The United States is ratcheting up pressure on Japan to toughen its penalties for bribing foreign government officials, in an apparent bid to ensure a level playing-field for American companies in the global marketplace.
At a series of high-level trade talks held in recent months between the two countries, the U.S. administration of President Bill Clinton has complained about what it views as lenient Japanese penalties for individuals and companies found to have bribed foreign government officials to win business contracts, according to government sources.
“The U.S. is probably concerned that Japanese companies may gain an unfair competitive advantage over their American rivals, especially in the Asian markets, which are rapidly recovering from the 1997 economic crisis,” a senior official at the Ministry of International Trade and Industry said, requesting anonymity.
The U.S., which enacted the Foreign Corrupt Practices Act in 1977 authorizing the prosecution of its citizens for bribing foreign government officials, has led an international crusade for a bribery-free global marketplace.
Prodded by the U.S., Japan and some 30 other industrialized countries, including the U.S. itself, signed an international treaty in December 1997 outlawing bribery of foreign government officials. The treaty went into force in February 1999.
To comply with the anti-bribery treaty, the Japanese government revised its unfair-competition prevention law to introduce penalties for the bribery of foreign government officials.
Under the revised law, which also became effective in February 1999, any individuals found to have bribed foreign government officials face either a prison term of up to three years or a fine of up to 3 million yen. Companies that have bribed foreign government officials face a fine of up to 300 million yen.
The U.S. Foreign Corrupt Practices Act imposes a smaller fine of about 100 million yen at the current exchange rate. However, all profits gained by U.S. companies through illegal methods, like bribery, are confiscated.
“Japan sees no problem with its current level of penalties,” a senior Foreign Ministry official said, on condition of anonymity. “The 1997 international anti-bribery treaty does not set any specific level of penalties to be imposed uniformly by the signatory countries.”
“It simply stipulates that the level of penalties should be enough to be effective in preventing the bribery of foreign government officials.”
The official said that the U.S. complaint about the level of Japanese penalties reflects “a difference in judicial culture” between the two countries.
“Japan’s judicial position is that it is impossible to confiscate all the profits gained by domestic companies, even if the profits come as a result of business contracts won through illegal methods, like bribery, as long as the contacts themselves are legal,” the official said.
An official with MITI’s Industrial Policy Bureau, who is in charge of the matter, agrees.
“The level of penalties under the unfair-competition prevention law were set in a manner to conform with the criminal law,” the MITI official said, also on condition that he not be named.
According to the official, the criminal law imposes no penalty on companies for bribing domestic government officials. However, individuals caught bribing domestic government officials face either a jail term of up to three years or a fine of up to 2.5 million yen.