Japan has made little effort to combat bribery of foreign officials involved in international business transactions...

"It is not that Japan has been lax in enforcing our laws; it is that sometimes our definition of offences can be different, owing to cultural and other differences. We will consider the OECD's recommendations seriously."

The Paris-based Organization for Economic Cooperation and Development issued a report Thursday calling on Japan to become more aggressive in investigating and prosecuting the bribing of foreign public officials and toughen the legislative framework to counter such practices. The demands were primarily based on concerns over the possible bribery of foreign public officials by Japanese corporations to win contracts in connection with Japan's official development assistance programs or public works projects by foreign governments. In the report, the OECD called on Japan to assess legal and procedural blocks that thwart its effective investigation and prosecution of foreign bribery and to submit findings to the organization within six months.

It also demanded that Japan take a clearer stance on the issue by moving a clause criminalizing the bribery of foreign public officials from the Unfair Competition Prevention Law to the Penal Code. Last year, the OECD also called on Japan to address its situation after finding that the country had made insufficient efforts to enforce the OECD Convention on Combating the Bribery of Foreign Public Officials in International Business Transactions. The OECD was reviewing Japan's compliance from February based on its conclusion that Tokyo did not cooperate enough during a field review it conducted in the country in 2004.

Mulboyne wrote:Kyodo via Yahoo: OECD demands Japan address bribery of foreign public officials

kamome wrote:From the Japanese perspective, this all appears like Western imperialism. It wouldn't surprise me that prosecutors and officials resent the attempt to change their domestic laws.

cstaylor wrote:Japan should agree to the bribery regulations as soon as America and England shut off Echelon and stop passing foreign trade secrets to American competitors.

mr. sparkle wrote:What's Echelon?

vacuum cleaner.

Bridgestone Corp. may have given about 150 million yen in bribes to government officials of countries in South East Asia and Central and South America in return for a total of 20 deals for the firm's marine hoses and other products beginning in 2003, according to recently released results of the firm's in-house inspection. The firm is alleged to have formed an international cartel in the sale of the hoses, which are used to transfer oil from tankers to storage facilities. The major tire and chemical products manufacturer reported the results of the inspection to the Tokyo District Public Prosecutors Office on Tuesday as the bribes are highly likely to have violated the Unfair Competition Prevention Law. The law bans the bribing of foreign government officials to gain unfair advantage in business deals. According to the firm, when it made public details of the deals with governments in the countries of these regions, several percent of the value of each deal was added to commissions paid to local agents through Bridgestone's overseas arms. The inflated part of the commissions are suspected to have been handed to officials from governments and other official bodies.

Such acts are suspected to have been conducted in deals for marine hoses, fenders to protect vessels' sides, inflatable rubber dams and other products, all handled by Bridgestone's International Engineered Products Department. Bridgestone's sales of the three products average about 9 billion yen a year. The firm said about 10 employees in the department were suspected to have been involved in the acts. The inflated payments were officially approved by division chiefs and the head of the department as "extra commissions," Bridgestone said. The firm refused to disclose where each of the inappropriate payments specifically went, but said the payments were made in return for purchases of the firm's products or other favorable treatment.

According to the firm, the inappropriate payments are suspected to have begun more than 15 years ago. In connection with the alleged international cartel over the sale of marine hoses, Japanese, U.S. and European authorities launched a joint investigation in May. The U.S. Justice Department arrested the then head of Bridgestone's International Engineered Products Department. The Fair Trade Commission plans to punish five firms in Japan, Britain, France and Italy, including Bridgestone. Bridgestone launched an internal inquiry with the help of Japanese and U.S. lawyers in response to the discovery of the international cartel.

