A comparison of laws on anti-bribery

A continued emphasis on battling corruption is evident in China and Japan

China’s crackdown on bribery and corruption

With the adjustment of China’s economic structure and changes in the trade environment in recent years, bribery and corruption in the business environment have shown new trends.

In firm response, significant progress has been made in combating commercial bribery, with continual improvement in the legal system and strengthened enforcement, along with enhanced corporate compliance awareness. Among development trends in anti-bribery and anti-corruption, the most prominent is a sustained, positive evolution of the legal and regulatory framework.

Legislative improvement

The latest Amendment (XII) to the Criminal Law is focused on revising provisions related to bribery and corruption within private enterprises.

The scope of three offences — illegal operation of similar businesses (article 165); illegal profit-making for relatives and friends (article 166); and abuse of power to undervalue shares or sell state-owned assets (article 169) — has been expanded from “state-owned companies and enterprises”.

Now it includes “other companies and enterprises”, making these offences applicable to private enterprises.

Stricter penalties

Additionally, stricter penalties for bribery have been introduced by amending articles 390, 391 and 393 of the Criminal Law.

The Draft Amendment to the Anti-Unfair Competition Law was approved in principle by the State Council Executive Meeting in September 2024, and submitted to the Standing Committee of the National People’s Congress (NPC) for review.

The draft raises the upper limit of fines for commercial bribery to between RMB100,000 (USD13,600) and RMB3 million, significantly enhancing the deterrent effect of the law against commercial bribery.

In October 2024, the State Administration for Market Regulation also issued the Guidelines for Compliance in Preventing Commercial Bribery Risks in Pharmaceutical Enterprises (Draft for Comment).

Providing compliance guidance for enterprises, these guidelines detail compliance measures, risk identification and prevention for nine common scenarios in the pharmaceutical sector such as academic visits, hospitality, discounts, commissions, outsourcing and clinical research.

Strengthened enforcement

Another key trend is strengthened supervision and enforcement in anti-bribery and anti-corruption.

The Work Plan of the Central Anti-Corruption Co-ordination Group (2023-2027) emphasises the need to “resolutely address corruption in high-risk industries, systems and regions”, further clarifying the focus areas of anti-corruption efforts.

In its 2024 work plan, the Third Plenary Session of the 20th Central Commission for Discipline Inspection highlighted the combination of individual case investigations with systemic rectification — deepening anti-corruption efforts in sectors such as finance, state-owned enterprises, energy, tobacco, pharmaceuticals, infrastructure projects and bidding.

The State Administration for Market Regulation and other departments have additionally intensified supervision of activities such as infringement of trade secrets and unfair competition.

As a result, market regulation authorities at all levels nationwide notably handled 11,036 unfair competition cases in 2024, including 120 cases of trade secret infringement.

With the 2024 Work Report of the Supreme People’s Court presented at the NPC, courts correspondingly recorded concluding 6,779 cases involving bribery and embezzlement by non-state employees involving 8,124 individuals — a year-on-year increase of 26.6%. The report also emphasised supporting private enterprises in combating corruption and addressing internal threats.

From January to July 2024, procuratorial authorities also prosecuted 62,000 individuals for crimes disrupting the market economy, a year-on-year increase of 36.5%, according to the August 2024 Special Action Report on Procuratorial Protection of Enterprises issued by the Supreme People’s Procuratorate.

Among these, 5,827 individuals were prosecuted for enterprise-related crimes such as embezzlement, misappropriation of funds, and bribery by key personnel in private enterprises — a year-on-year increase of 41.1%.

Emerging industries

Another new regulatory focus is on emerging industries.

New Energy. The rapid development of industries such as photovoltaics, energy storage and new energy vehicles has been accompanied by numerous bribery and corruption cases, highlighting the lack of sufficient regulatory capacity and experience in these sectors. For instance, bribery and corruption in the supply chain of the new energy vehicle industry have significantly increased production costs, leading to reduced competitiveness and, in severe cases, bankruptcy.

Internet. Bribery and corruption cases in the internet sector remain prevalent, often linked to industry-specific characteristics such as operational services, traffic monetisation and data rights. Annual anti-fraud and integrity reports from leading internet companies frequently reveal cases of senior executives being referred to law enforcement for bribery and corruption.

