Japan's Official Development Assistance White Paper 2010
(3) Prevention of Fraud and Corruption
Given that Japan’s ODA comes from taxpayers’ money, fraudulent use of the funds provided for assistance must be avoided. Accordingly, the government and JICA work to ensure the transparency of procurement and other procedures.
During the procurement stage for ODA projects, tenders are submitted by developing countries in accordance with the guidelines. The results of these are verified by JICA and steps are taken to increase transparency; not only is the name of the business receiving the order made public, but so too is the contract amount. In case improprieties are discovered relating to procurement or other stages of ODA project implementation, a mechanism has been set in place whereby firms that commit improprieties are disqualified from bidding or receiving contracts for projects for a certain period.
Efforts are also being made for auditing. These efforts include expanding external auditing, implementing spot audits, and taking measures to improve auditing based on audit results. With regard to external audits, they are being implemented at JICA by accounting auditors. For grant aid, external audits for Grant Assistance for Grassroots Human Security Projects worth ¥3 million or more are obligatory in principle and are steadily implemented.
With respect to the implementation of spot audits of loan aid, a mechanism has been introduced for audits that can be conducted where necessary for projects agreed upon by the governments. For technical cooperation, internal audits are conducted at JICA via sampling. For grant aid as well, technical audits are being conducted.
Japan has ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Note 44), and as such it is strict in its handling of fraudulent business with foreign government parties, including the application of the Unfair Competition Prevention Law, in order to ensure trust toward ODA projects which use taxpayers’ money as their main resource.
Improprieties were revealed in ODA loan projects in Viet Nam, and in 2008 the concerned parties in Japan were prosecuted and convicted. In consideration of the aforementioned incident, an exploratory committee was established under the Foreign Minister and formed of external advisors in order to conduct deliberations aimed at preventing the reoccurrence of similar fraud and corruption cases. The committee submitted its report in September 2009. Based on this report, a variety of initiatives were implemented, with these initiatives having been compiled in October 2010. These include overhauling measures and regulations by MOFA and JICA for companies that have engaged in fraudulent acts, establishing a support structure for overseas Japanese affiliate companies through embassies and JICA’s local offices, and appeals encouraging compliance with laws and ordinances from related businesses. Other initiatives include holding seminars concerning international contract terms and conditions for Japanese companies through the cooperation of industry associations, enhancing JICA’s involvement during the selection of consultants by partner countries, and holding discussions on the prevention of fraud and corruption with other donor countries.
Notes:
(44) Official name: Convention on Combating Bribery of Foreign Public Officials in International Business Transactions