Mulboyne wrote:They have found someone to throw to the wolves:

Yomiuri: Bridgestone 'paid 150 mil. yen in bribes'

It is unforgivable for companies to simply accept the notion that providing kickbacks in developing countries is just another "business practice." The first arrest in a bribery case in connection with Japan's official development assistance projects should be a strong signal to Japanese companies to change their way of looking at things. Pacific Consultants International's accounting irregularities relating to Japanese projects to dispose of chemical weapons abandoned by the Imperial Japanese Army in China during World War II are now developing into an alleged violation of the Unfair Competition Prevention Law that prohibits bribing foreign government employees. According to investigations by the Tokyo District Public Prosecutors Office, a former president of PCI and others are suspected of handing over 90 million yen in 2003 and 2006, at the request of the head of the office in charge of a construction project to build an east-to-west trunk road in Ho Chi Minh City in Vietnam. This was the second arrest linked to bribery of foreign government officials after the Fukuoka Local Public Prosecutors Office filed a summary indictment last year against two former executives of electrical and engineering company Kyudenko Co.'s local subsidiary in the Philippines who had provided sets of golf clubs to two high-ranking officials at the Philippines National Bureau of Investigation. Japan is Vietnam's largest donor country, providing about 100 billion yen in ODA last fiscal year.

Tokyo-based PCI was previously found to have accounting irregularities of about 140 million yen that stemmed from padding expense claims for ODA projects in 16 countries, including Vietnam and Costa Rica, submitted to the Japan International Cooperation Agency. In Costa Rica, it was learned that PCI bribed influential local people. Monday's arrest may illuminate only some of the bribes paid by PCI in developing countries. We hope prosecutors will uncover the full scope of what PCI has done in winning bids. In 1998, member countries of the Organization for Economic Cooperation and Development, including Japan, as well as some nonmember countries concluded a convention to prevent the bribing of government officials. Along with that, Japan prepared the necessary domestic legislation by revising the Unfair Competition Prevention Law. In spite of that, bribery is rarely detected because it is difficult to gather the necessary information as well as to get cooperation from the foreign countries involved.

In 2002, Mitsui & Co., a major trading company, was suspected of bribing a high-ranking Mongolian government official by providing 1.3 million yen in cash in connection with an ODA project in that nation. At the time, prosecutors considered filing charges against the trading company under the Unfair Competition Prevention Law, but in the end decided not to proceed with the case. In contrast, bribery charges have been laid in about 100 cases in the United States since the OECD convention was enacted. Japan's accomplishments in this area have been outshone by a considerable degree, so much so that the OECD repeatedly recommended improvements were needed. It has also sought to have Japan take a more active approach to filing charges. It is almost impossible to eradicate corporate misconduct when government officials solicit bribes as in the PCI case, unless the recipient of the bribe is strictly punished in their own country. Meanwhile, companies should be aware that complying with such demands will lead the international community to lose trust in Japan. The government now is going to focus on ODA projects in Africa. To make good use of ODA as a valuable diplomatic tool, disciplined corporate behavior and strict oversight by the Foreign Ministry are indispensable.

A former Nishimatsu Construction Co. executive who was arrested on suspicion of embezzling some of the firm's slush funds said more than 400 million yen from the slush funds was used to win a construction contract in Thailand, sources said. The second-tier general contractor is suspected to have used the money to improve its performance on its overseas projects. Nishimatsu Construction illegally brought about 100 million yen to Japan from a total of 1 billion yen in slush funds amassed through the firm's Southeast Asian projects, sources said. Nishimatsu was one of the country's first general contractors to take part in overseas projects. Kazuhiko Takahara, a former vice manager of the company's overseas business department, became involved in projects in Asian nations after he was transferred to the company's overseas department from its U.S. office in 1990s, sources close to the company said...Before he was arrested, Takahara told the special investigation squad of the prosecutors office he had used more than 400 million yen to win the contract for a flood prevention tunnel construction project in fiscal 2003. The project was commissioned by the Bangkok Metropolitan Administration (BMA) in Thailand..."It's taken for granted [in Thailand] that bribes are used. We had local companies offer bribes. That's why we formed a joint venture with local companies," a former Nishimatsu executive said. Meanwhile, BMA investigated the bribery and concluded that no illegal activities had taken place. Nishimatsu Construction general affairs department officials also claimed that no illegal activities had taken place...more...

