JAPAN BIZLAW LITE 4 GAIJIN
BUSINESS WITH THE GOVERNMENT
To Corrupt, or Not to Corrupt? That is the Question.
(Caveat/Disclaimer)
This is just to make it clear from the outset that in this writer's experience Japan has a very clean government. Although political deals may be made at the top by politically powerful groups or businesses, I fail to see much difference in that sense from lobbying in the USA.
Even the most simple-minded business person knows that you need customers to profit, even to survive. And the biggest customer of all, in almost every country, is the government. The irony is that some of the poorest of countries have governments populated by some of the richest of businessmen. In the modern world, they can plunder their governments, steal from the poorest of the world and then blame their country's problems on the good old USA. Its standard operating procedures in most all those nations voting against the US at the United Nations.
I believe that one of the keys to Japan's economic success has been that when they have a problem, they try to figure out how they can resolve the problem, instead of blaming the problem on the USA.
As is the case with most of the wealthy nations, a clean government is another key to Japan's wealth. Japan has had a mixed record on this. It has improved and most dealings with government do not involve such transactions, except perhaps at the higher levels. Day to day dealings on normal transactions are virtually corruption free, certainly as compared to most of those developing nations which have "express services." The most notorious case was the fall of former Prime Minister Tanaka in the 1970s who took bribes from Lockheed. That case resulted in the US passing laws prohibiting American businessmen from bribing foreign government officials. Japan also tightened up on its corruption legislation. It was hardly a coincidence that Tanaka had been a kingpin in the Japanese construction industry. Most corruption in Japan, as in most corruption cases round the world, involves public works construction projects. The construction industry is unusually large in Japan for the size of its economy. Considering how big the Japanese economy is, that is quite an industry. Government public works projects.
The corruption problems happen when one way or another a government employee helps certain companies win projects. Another strategy is where the construction companies rig the bids and decide among themselves who will win the next contract. This particular problem usually does not involve government officials and is mostly handled by the Fair Trade Commission based on the Antimonopoly Law.
In this section we will discuss Japanese laws involving corruption of government officials.
One of the key concepts is that there are two sides to one act of corruption. There is the one giving the bribe and there is one receiving the bribe. Most of the emphasis has been on punishing the official receivng the bribe, but increasing attention has been given to those giving the bribe as well.
One of the problems is what constitutes bribery? Does throwing a birthday party for a government official mean bribery? If he is your dad, it does not. But if he works in the government agency with jurisdiction over your company, it probably does. One of the keys is thus understanding the motive for the bribe. Probably the easiest way to determine is if you expect to get an unfair advantage by making the bribe. The most common form of bribery is giving money, gifts, fancy entertainment or free services. In 2003 there was a strengthening of the rules for punishing those giving bribes, not just those receiving bribes. Of course many of these activities result in violation of criminal laws, fines and prison terms for the individual perpetrators and most importantly for corporations, they can be banned on a national basis from participating in government projects.
As a result of a series of bribery scandals involving government officials in the early 1990s, in 1999 Japan enacted the Government Employees' Logic Law. Based on that law, a cabinet order was also issued for Government Employees' Logic. A kind of set of ehtical standards on how government employees should think. Inappropriate activities by government employees were widely regulated. Some of these new restrictions also expand their application to the ordinary employees of corporations, not just executives.
The Relationship Between Receiving Bribes and Giving Bribes.
According to Japanese criminal law, it is a crime for a Japanese government employee to receive or demand a bribe in relation to their work. In theory there are seven types of crimes for receiving bribes. There is the simple bribe; an aggravated bribe, a bribe in advance (pre-event); a bribe later (post-event); a bribe given to a third party; an intermediated bribe; and an entrusted bribe. Penalties are provided for each of these types of bribes.
The crime of bribery is established when a bribe is received, demanded or promised. A bribe is also committed when, having received a request for an inappropriate act a bribe is received by a third party or when a third party public employee is made to commit an inappropriate act.
In certain cases, retirees and those leaving government employ can also be found to have been bribed. Failure to act can be just as culpable as committing an inappropriate act. If one fails to carry out acts regarded as part of their duties in exchange for some quid-pro-quo, then there is a bribery problem.
