National Public Service Ethics Act and Ethics Code

～ Background, Regulation and Lessons ～

Akira YamamotoCounselor,

Secretariat of the National Public Service Ethics Board (NPSEB)

Ⅰ. Background (The problems which should be addressed)

Ⅱ. Ethics Act & Ethics Code

Ⅲ. Lessons Learned from Real Cases

Anti-corruption regulations varies greatly by country for different cultural and social environment.In order to understand well Japanese anti-corruption system, it is important to understand the background.

Code of ConductDisciplinary Standards for ViolationsReporting System

Proactive Measures to Prevent RecurrenceCompatibility with Administrative ObjectiveResponding to Bad Habits

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1. Anti-Corruption regulation (Before 2000)

Criminal Law

A public officer or arbitrator who accepts, solicits or promises to accept a bribe in connection with his/her duties shall be punished by imprisonment with work for not more than 5 years; and when the official agrees to perform an act in response to a request, imprisonment with work for not more than 7 years shall be imposed.

Giving of bribes (Article 198)

Acceptance of bribes (Article 197)

A person who gives, offers or promises to give a bribe provided for in Articles 197 through 197-4 shall be punished by imprisonment with work for not more than 3 years or a fine of not more than 2,500,000 yen.

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(1) Anti-corruption regulations

Ⅰ. Background

Disciplinary Actions (National Public Service Act)

Corrective Actions

Administrative sanction regulated in the National Public Service act. They are dismissal, suspension, pay reduction or admonition. The effects of each disciplinary actions are also regulated.

Administrative sanction for maintenance of order within the organization, regulated in each ministries. The standards and effects are differs among ministries.

(2) General regulations (Administrative sanctions)

Obligation to Obey Laws and Regulations and Orders of Superiors(98)

Prohibition of Acts Causing Discredit(99)

Obligation to Preserve Secrecy(100)

Obligation to Give Undivided Attention to Duty(101)

Restriction on Political Acts(102)

Exclusion from Private Enterprise(103)

Restriction on Participation in Other Undertaking or Business(104)

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19952 Executive officers of the Ministry of Finance received excessive entertainment(food&drinks, etc.) from the ex-president of a bankrupt credit union and a management consultant (2)

1998A series of executive officers of the Ministry of Finance received excessive entertainment(food&drinks, etc) from the representative of social welfare corporation. (116)

A series of executive officers of the Ministry of Health and Welfare received excessive entertainment(food&drinks, golf, etc.) from the representative of social welfare corporation. (13)

1996

A series of executive officers of the Ministry of International Trade and Industries received excessive entertainment(food&drinks, golf, etc.) from the petroleum wholesaler. (5)

1996

2. A series of Scandal

The Enactment of the Code of Ethics in each ministries and agencies.

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3. Characteristics of misconducts

2. Excessive Treatment (Food and Drinks)Suitable for the formation of a long, smooth and deep relationship with officers.

In Japanese society including private sector, treatment has been widely used to build relationships and “man-to-man” exchange of views. Food and drinks are considered just as a tool or ornament to encourage discussion. (Japanese culture)

3. Start small, but greatly expandedAt the beginning, the treatment could be considered within a rage of social ritual. But, over time, it had become too excessive.

A series of executive officers Excessive entertainment

1. No direct connection with his/her duties The main purpose is to form and keep a long, smooth and deep relationship with executive officers through day-to-day treatment for the future benefits. Therefore, companies invested in a series of promising officers irrelevant to his/her current duties.

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Food & Drinks

4. Cultural and Mental Background (Personal opinion of lecturer)

It would be rude to invite executives without food and drinks. With over drinks, we can talk frankly.

Wrong and Distorted Elitism

Sending gifts is a part of culture

Sense of Ethics has been paralyzed.

Justification of receiving entertainment.

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Everyone does, why not I?

A public officer or arbitrator who accepts, solicits or promises to accept a bribe in connection with his/her duties shall be punished by imprisonment with work for not more than 5 years; and when the official agrees to perform an act in response to a request, imprisonment with work for not more than 7 years shall be imposed.

Acceptance of bribes (Article 197)5. Limit of Criminal Law

Characteristics1. No direct connection with his/her duties

2. Excessive Treatment (Food and Drinks)

3. Start small, but greatly expanded

It is required that the bribe must be related to his/her duties.Relevance to duties

Bribes includes any kind of benefits including food and drink. But , in case of food and drink ,it is not easy to tell the difference between the benefit and just courtesy in Japanese culture.

Proof

It is required that the officer must recognize the such benefit is a bribe (a consideration for certain requests).Recognition

Need of New Regulation

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Ⅱ. Ethics Act & Ethics Code

Outline(1) Code of Conduct (prohibited act list)

(2) Reporting System

The purpose is to cope with the activities which are not criminally illegal but not appropriate for a national public servant.In order to be compatible with common sense or general practice, the range where corruption is highly likely to be supposed is classified as “interested parties”, and stringent restrictions are introduced there.5 years after the introduction of the ethics system, some amendments were made.