A Tokyo executive of a rubber products manufacturing company pleaded guilty and was sentenced to serve two years in jail and to pay an $80,000 criminal fine for participating in two conspiracies to rig bids and bribe foreign government officials affecting the sale of marine hose and other industrial rubber products manufactured by the company and sold throughout the world, the Department of Justice announced today. Misao Hioki, the former general manager of his company's International Engineered Products (IEP) Department, pleaded guilty today to charges contained in a two-count felony charge that was filed on Dec. 8, 2008, in U.S. District Court in Houston. Hioki was charged for his role in a conspiracy to rig bids, fix prices and allocate market shares of marine hose in the United States and elsewhere and also for his role in a conspiracy to violate the Foreign Corrupt Practices Act (FCPA) by making corrupt payments to government officials in Latin America and elsewhere to obtain and retain business. Hioki is the ninth individual to plead guilty in the marine hose bid-rigging investigation. He is the first individual to plead guilty in the FCPA conspiracy. Hioki agreed to cooperate fully in the Department's ongoing antitrust and FCPA investigations[url=http://www.marketwatch.com/news/story/Japanese-Executive-Pleads-Guilty-Sentenced/story.aspx?guid={B041A1B3-0234-4651-BE21-991895C78830}]...more..[/url]

The president of Nishimatsu Construction Co. was responsible for a scheme that provided shady funds to ruling and opposition politicians through two political organizations headed by former company executives, according to sources close to the company. Several senior officials of the Minato Ward, Tokyo-based second-tier general contractor reportedly have told the special investigation squad of the Tokyo District Public Prosecutors Office that President Mikio Kunisawa, 70, instructed his subordinates to consider setting up a political organization, according to the sources. The company in effect covered membership fees for joining the two political organizations, the sources said. This might have violated the Political Funds Control Law, as the law prohibits corporate donations made to groups other than political parties. The two political organizations, Shin Seiji Mondai Kenkyu-kai and Mirai Sangyo Kenkyu-kai, were established in 1995 and 1999, respectively.

According to the sources, bribery involving collusive relationships between politicians and construction firms came to the fore in 1993-94, making it difficult to make corporate donations. Kunisawa, who was executive managing director in charge of accounting and general affairs at Nishimatsu Construction at that time, allegedly told his subordinates to consider setting up a political organization. Among the subordinates was Takashi Utsunomiya, one of four people arrested Wednesday on suspicion of smuggling 70 million yen into Japan from abroad in violation of the Foreign Exchange and Foreign Trade Law. Utsunomiya, 67, is a former president of Shoei Real Estate, a subsidiary of Nishimatsu Construction. Utsunomiya, who reported directly to Kunisawa at that time, took a leading role in developing the scheme, the sources said. He consulted Kunisawa and negotiated with the former executive who later headed the first political organization, as well as listing senior officials as members of the political organization and making them pay "membership fees" to the group, the sources said. The company reimbursed the "members" for the payment by paying them an additional bonus.

In 1995, Shin Seiji Mondai Kenkyu-kai donated 11 million yen to politicians. The following year, this figure jumped to 66 million yen, which "posed a risk of the organization drawing attention," according to a senior official. To disperse the donations, the company set up the second political organization, which was headed by another former executive, the sources said. The two groups were dissolved in 2006. A total of 478 million yen was spent on donations to lawmakers and tickets for fund-raising parties under the names of the groups. This amount includes 14 million yen in donations made from 2004 to 2006 to the fund management organization of Democratic Party of Japan leader Ichiro Ozawa, and 3 million yen to that of former Prime Minister Yoshiro Mori. Utsunomiya served as the head of the corporate development department at Nishimatsu Construction for eight years from 1993 and was regarded as a close Kunisawa aide. Kunisawa was promoted from executive managing director to vice president in 1999 and to president in 2003. Nishimatsu Construction and Kunisawa did not respond to inquiries from The Yomiuri Shimbun on Thursday.