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Anti-Corruption

Vietnam and Japan: Anti-bribery and corruption compliance for global companies

By 4 Mins Read

In brief

In an effort to address Vietnam’s historical perception as a high-risk compliance jurisdiction, the Vietnamese government has recently implemented a series of regulatory and practical measures to significantly reduce corrupt practices in the country.

These recent efforts to combat corruption have resulted in a number of measures, including legal reforms, public awareness campaigns, international cooperation efforts, as well as increased enforcement of corruption and bribery laws (including a number of high profile arrests and prosecutions for bribery offences). These trends in Vietnam show no sign of slowing down, and heightened enforcement of corruption-related crimes in Vietnam can be expected to continue and even increase in the months and years to come.

Regulatory landscape

Criminal bribery, which applies to both private and public entities, is broadly defined under Vietnam’s Penal Code to cover the provision of a benefit or interest that meets applicable criminality thresholds. Corresponding criminal liability can apply to all those involved in a bribe, including the offeror, receiver, intermediaries and even those with full knowledge that failed to report it. Depending on the context and severity, bribery-related crimes can result in harsh penalties, including hefty fines and lengthy prison sentences.

Vietnam’s Anti-Corruption Laws further provide a legal framework for preventing corruption as well as disciplinary actions for non-compliance. Notably, under these regulations, state organizations and their office holders are not allowed to receive gifts or hospitality from entities related to their work.

Vietnam is also active in international anti-corruption efforts, including by participating in bilateral agreements, such as the 2008 Vietnam-Japan Joint Committee for Preventing Japanese ODA-related Corruption, as well as multinational initiatives, including the UN Convention against Corruption.

Anti-corruption drive and enforcement trends

Vietnam’s recent anti-corruption crackdown is the culmination of the “blazing furnace” campaign initiated by its government in 2016 as part of a national drive to combat corruption through stricter laws and the establishment of specialized agencies to investigate and prosecute corruption cases. These initiatives have also seen the utilization of a wide range of tools in addition to criminal prosecution, such as asset recovery and public education campaigns.

The past few years in particular have seen a noticeable uptick in compliance enforcement, with a series of high profile corruption investigations and prosecutions. This has resulted in a growing string of arrests of senior officials on charges of bribery-related crimes in recent years, including several in 2022. These high-profile cases demonstrate the far reaching impact of Vietnam’s anti-corruption campaign, which has now reached all levels of government and industry.

Another noticeable recent trend is the increasing focus on private sector bribery by the Vietnamese authorities. Historically, corruption investigations in Vietnam have focused on the public sector. However, the past several months in particular have seen the high-profile arrest and prosecution of a number of individuals in private industry across a range of business sectors (including real estate and healthcare) on commercial corruption charges.

Vietnam’s ongoing campaign has produced demonstrable results, including significant improvement in the country’s ranking under the Transparency International Corruption Perception Index (CPI) in recent years. Vietnam — which ranked 113th in the world with a score of 33 in 2016 — has now improved to rank 77th with a score of 42 in the latest CPI from 2022. These figures demonstrate that the anti-corruption drive has made tangible progress and that the time has come for Japanese companies to take a stricter approach to their local ABC compliance in Vietnam.

Key takeaways and conclusions

The above overview shows that companies operating in Vietnam should improve their compliance programs by incorporating the good practices of other global companies. In particular, companies should implement proactive practices to mitigate compliance risks, including the following:

  • Internal compliance policies: Maintaining strong and robust internal compliance policies and procedures is a vital component to mitigating the risk of compliance breaches.
  • Regular compliance training: All company personnel should receive regular training on compliance policies as well as the necessary knowledge to identify and report potential bribery.
  • Third party management: Third party vendors should be thoroughly vetted and monitored through rigorous due diligence, as well as periodic compliance training and audits.
  • Records: Companies should ensure that transparent and accurate books and records are maintained at all times. In this context, cash transactions should be avoided.

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Please feel free to reach out to Baker McKenzie for further advice on maintaining effective compliance programs in Vietnam.

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Author

Toshio Ibaraki is a member of Baker McKenzie’s Compliance & Misconduct Investigation Group and Dispute Resolution Group in Tokyo. Prior to joining the Firm, he worked at a major international accounting firm, where he gained experience in accounting audits at listed companies. From 2005 to 2007, Mr. Ibaraki was seconded to the principal investment department of a major Japanese securities company where he advised on a wide range of investment matters, including corporate restructuring investment and private equity investment. He was seconded to Baker & McKenzie.Wong & Leow in Singapore from June 2011 to August 2012, where he assisted Japanese companies with compliance and investigation matters in Southeast Asia.

Author

Yoshiaki Muto has more than 25 years' experience handling matters related to international disputes and corporate transactions. He is currently head of the Dispute Resolution Group at the Firm's Tokyo office and a member of the Firm's Asia Pacific Dispute Resolution Group Regional Steering Committee. Yoshiaki is also a member of the Registered Foreign Lawyers & International Legal Practice Committee, chair of the International Legal Service Promotion Centre and a member of the SME Outbound Legal Support Working Group of the Japan Federation of Bar Associations. Yoshiaki has been recommended as a dispute resolution practitioner in Japan by PLC Which Lawyer and Global Counsel 3000, and has been recognized as a leading individual in the dispute resolution and crisis management categories by Asia Pacific Legal 500 and Chambers Asia Pacific.

Author

Thuy Hang Nguyen is a partner in Baker McKenzie's Ho Chi Minh City office and the head of the Employment and Labor, and Compliance and Investigations practices in Vietnam.
Her diverse working experience, broad knowledge in various areas of law, and business management qualifications allows her to provide clients with practical and commercially savvy legal advice, and to create effective, strategic and innovative solutions for her clients to navigate around the ever-changing legal landscape of Vietnam.
As head of Baker McKenzie Vietnam’s Employment and Labor practice, Hang is in charge of developing and providing strategy for the practice, training and coaching team members and coordinating the global and regional employment practices when related to Vietnam. She is a member of the Steering Committees for the Firm's JAO and Asia Pacific Employment Practice Groups, and the Global Immigration and Mobility Group. Hang is also a leading authority and frequent speaker on employment and labor law in Vietnam and the Asia Pacific region.

Author

Takeshi Yoshida is a partner in the Firm's Dispute Resolution and Compliance & Investigations groups in Tokyo. He handles international dispute resolution and corporate investigations as well as compliance and commercial contracts. He has been recognized as a "Next Generation Partner" in Japan's dispute resolution field by The Legal 500 (2022 edition). His experience includes working at the ICC International Court of Arbitration in Hong Kong and as a panel arbitrator at the Japan Commercial Arbitration Association (JCAA). Since 2015, Takeshi has been teaching business negotiation strategy as a part-time lecturer at Chuo University's Graduate School of Strategic Management (Chuo University Business School). In addition, he is a member of the Tokyo Bar Association, the New York Bar Association, the Chartered Institute of Arbitrators (CIArb) as an MCIArb, the Institute of Internal Auditors (IIA) as a CIA, and the Association of Certified Fraud Examiners (ACFE) as a CFE. Takeshi is fluent in English and Japanese.

Author

Boris Hall is an Associate from Baker McKenzie, Ho Chi Minh office.

Author

Wabi Tanaka is an associate in Baker McKenzie's Tokyo office.

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