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October 9, 2014

Anti-Corruption in ODA Projects (Strengthening of Preventive Measures)

After a bribery case occurred in Viet Nam in 2008, we carried out preventive measures against fraud in official development assistance (ODA) projects. In March this year, however, contractors bribed foreign government officials concerning ODA projects in Indonesia, Viet Nam, and Uzbekistan.

We paid serious attention to the bribery cases and decided to take the following actions by closely cooperating with the Japanese Government in order to enhance preventive measures for ODA projects not only in the above three countries, but also in all the other countries where ODA projects are in progress.

1. Improvement of the Consultation Desk on Anti-Corruption

We will improve and strengthen the function of the existing Consultation Desk on Anti-Corruption and exert renewed efforts to make its existence widely known.

In addition, we have established a section in charge of anti-corruption (*) within JICA to respond to information on fraud and corruption with the participation of external experts (lawyers and certified public accountants).

(1) Improvement and strengthening of contact points

  • Improvement of the "consultation" function (receiving a request for consultation at an earlier stage to prevent the occurrence of any fraud or corruption cases; carrying out necessary measures, including conferences with the partner countries' governments, on the condition that the whistleblower should be protected; and improving the online mailing form for greater convenience)
  • Online receipt of reports in English and in the local language (information was accepted only in Japanese in the past)

(2) Encouragement of consultation requests and reports to the Consultation Desk

  • Introduction of a system whereby companies that voluntarily report fraudulent practices can benefit from a reduction in or exemption from the measures of exclusion from bidding for a certain period (hereinafter referred to as the "Measures") (*)
  • Strengthening of public relations for an exchange of opinions with companies overseas and in Japan

* JICA Consultation Desk on Anti-Corruption
URL: https://www2.jica.go.jp/en/odainfo/index.php
TEL: 03-5226-8850
FAX: 03-5226-6393

2. Further strengthening of the Measures against companies engaged in fraudulent practices (*)

JICA further strengthened the Measures against companies engaged in fraudulent practices as follows:

  • Strengthening of the Measures for bribery (although the period of the Measures has so far varied according to the position of the person committed the fraudulent practices, this has been abolished and the period has been fixed at 18 months in principle to prevent any company from committing bribery.)
  • The companies subject to the Measures cannot participate in ODA projects as subcontractors.

3. "JICA Anti-Corruption Guidance"

To further promote efforts by ODA project contractors to prevent fraud and corruption, JICA decided to prepare guidance that explains the definition of fraud and corruption, systems for preventing fraud and corruption, and measures to be taken by the partner countries' governments, executing agencies, and companies and then distribute it to ODA project contractors and partner countries' governments and executing agencies. This guidance deepens the understanding of fraud and corruption among the concerned parties and requests thoroughgoing implementation of measures against fraud.

4. Measures for strengthening compliance by companies

We will take the following measures to encourage ODA project contractors to increase compliance further and continue to request companies to cooperate with the Japanese Government and JICA.

(1) Imposition of the obligation to submit a compliance program or measures to prevent reoccurrences by the end of the period of the Measures (*)

We decided to impose on companies under the Measures the obligation to submit a compliance program or measures to prevent reoccurrences by the end of the period of the Measures.

(2) Strengthening of warnings to and dialogues with industry groups related to ODA projects

We will raise awareness among companies and request companies to increase compliance further through dialogues with relevant industrial groups and seminars for companies.

(3) Strengthening of penalties in technical cooperation projects

With regard to a technical cooperation project or a study ordered by JICA, the contract with the contractor provides that if it is confirmed that the contractor has committed fraudulent practices, we will impose 10% of the contract amount as a penalty. In addition to this provision, we will proceed with the introduction of a provision that 20% of the contract amount should be imposed as a penalty if it is confirmed that the contractor has bribed any foreign government official or the like in relation to the project.

5. Further encouragement to the governments of partner countries

We will further request partner countries' government agencies in charge of the receipt of assistance and their implementing agencies to thoroughly apply measures to prevent fraud and corruption at various stages between project formation and implementation. Among others, with regard to the three countries where the fraud and corruption cases occurred concerning yen-loan projects, we will request them to carry out measures, such as strengthening the monitoring of the stages of bidding, contracting, and implementation during yen-loan projects and adding the preparation of a compliance program in the requirements for the bidding process applied by the implementing agencies concerning which the fraud was pointed out.

In addition, we will consider how to request a partner country's government to return a part of the donated funds to Japan if it is confirmed that the funds were unlawfully provided to the partner country's government official engaged in a grant aid project.

6. Strengthening of the partner countries' system of governance and support for the improvement of their capabilities to prevent fraud and corruption

As measures for strengthening the partner countries' governance, we will support their development of legal systems for public procurement and the prevention of fraud and corruption through the use of training, dispatch of experts, and technical cooperation projects. In addition, we will carry out support measures for improving their capabilities to prevent fraud and corruption, such as the holding of seminars to familiarize the concerned parties of the partner countries regarding contract clauses.

The measures marked with (*) are applied from October 9.

If you have any questions, please contact us at:
General Coordination Division, General Affairs Department, Japan International Cooperation Agency (JICA)
TEL: 03-5226-8824
FAX: 03-5226-6393


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