Pharmaceuticals. Regulatory and enforcement efforts in the pharmaceutical sector have intensified, with numerous executives and medical institution leaders being referred to law enforcement for bribery and corruption. Some 52,000 cases were filed in the pharmaceutical sector nationwide in 2024, with 40,000 individuals disciplined and 2,634 referred to prosecutors, according to the National Supervisory Commission’s Report on Addressing Corruption and Misconduct in Proximity to the Public.

Cunning concealment

As the crackdown continues, perpetrators of commercial bribery are correspondingly concealing their crimes with more cunning.

Disguised transfers of benefits. Enterprises or individuals often use seemingly legitimate methods, such as “research funding” or “academic conference fees” to transfer benefits, masking bribery as normal business transactions.

Third-party intermediaries. Bribers may employ intermediaries to indirectly transfer benefits, complicating investigations.

Commercial opportunity. This involves leveraging positions to create business opportunities in exchange for improper benefits.

Stock and futures markets. Bribery through insider information or undisclosed data in the stock and futures markets has been observed, with cases involving market manipulation and information leaks.

Challenges and solutions

The era of new technology such as digitalisation and even brand new financial transactions through cryptocurrency presents an entirely new set of challenges.

While blockchain and cryptocurrency are being used for bribery, complicating regulatory efforts, authorities are also rising to the challenge through digital tools of emerging technologies.

Big data and AI. These technologies enable real-time monitoring and risk identification in transactions.

Blockchain. Its transparency and immutability make it a valuable tool for ensuring supply chain integrity and preventing bribery.

Data security and privacy. At the same time, new laws such as the Data Security Law and Personal Information Protection Law aim to safeguard data and prevent misuse.

International co-operation

Global rule-making. China actively participates in international anti-corruption rule-making, such as under the UN Convention against Corruption.

Cross-border supervision and enforcement. China has established extradition and judicial assistance treaties with numerous countries to combat cross-border bribery and corruption.

Takeaway

China’s anti-bribery and anti-corruption efforts are crucial for ensuring the healthy development of enterprises and their competitiveness.

Enterprises must adapt to evolving trends, enhance internal governance and strengthen compliance systems. This includes implementing strict anti-bribery policies, conducting due diligence on third parties, and leveraging technology to improve compliance.

JINGTIAN & GONGCHENG
Room 1401A, Tower 2, Kerry Center Qianhai,
Qianhai Avenue, Nanshan District, Shenzhen, China
Tel: +86 755 2155 7000
Email: jingtiansz@jingtian.com
www.jingtian.com

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Bribery and corruption laws in Japan

Preventing bribery in companies is essential from a compliance perspective. A company in Japan providing illicit benefits to a Japanese public official may be subject to criminal penalties for bribery under the Penal Code, as well as face significant reputational risks. Additionally, providing illicit benefits to foreign public officials may violate the Unfair Competition Prevention Act (UCPA).

As demand for preventing corruption is increasing both domestically and internationally, this article discusses crimes under Japanese law that may be committed when a company offers illicit benefits to public officials, as well as key points to avoid violating these laws and regulations.

The Penal Code

Under Japan’s Penal Code, if a public official accepts a bribe in connection with their duties, the crime of accepting a bribe has been committed (article 197) and the giver can be charged with giving a bribe (article 198). Although other forms of bribery are also covered in the Penal Code, this is the basic form of simple bribery.

If a company’s employee gives a large sum of money to a public official in charge of permits and licences in a related business field to gain favourable treatment for their company’s permits, that act would also be considered an act of bribery. Allowing such acts undermines the fairness of public officials’ duties and public trust in them, and thus such acts are punished as crimes.

Public officials

The term “public officials” includes not only national and local public officials, but “deemed public officials” who are considered public officials under the law, such as employees of national university corporations. The recipient of the bribe must be a Japanese public official, but the giver of the bribe does not need to be a Japanese national.

Official duties

If some kind of benefit is provided to a public official entirely unrelated to the public official’s duties – such as receiving a gift from an acquaintance during a private club activity on a day off – and based purely on a private relationship, there is no duty and bribery charges do not apply.

A bribe

A bribe refers to a benefit as an unlawful remuneration for a public official’s duties. It includes not only economic benefits but also non-economic benefits such as positions related to duties.

The bribe must be illicit and of a nature that is not socially acceptable to receive. Actual expenses such as transportation expenses are not unlawful remuneration and therefore not considered bribes.

