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Indonesia Anti-Corruption Update : Latest Charges Under Corporate Criminal Liability Provisions


On 31 May 2021, thirteen of Indonesia investment management companies (“Investment Managers”) were charged by the Indonesian Attorney General’s Office (“IAGO”) with corruption and money laundering. In the indictment, the IAGO claims that the Investment Managers received illegal commission fees in managing PT. Jiwasraya’s investment funds (one of the biggest state-owned insurance companies), and have also illegally enriched themselves or other third parties. In addition, these illegal conduct are alleged to have led to financial loss suffered by the state in the amount of 12.157 trillion Rupiah, roughly equivalent to 842 million US dollars.


Corporation as perpetrator

Under the Indonesian Anti-Corruption Law, corruption is taken as being committed by a corporation when the individuals committing the offense, based on their responsibilities or other relationship with the corporate entity, acted within the corporate environment, whether personally or collectively. This means that corporate criminal liability under the Anti-Corruption Law extends not only to acts committed by the directors, but also those committed by employees and proxies, insofar as such acts were committed within the corporate environment.


Under the Indonesian Anti-Money Laundering Law, the elaboration appears to be clearer. A violation in this law is taken to be committed by a corporation if such violation is:

  • carried out or ordered by an individual exercising control over the corporation;

  • carried out for the purpose of achieving the corporation’s purposes and objectives;

  • carried out in the performance of the official duties and functions of the person committing the offense or the individual giving the order; and

  • carried out for the benefit of the corporation.

Penalty

The potential main penalty under the Indonesian Anti-Corruption Law for corporations is a fine with varying maximum amounts depending on the violation. In the case cited above, since the Investment Managers were charged with corruption, the maximum fine would be 1 billion Rupiah plus one-third of the amount (the additional one-third are applied to corporate offenders). On the other hand, the maximum fine for corporations under the Anti Money-Laundering Law is 100 billion Rupiah.


However, in addition to the primary sanction, the court may also impose additional penalties, among others:

  • compensation for the state’s financial loss;

  • suspension of business activities;

  • revocation of business license;

  • dissolution;

  • confiscation of assets; and/or

  • forced takeover.

Defence


Unlike in the case of individual perpetrators, the Indonesian criminal system as it currently stands has yet to include legal defense against corporate criminal liability charges.


In the absence of legal defense, in 2016 the Indonesian Supreme Court issued a regulation concerning procedures for handling corporate criminal liability cases, in which the Supreme Court stated that to determine whether corporations are liable, judges should also assess whether a company have taken the necessary steps to prevent criminal violations and be compliant with the prevailing laws and regulations.


Also, in November 2018 the Corruption Eradication Commission (Komisi Pemberantasan Korupsi / KPK) also issued a corruption prevention guide for the business sector, which consists of several guidelines and processes to be implemented in the private sector.


In our view, strict implementation of anti-corruption policy and guidelines that are in line with the Supreme Court regulation and KPK’s corruption prevention guide may be seen as a token of good faith from corporations, which may eventually be useful if a corruption charge is leveled against it.


How we can assist you


We have assisted clients in providing legal advice in anti-corruption matters, reviewing anti-corruption policies, and representation in legal proceedings.


By Emir Z. Pohan and Markus Sugiarto


Key contacts:

  1. Emir Z. Pohan (emir.pohan@eplaw.id)

  2. Markus Sugiarto (markus.sugiarto@eplaw.id)


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