In all such cases, the one giving the bribe is also criminally culpable.
The courts have also taken an expanded interpretation when it comes to the requirement that the government employee do something in relation to their work. It is not restricted only to matters where the employee has official control over a matter, it is also expanded to cover where the employee has actual control in fact.
The bribe itself is not limited to just giving money. It basically encompasses anything that some party desires. Japanese society has customs of giving gifts for different occasions such as certain holidays, birthdays, weddings etc. In theory there may not be problems if that is the only purpose of the gift. But if there is the slightest hint that the gift is to gain some kind of advantage with the official, it is probably inadvisable.
With the enactment of the Government Employees' Logic Law in April, 2000, and the pertinent regulations then following, even such innocent sounding activities as taking a government employee out to a dinner or on a golf trip are now probably in violation of the law. The new regulations provide a detailed listed of violating activities. Government officials are prohibited from gifts, meals, services entertainment, travel, etc. The law also provides that for any government employer in the position of assistant section chief or higher and who receives any gift over 5000 yen must report it to the head of his agency. If it exceeds 20,000 yen, it must be publicly disclosed.
Government employees violating these provisions can receive warnings, salary reductions, suspensions or even dismissal.
More specifically the Government Employees' Logic regulations ban the following:
As performed by Interested Parties (businesess)
---Giving monies, parts, real estate
---Lending money
---Gratis provision of services
---Gratis lending of products or real estate
---Transferring shares of unlisted companies
---Banquet meetings
As performed together with Interested Parties (businesses)
---Golf, mahjong and other games
---Meals
---Travel
As performed by parties other than Interested Parties
---Passing on Invoices, and other bills
Related Parties? What are They?
The Government Employees' Logic regulations define Related Parties as follows:
---Businesses which receive licenses or authorizations from the government.
---Businesses which receive subsidies from the government
---Businesses which are inspected, audited or examined by the government
---Businesses which are the target of "administrative guidance"
---Businesses which are under the jurisdiction of government ministries or the cabinet
To Corrupt, or Not to Corrupt? That is the Question.
(Caveat/Disclaimer)
This is just to make it clear from the outset that in this writer's experience Japan has a very clean government. Although political deals may be made at the top by politically powerful groups or businesses, I fail to see much difference in that sense from lobbying in the USA.
Even the most simple-minded business person knows that you need customers to profit, even to survive. And the biggest customer of all, in almost every country, is the government. The irony is that some of the poorest of countries have governments populated by some of the richest of businessmen. In the modern world, they can plunder their governments, steal from the poorest of the world and then blame their country's problems on the good old USA. Its standard operating procedures in most all those nations voting against the US at the United Nations.
I believe that one of the keys to Japan's economic success has been that when they have a problem, they try to figure out how they can resolve the problem, instead of blaming the problem on the USA.
As is the case with most of the wealthy nations, a clean government is another key to Japan's wealth. Japan has had a mixed record on this. It has improved and most dealings with government do not involve such transactions, except perhaps at the higher levels. Day to day dealings on normal transactions are virtually corruption free, certainly as compared to most of those developing nations which have "express services." The most notorious case was the fall of former Prime Minister Tanaka in the 1970s who took bribes from Lockheed. That case resulted in the US passing laws prohibiting American businessmen from bribing foreign government officials. Japan also tightened up on its corruption legislation. It was hardly a coincidence that Tanaka had been a kingpin in the Japanese construction industry. Most corruption in Japan, as in most corruption cases round the world, involves public works construction projects. The construction industry is unusually large in Japan for the size of its economy. Considering how big the Japanese economy is, that is quite an industry. Government public works projects.
The corruption problems happen when one way or another a government employee helps certain companies win projects. Another strategy is where the construction companies rig the bids and decide among themselves who will win the next contract. This particular problem usually does not involve government officials and is mostly handled by the Fair Trade Commission based on the Antimonopoly Law.
In this section we will discuss Japanese laws involving corruption of government officials.
One of the key concepts is that there are two sides to one act of corruption. There is the one giving the bribe and there is one receiving the bribe. Most of the emphasis has been on punishing the official receivng the bribe, but increasing attention has been given to those giving the bribe as well.
