[Chickensoup]

Fixed it:

HEAVEN is where:
The British are the government
The French are the cooks
The Italians are the lovers
The Japanese are the auto mechanics

HELL is where:
The British are the cooks
The French are the auto mechanics
The Italians are the government
The Japanese are the lovers.

[dayglored]

Wikipedia has it as:

Heaven is where:

the police are British,
the lovers French,
the mechanics German,
the chefs Italian,
and it is all organized by the Swiss.

Hell is where:

the police are German,
the lovers Swiss,
the mechanics French,
the chefs British,
and it is all organized by the Italians.

http://en.wikipedia.org/wiki/Faxlore

So now we just have to substitute Japanese for German...