Prevention and detection are two main purposes of the reporting system.Amount of information and efficiency: Too much information may inhibit efficiency.Collecting minimal information sufficient for the purpose is the key.

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(1) Interested parties-The business entities with high risk of adhesions for having direct interest to the job. →Particularly stringent restrictions are applied.- Judged objectively based on the job description.

Assessment on budget, class

fixed number and capacity

Contract

Administration for developing, improving and

adjusting business Administrative guidance

Disadvantageousaction

Inspection, audit or

supervision

Delivery ofsubsidy

Permission,Authorization, etc.

1. Code of Conduct

Interested Party

(2) Code of Conduct (original: FY2000~FY2004)

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Category A: Receiving Benefits from Interested Parties

Category B: Suspicious Activities with Interested Parties (although receiving no benefit)

Category C: Receiving Benefits from Non-Interested Parties

Receiving gifts, money, or any other benefits Being treated to dining and/or entertainment Borrowing money Borrowing goods or receiving services for free, etc.

Playing golf together Playing Mah-jong together Traveling together Buying unlisted shares, etc

Receiving benefits which exceed the extent approvable in the light of common sense

Having Dinner together without the permission of the Secretary-General

Based on real cases

(3) Code of Conduct (amended: FY2005~)

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Category A: Receiving Benefits from Interested Parties

Category C: Receiving Benefits from Non-Interested Parties

Category D: Organizational Violation

Employees who knowingly received some of all of the profit obtained in violation of the Ethics Law or Code should be punished.

Employees who make false statements about colleagues’ violation of code of conducts or hide it

Managers who tolerate violations of his/her subordinates

Category B: Suspicious Activities with Interested Parties (although receiving no benefit)

Having Dinner together without the permission of the Secretary-General

Uniform Criteria

In addition to that

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Administrative Action

Uniform Criteria

Compatibility with Socially Approved

Manners and Customs

The National Personnel Authority rules 22-1 (standards for disciplinary action in cases where orders based on the Ethics Act or equivalent laws have been violated)

Receiving money or gift from an interested party· · · Dismissal, suspension, pay reduction or admonition

Receiving benefit in compensation for an act taken in line of official duty · · · Dismissal or suspensionPlaying golf with an interested party

· · · AdmonitionReceiving expensive gifts from non-interested party

· · · Pay reduction or admonition Tolerating violations of his/her subordinate

· · · Suspension or pay reduction

(e.g.)

(4) Disciplinary Standards for Violations

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( ) Effects of Disciplinary Sanctions※

Dismissal Exclusion from public sector without Retirement Allowance

Suspension Leave without pay less than one year Affect Promotion, End-of-Term Allowance and Diligence

Allowance Recorded on personal record

Pay Reduction Reduction of salary less than 20% for less than one year Affect Promotion and Diligence Allowance Recorded on personal record

Admonition Pursuit of responsibility Affect Promotion and Diligence Allowance Recorded on personal record

Publication of Cases+ • Overview of the case• Disposal contents• Office and post of the

disposed staff• Basically no name 15

2. Reporting System

Report of Gift, Entertainment and Reward

Report of Stock Dealings

Report of Income

Deputy Director or above(about 30% of all staff)

Vice Director-General or above(about 3% of all staff)

Frequency

Each time

Once a year

Once a year

Staff dedicated to submit

Vice Director-General or above(about 3% of all staff)

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Date dd/mm/yy

Category (gift, reception or reward)

□ Attendance of a meeting, etc.

(Name of the meeting, contents,

etc.: )□ Writing

(Name of the writing, contents of the writing,

etc.: )□ Lecture

(Title of the lecture and contents, date, venue,

etc.: )□ Others

Fact of gifts, etc. or remuneration

□ Money □Manuscript fee □Royalties □Lecture fee □ Others□ Other than money

Amount of benefits received by gifts, etc. or reward paid

\ (Number of hours of lectures or pages of manuscript, etc.)

Grounds for speculation if the price above is based on speculation

□ Answer from the dealer□ Catalogue□ Confirmation by the donor/host□ Confirmation by the restaurant□ Others

Name & address of the place, and number and pro-fessions of other attending members

Name & address of the place:□ A stand-up buffet (Rough) Number of attendees: □ Others Number & professions of attendees

Name and address of the business entity

Name & address of the business entity

When the donor is an executive Name & Position of the executive

Relationship to the business entity

Relationship to your official dutiesRelationship to your organization□ Conflict of interest□ No conflict of interest

Report of Gift, Entertainment and Reward

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Content

Staff dedicated to submit

Frequency

When receiving a donation, attend a reception, or obtain rewards for any labor, worth more than 5,000 JPY (equivalent to about 60 USD).