One of the problems is what constitutes bribery? Does throwing a birthday party for a government official mean bribery? If he is your dad, it does not. But if he works in the government agency with jurisdiction over your company, it probably does. One of the keys is thus understanding the motive for the bribe. Probably the easiest way to determine is if you expect to get an unfair advantage by making the bribe. The most common form of bribery is giving money, gifts, fancy entertainment or free services. In 2003 there was a strengthening of the rules for punishing those giving bribes, not just those receiving bribes. Of course many of these activities result in violation of criminal laws, fines and prison terms for the individual perpetrators and most importantly for corporations, they can be banned on a national basis from participating in government projects.
As a result of a series of bribery scandals involving government officials in the early 1990s, in 1999 Japan enacted the Government Employees' Logic Law. Based on that law, a cabinet order was also issued for Government Employees' Logic. A kind of set of ehtical standards on how government employees should think. Inappropriate activities by government employees were widely regulated. Some of these new restrictions also expand their application to the ordinary employees of corporations, not just executives.
The Relationship Between Receiving Bribes and Giving Bribes.
According to Japanese criminal law, it is a crime for a Japanese government employee to receive or demand a bribe in relation to their work. In theory there are seven types of crimes for receiving bribes. There is the simple bribe; an aggravated bribe, a bribe in advance (pre-event); a bribe later (post-event); a bribe given to a third party; an intermediated bribe; and an entrusted bribe. Penalties are provided for each of these types of bribes.
The crime of bribery is established when a bribe is received, demanded or promised. A bribe is also committed when, having received a request for an inappropriate act a bribe is received by a third party or when a third party public employee is made to commit an inappropriate act.
In certain cases, retirees and those leaving government employ can also be found to have been bribed. Failure to act can be just as culpable as committing an inappropriate act. If one fails to carry out acts regarded as part of their duties in exchange for some quid-pro-quo, then there is a bribery problem.
In all such cases, the one giving the bribe is also criminally culpable.
The courts have also taken an expanded interpretation when it comes to the requirement that the government employee do something in relation to their work. It is not restricted only to matters where the employee has official control over a matter, it is also expanded to cover where the employee has actual control in fact.
The bribe itself is not limited to just giving money. It basically encompasses anything that some party desires. Japanese society has customs of giving gifts for different occasions such as certain holidays, birthdays, weddings etc. In theory there may not be problems if that is the only purpose of the gift. But if there is the slightest hint that the gift is to gain some kind of advantage with the official, it is probably inadvisable.
With the enactment of the Government Employees' Logic Law in April, 2000, and the pertinent regulations then following, even such innocent sounding activities as taking a government employee out to a dinner or on a golf trip are now probably in violation of the law. The new regulations provide a detailed listed of violating activities. Government officials are prohibited from gifts, meals, services entertainment, travel, etc. The law also provides that for any government employer in the position of assistant section chief or higher and who receives any gift over 5000 yen must report it to the head of his agency. If it exceeds 20,000 yen, it must be publicly disclosed.
Government employees violating these provisions can receive warnings, salary reductions, suspensions or even dismissal.
More specifically the Government Employees' Logic regulations ban the following:
As performed by Interested Parties (businesess)
---Giving monies, parts, real estate
---Lending money
---Gratis provision of services
---Gratis lending of products or real estate
---Transferring shares of unlisted companies
---Banquet meetings
As performed together with Interested Parties (businesses)
---Golf, mahjong and other games
---Meals
---Travel
As performed by parties other than Interested Parties
---Passing on Invoices, and other bills
Related Parties? What are They?
The Government Employees' Logic regulations define Related Parties as follows:
---Businesses which receive licenses or authorizations from the government.
---Businesses which receive subsidies from the government
---Businesses which are inspected, audited or examined by the government
---Businesses which are the target of "administrative guidance"
---Businesses which are under the jurisdiction of government ministries or the cabinet
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DISCLAIMER Japan BizLawLite 4 Gaijin is intended purely for introductory, educational purposes. If you plan a transaction in Japan, consult with a licensed Japanese attorney. THIS PUBLICATION IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. THIS PUBLICATION COULD INCLUDE INACCURACIES OR ERRORS IN TYPOGRAPHY OR TRANSLATION .