Corruption and anti-corruption in Japan

Japan is a low-risk destination for doing business compared with most other countries in Asia. The
rule of law is well established and contracts are easily enforceable. Nonetheless, your research should also include careful assessment of the risks associated with doing business overseas.

Japan’s public debt, which stood at 248 per cent of GDP in 2015, has recently resulted in credit rating downgrades from the international ratings agencies. However, Japan’s credit rating outlook is now considered ‘stable’ by the main agencies, and it still enjoys relatively strong ratings. At the time of writing, Standard & Poor’s credit rating for Japan was AA-, while both Moody’s and Fitch’s assigned Japan an A rating.

Corruption is minimal in Japan, resulting in a world ranking of 18 out of 168 countries by Transparency International 2015 for control of corruption. Japan was equal fourth best rating in the Asia-Pacific. According to some sources, the practice of ‘amakudari’, where retired public servants take up lucrative private-sector roles in retirement, is the most significant source of corruption in Japan. 

Japan anti-corruption

Due Diligence and Avoiding Scams

Australian firms planning to operate in Japan should commit to the highest levels of corporate behaviour and familiarise themselves with Australian laws and penalties for bribery. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas.

Dispute resolution

Companies involved in international commercial disputes should seek appropriate legal advice in Australia or overseas. Austrade can provide referrals to legal service providers upon request. A number of international arbitration commissions exist to facilitate international dispute resolution. Deciding which arbitration body best suits your commercial needs is complicated and requires the balancing of many considerations – and good legal advice. The choice of arbitration body will depend on a combination of convenience, cost and the facts of the particular case.

While the Australian Government supports arbitration as a preferred method of commercial dispute resolution with foreign companies, it does not endorse any one arbitration body over another.

Scams

There are a number of websites that alert consumers and businesses to scams, both in Australia and overseas. Watch for scam alerts at www.scamwatch.com.au. Although Japan is considered a safe destination for foreign business travellers, exercise common sense like you would in Australia.

If you are the victim of a petty crime or a scam, report it immediately to the local police.

Local laws and penalties for crimes

Some local laws and penalties in Japan are very different to those in Australia. Penalties for serious crimes include the death penalty.

Some of the Legal issues to be aware of (identified by DFAT):

  • Penalties for serious crimes, such as murder, include the death penalty. Other sentences can include heavy fines, lengthy imprisonment with hard labour, and deportation.
  • Some Australian criminal laws, such as those relating to money laundering, bribery of foreign public officials, terrorism, forced marriage, female genital mutilation, child pornography and child sex tourism, apply to Australians overseas. Australians who commit these offences while overseas may be prosecuted in Australia. 

Bribery, graft and corruption

Bribery,graft and corruption are illegal in most countries. Under Australian law (Division 70 of the Criminal Code Act 1995) you can face criminal prosecution in Australia for bribing a public official in another country.

Want to learn more? Explore our other Indonesia information categories or download the Japan Country Starter Pack.