Deputy Director or above(about 30% of all staff)

Each time (deadline: ever 3 months)

Date Category Name Numb

er Price

Acquire

Transfer

Categories - Stock certificates - Certificates of share options - Certificates of bond with share options - Others ( )

Report of Stock Dealings

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Content

Staff dedicated to submit

Frequency

Stock dealings in the previous year

Vice Director-General or above(about 3% of all staff)

Once a year

Amount of income

Reason of income

Comprehensive taxation

Business income

Real estate income

Interest income

Dividend income

Employment income

Miscellaneous income

Capital gains

Occasional income

Declared separate taxation

Income of land

Short-term capital gains

Long-term capital gains

Capital gains of stocks

Dividend income of listed stocks

Timber income

Report of Income□ only employment income by the government (no need to fill the list below)

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Content

Staff dedicated to submit

Frequency

All incomes in the previous year

Vice Director-General or above(about 3% of all staff)

Once a year

Confirmation with each other

Report of Income

Capital gains of stocks Miscellaneous income

Report of Stock Dealings

Report of Gift, Entertainment and Reward

Gift Reception Reward

Pressure

Internet, investigation, etc

Report from other participants

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Basic Concept Proactive measures must be based on the analysis of

actual cases and situations

Role of Central Body Supporting ministries and agencies Giving them appropriate incentives Assisting in any difficulties they face

Central Body(NPSEB)

Ministries and Agencies

Administration and coordination Administration of investigation of ethics act violations Approval of disciplinary actions on ethics

Implementation of ethics policies for staff of each organization

Research & Investigation of actual cases

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1. Proactive Measures Ⅲ. Lessons Learned from Real Cases

Questionnaire to Offenders

1. How often have you discussed ethics in meetings at your workplace?

2. Did you have the recognition that the act you committed would be a violation of the Code of Ethics or Ethics Act?

If Yes, - Why did you dare to act so? - How did you recognize that you violated the rules? (the source of information) If No, - Do you remember that you have received ethics training? - Why did you not recognize that you violated the rules?

3. What additional information in the Code of Ethics and Ethics Act would have prevented you from infringing the rules?

Response rate: 73%

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FINDING POINTSBased on the questionnaire to offenders & inspection in real cases

1. Not enough opportunities to be aware of ethics in everyday life

Increase opportunities2. Despite participation in the training, offenders do

not remember the contents More effective and attractive materials3. Offenders often have no awareness that they have

violated rules Promotion of understanding4. Private companies (conflict of interest) have no

sense of guilt Outreach to the private sector

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2010

2009

2008

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

~10%10~33%33~50%50~100%100%~

Ethics Training Rate(Rate: number of trainees in a year / number of staff)

Number of Ministries and Agencies

Increase opportunities

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2010

2009

2008

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

~10%10~33%33~50%50~100%100%~

Ethics Training Rate

Number of staff

(Rate: number of trainees in a year / number of staff)

Average

32%

66%

110%

Increase opportunities

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More effective and attractive materials

Reenactment Dramas on DVD E-learning

Distribute to Ministries and Agencies

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Promotion of understanding

Booklets & Portable Cards

Distribute to each staff

FAQ and Case Studies on website

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Outreach to the private sector

Questionnaire to Private Companies

What seems to be an effective measure to promote the understanding of private companies in the Code of Ethics and Ethics Act? Please choose a maximum of three from the following:

PR activities through mass media: 31% Alert private companies through ministries and agencies with which

they are actually in contact: 25% PR activities through the Chamber of Commerce and Industry and other

private sector organizations: 25% Distribution of posters and pamphlets: 10% Website: 7% Articles on the PR magazine of the National Personnel Authority: 1% Others: 1%

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Outreach to the private sector

Request for PR activities

Request to the Chamber of Commerce and Industry and other private sector organizations in each region for the PR activities of the Ethics Act to member companies (every year)

Distribute pamphlets

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Compatibility with Administrative Objective

Staff Interested Party

Treated Pay

PayPay

TreatedPay

Prohibited

Only admitted with prior approval of the Secretary-General

Prohibited

In case of 10,000yen/person, prior report to the secretary General is required

Basically Prohibited OK subject to the following condition

Original (2000 ～ 2004) Current (2005 ～ )

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Responding to Bad Habits

Ethics Violation Cases

16 1430

20

45

222

54

159

267

30

61

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4 11 17 1021 20 27 32

57

16 21 16

0

50

100

150

200

250

300

H12 H13 H14 H15 H16 H17 H18 H19 H20 H21 H22 H23

懲戒処分等人数（人）

懲戒処分等件数（件）

Improper Accounting

Bar in Taxi

（ FY ） 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Number of Staff

Number of Cases

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Category D: Organizational Violation

Employees who knowingly received some of all of the profit obtained in violation of the Ethics Law or Code should be punished.

Employees who make false statements about colleagues’ violation of code of conducts or hide it

Managers who tolerate violations of his/her subordinates

・・・ Suspension, pay reduction or admonition

・・・ Suspension or pay reduction

・・・ Dismissal, suspension, pay reduction or admonition

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