Newspaper article The Daily Yomiuri (Toyko, Japan)

Plea Bargaining: Ideas and Challenges

Newspaper article The Daily Yomiuri (Toyko, Japan)

Plea Bargaining: Ideas and Challenges

Article excerpt

On July 20, the special investigation squad of the Tokyo District Public Prosecutors Office indicted without arrest three former executives of Mitsubishi Hitachi Power Systems, Ltd. (MHPS), headquartered in Yokohama, in a case involving the bribing of an overseas public official. This was the first instance in which the Japanese version of plea bargaining, also known as a negotiation and agreement system (see below), was applied. The prosecutors did not indict the company as a corporate entity. What are the significant features and challenges involved in this new system as revealed by this case? The Yomiuri Shimbun spoke with three experts: a lawyer specializing in corporate legal affairs, a jurist who was involved in the drafting of the system, and a former prosecutor with the special investigation squad. The following are excerpts from the interviews.

(From The Yomiuri Shimbun, July 22, 2018)

Opportunity to boost companies' legal compliance

Mitsubishi Hitachi Power Systems, Ltd. has been able to avoid indictment as a corporation through its self-declaration of a crime that investigative authorities were unaware of, and through its full cooperation in the subsequent investigation.

The decision of the company to opt for plea bargaining was appropriate in that it demonstrated the company's high level of capability for self-correction over a scandal and enabled the company to protect its value.

Plea bargaining is definitely effective in investigating organized crime by gangs and fraud rings. However, I have argued for some time that the investigation of corporate crime, particularly cases of bribery of overseas civil servants such as this one, would become the main battlefield of plea bargaining.

Payments of bribes overseas often occur at the discretion of local staff who are too far away to be under the supervision of the head office. Despite its lack of involvement in the fraud, a head office will suffer greatly if the company is prosecuted. It can be expected that more companies that have learned of wrongdoing will be eager to make a speedy declaration to investigative authorities and seek plea bargains in order to avoid such risks.

On the prosecution's side, the advantages of being able to get full cooperation from the company through plea bargaining are immeasurable. To date, there have only been five cases, including this one, where Japanese investigative authorities have made indictments over bribery overseas. Thus, Japan has been criticized by the international community for not doing enough. The Tokyo District Public Prosecutors Office's special investigation squad is sure to increase crackdowns on bribery cases through plea bargaining in the future.

One thing that corporations can learn from this case is the importance of building compliance systems. If companies take the lead to carry out compliance education in a thorough manner, it will be easy to gain understanding among the general public with regard to the company trying to avoid being charged by reporting to investigators about its employees who have been involved in wrongdoing. Conversely, if a company should take a passive approach to compliance education, it would be difficult to get the public to accept that the company has demonstrated self-corrective mechanisms, irrespective of how much it may appeal to investigators about wrongdoing by its employees.

On the other hand, it can also be imagined that an employee who has committed wrongdoing runs to the investigative authorities before the company's internal investigations take place in hope of easing the criminal charges that would be made against the employee. The most distressing situation for a company would be to be suddenly subject to an investigation, completely ignorant of anything that has occurred. To prevent catastrophic damage, companies need to perfect their internal reporting systems and set up systems for fast and accurate internal investigations. …

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