foreign public officials even more difficult to uncover and prosecute.
What are the biggest challenges businesses face when investigating bribery and corruption issues?
As explained in Answer 23, we believe that one of the biggest challenges is the clandestine nature of bribery and corruption. This analysis is also applied to businesses.
Bribery and corruption are difficult to detect and prevent by the members of businesses.
Especially when an executive or president engages in bribery, which is very difficult to prevent. This was also pointed out in the report of the third-party committee’s investigation into a large-scale bribery case related to the Olympics.
Bribery by foreign subsidiaries is even more difficult to prevent or detect.
What do you consider will be the most significant corruption-related challenges posed to businesses in your jurisdiction over the next 18 months?
We believe that the most significant corruption-related challenge for businesses in Japan is the complexity of the root causes of corruption. In the Olympic-related bribery case mentioned in Answer 24, the investigation report stated that the president committed bribery and that the legal department and equivalent overlooked and hesitated to internally report it.
This case suggests that the bribery scandal was caused due to a complex set of problems related to governance, internal control, corporate culture and awareness of compliance. Based on this suggestion, it is important for businesses to strengthen the supervisory functions of the Board of Directors, Outside Directors, and the Legal Department and to provide continuous compliance training about bribery and corruption to not only employees but also officers.
How would you improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption?
The METI Guidelines have further clarified the legal framework relating to bribery of foreign public officials.
Also, as explained in Answer 18, the UCPA on bribing foreign public officials is likely to be amended in response to a recommendation on Article 12 of the OECD Convention and a bill to amend the UCPA has already been submitted to the Diet.
It is expected that companies will take various measures to prevent bribery and corruption based on the latest laws and the METI Guidelines.
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