Likewise, to consider that providing a public official visiting a factory with a glass of water or a cup of coffee as a bribe is unreasonable and not regarded as such because this is considered as socially acceptable. In this context, it is understood that if a gift falls within the scope of customary or social courtesies, it is not considered a bribe.

For example, providing a public official visiting a company for official purposes with inexpensive novelty goods or small samples created for general distribution is considered within the scope of customary or social courtesies, and therefore not a bribe.

On the other hand, giving or paying for expensive meals or gifts during a visit from a public official may be considered a bribe. In practice, evaluating whether something constitutes a bribe is sometimes very difficult to judge. In such cases, it is advisable to seek a lawyer’s advice.

Foreign public officials

Bribery crimes under the Penal Code pertain to Japanese public officials and do not apply to foreign public officials. However, providing illicit benefits to foreign public officials is considered a crime under Japanese law.

The UCPA prohibits providing monetary or other benefits to foreign public officials to obtain illicit business advantages in international transactions, and sets penalties for such actions (articles 18 and 21 of the UCPA).

In cases involving bribery of foreign public officials, both the individual responsible within the company, and also the company itself as a corporation, can be held criminally liable (article 22 of the UCPA).

It should be noted that, unlike bribery under Japan’s Penal Code — where only the individual who gave the bribe is subject to criminal penalties and not the company they belong to — bribery of foreign public officials subjects companies to criminal penalties as well.

For example, if an employee of a company provides illicit benefits to a public official of a country other than Japan, that employee may face imprisonment of up to 10 years or a fine of up to JPY30 million (approximately USD190,000), or both.

In accordance with stricter penalties introduced in the 2024 amendment to the UCPA, the company may face an even heftier fine of up to JPY1 billion (approximately USD6.4m).

If an employee of a Japanese company engages in bribery of a foreign public official outside Japan, this act of bribing foreign public officials would constitute a crime under the UCPA.

Before the 2024 amendment to the UCPA, bribery of foreign public officials conducted outside Japan was only punishable if the giver was a Japanese national of a Japanese company. However, since the amendment, non-Japanese nationals of a Japanese company are now also subject to punishment (article 21 of the UCPA). Even if an act of bribery is committed by an employee of a Japanese company outside Japan, that company as well as the employee — regardless of nationality — can be held criminally liable as a corporation.

Preventing violations

As mentioned, if bribery occurs in connection with corporate activities and is uncovered by investigative authorities, it not only runs the risk of criminal penalties but also poses significant reputational risks.

In Japan, there is traditionally strong criticism of crimes perpetrated by public officials, and companies that provide illicit benefits to public officials also face strong criticism. Additionally, related evidence such as digital devices may be seized, and if the person responsible is arrested, he or she may be held in custody for a considerable period.

Such situations pose the risk of significant operational disruptions that could threaten the continuation of business activities. Therefore, it is extremely important for corporate risk management to prevent bribery and corruption and avoid legal violations.

Unfortunately, there is no uniform standard such as “providing more than X amount of yen constitutes bribery, while less does not”. Whether providing benefits to Japanese or foreign public officials is illegal must be judged on a case-by-case basis, taking into account: the relationship between the giver of the benefit and the public official; the nature and extent of the benefits; the timing of the provision; and general social customs.

In addition, it should be clearly noted that “deemed public officials” are also considered to be public officials in the context of bribery crimes. From this perspective, some Japanese companies have established guidelines for preventing corruption that prohibit providing any benefits not only to public officials but also to private business partners.

In principle, providing benefits to private company representatives does not inherently raise issues of bribery or legal violations. Nevertheless, it is believed that by prohibiting all benefit-providing actions, including to non-public officials, they aim to absolutely avoid legal violations.

Avoiding legal violations such as bribery is absolutely important, but balancing this with actively conducting smooth business activities is very challenging.

As such, companies are advised to be completely familiar with the Penal Code and the UCPA, developing perspectives and means to avoid illegal activities, and building a compliance system with the help of experts such as lawyers to continue business activities appropriately.

Key takeaway

As the demand for compliance strengthens globally, avoiding legal violations such as bribery is extremely important for companies to continue their business activities. Understanding the magnitude of risks associated with legal violations such as bribery, and the importance of establishing a compliance framework, is crucial.

CHUO SOGO LPC
Osaka Dojimahama Tower 15th Floor, 1-1-27
Dojimahama, Kita-ku, Osaka, 530-0004 Japan
Tel: +81 6 6676 8834
Fax: +81 6 6676 8839
www.clo.jp/english

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