INDONESIA

NEW AND EMERGING FORMS OF CORRUPTION IN INDONESIAAND THE EFFECTIVE COUNTERMEASURES: CORRUPTION IN
THE STOCK MARKET SECTOR
Suyanto R. Sumarta *I. INTRODUCTION
A characteristic of a developed country is the existence of an advanced stock market. The
stock market refers to an equity market and is one of the important areas of a market economy
as it gives firms access to capital while both the existing and potential investors could also bepart of a company's ownership through the acquisition of shares. 1 The stock market also
provides information about the economic condition of a country, through the composite stockindex report. Stock Market development plays a crucial role in the national economy andfinance. 2 If the composite stock index shows a declining trend, it indicates that there is an
economic crisis in a country. Several countries in Asia, including Indonesia, have been hit bya financial crisis, and Indonesia has been hit by the crisis for a long time due to its fragile
economic foundation. Some factors causing the crisis are mismanagement by the company's
management and corruption.
Corruption cases are not only an issue for national development in Indonesia but also havebeen an issue of global development. 3 In Indonesia, corruption was widespread in government
at both central and local levels, and no exception to the business sector involving statecompanies (state-owned enterprises), that have core business in banking, taxation, capital
market, trade and industry, commodity futures, or in the monetary and financial sector.
In 2020, the Attorney General Office of the Republic of Indonesia (AGO RI) in this case
Deputy Attorney General on Special Crime Affairs 4 investigated corruption at PT Jiwasraya 5with a state financial loss amount of Rp16.81 trillion (equivalent to USD1.1 billion). 6 Then in
2021, AGO investigated corruption at PT Asabri 7 with a state financial loss amount of
Rp22.788 trillion (equivalent to USD1.5 billion). 8

Special/Specific Crime Investigator and Prosecutor, Head of Section II of Sub. Directorate Corruption andMoney Laundering at Directorate Investigation of Deputy Attorney General on Special Crime Affair.
1
Kennedy, Osoro. 2013. Kenya’s Foreign Trade Balance: An Empirical Investigation. European Scientific
Journal July 2013 edition vol.9, No.19 ISSN: 1857 – 7881. School of Economics, University of Nairobi, Kenya.
2
Hasan Ayaydın, Nuri Baltacı. 2013. Corruption, Banking Sector, And Stock Market Development: A Panel Data
Analysis, European, Journal of Research on Education.
3
Zulkipli. 2016. Legal Policy of Corruption Eradication At State-Owned Enterprises Sector In Indonesia,
International Journal Of Scientific & Technology Research Volume 5, Issue 02, February 2016.
4
At the Attorney General Office of the Republic of Indonesia, special/specific crimes refer to corruption, tax
crimes, customs crimes, economic crimes, and serious human rights violations crimes (genocide and crimes
against humanity).
5
A state-owned enterprise (BUMN) with a core business in the insurance sector.
6
https://www.bpk.go.id/news/kerugian-negara-kasus-jiwasraya-rp1681-triliun.
7
Other state-owned enterprises (BUMN) with a core business in the insurance sector.
8
https://papua.bpk.go.id/bpk-kerugian-negara-dari-kasus-korupsi-asabri-rp-2278-triliun/
*

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SIXTEENTH REGIONAL SEMINAR ON GOOD GOVERNANCE

The results of the investigation revealed that PT Jiwasraya and PT Asabri invested theirfunds in shares affiliated with Heru Hidayat and Benny Tjokrosaputro. Then the shares werepumped and dumped at the desired value so that it seemed like PT Jiwasraya and PT Asabri
were making a profit. In Indonesia, corruption cases in the capital market are new and emerging
forms of corruption. Corruption in the capital market is very complicated because it involves
so many parties i.e., brokers, investment management, Indonesia Stock Market, Financial
Service Authority, nominees, more than 100 companies affiliated with Heru Hidayat andBenny Tjokrosaputro, and more than 200 bank accounts belonging to suspects and nominees.
II. ATTORNEY GENERAL OFFICE AT A GLANCE
The Attorney General Office of the Republic of Indonesia is the state agency that
implements state power, especially in the field of prosecution. The Attorney General is acompetent authority in law enforcement and justice, elected by and responsible to the President.
The Attorney General Office has wider core duties and powers, from the investigation of
special crimes up to the execution of court sentences and criminal decisions. These are addedby the duties to upkeep public order and stability, and supervision of religious and traditional
beliefs which might be a threat to the state and public interest.
With numerous duties applied for the legal field, the AGO as one of the law enforcement
authorities is demanded to perform more roles in law enforcement that are free from corruption,collusion, and nepotism, the upholding of legal supremacy, protecting the public interest, as
well as the preservation of human rights. Referring to Legislation Number 16/2014 andNumber 11/2021, the AGO as a government institution exercising the prosecutorial power ofthe state must be independent in performing the functions, duties, and powers, unbounded toany influence, either from the governing power or other parties.
Besides a role in a criminal case, prosecutors also have other roles in the Civil Code andthe State Administration, which may represent the Government in a Civil Case and the State
Administration for the State Attorney Prosecutor.
III. CORRUPTION CASES IN THE LAST TEN YEARSThe Government of Indonesia has implemented strategies and approaches to combating
corruption, by Law Number 31/1999 on Eradication of Corruption, as amended with Law
Number 20/2001 on the Amendment of Law Number 31/1999 on Eradication of Corruption.
The law regulates seven types of corruption, i.e.:--

unlawful acts that cause state financial or economic loss;
The formulation of the element of “state financial losses” in the provision has theconsequence that there should be a state financial loss caused by an unlawful act orabuse of power.
bribery;
embezzlement;
extortion;
fraud;
conflict of interest; andgratification.

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INDONESIAIn Indonesia, three institutions have the authority to investigate corruption cases, i.e., theAttorney General’s Office, the Indonesian National Police, and the Corruption Eradication
Commission (KPK-RI).
In the last ten years, many corruption cases have been revealed by these three institutions.
Most cases are corruption in the procurement of goods and services sector. Based on theperformance report of the Prosecutor's Office of the Republic of Indonesia in 2021, theinvestigation stage is 1,856 cases, the prosecution stage is 1,633. Statistically, when comparedto the previous years, the number of cases handled tends to increase, with details as follows:
Table 1.
No
1
1
2
3
4
5
6
7
8
9
10

Corruption Cases Handled by the INP, 9 the AGO-RI, and the Corruption
Eradication Commission (KPK-RI) from 2012-2021

Period
2
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012

INP & AGO RI
3
1.633 111.275 13
1.596 15
1.803 171.918 192.434 212.446 232.225 25
2.013 27
1.511 29

KPK-RI 10
4

122 1281 14
234 16151 18103 20
76 22
95 24
45 26
73 28
45 30

Indonesian National Police (Polri).
Corruption Eradication Commission of the Republic of Indonesia.
11
Secretariat of Deputy Attorney General on Special Crime Affair, (2022) Recapitulation of Corruption Cases in
2021, Jakarta.
12
KPK-RI, (2022), 2021Annual Report, p. 40.
13
Ibid.
14
KPK-RI, (2021), 2020 Annual Report, p. 50.
15
Deputy Attorney General on Special Crime Affair, (2022), Recapitulation of Corruption Cases in 2021, Jakarta.
16
KPK-RI, (2020), 2019 Annual Report, p. 64.
17
Attorney General Office, (2019), 2018 Annual Report, Jakarta: AGO, p. 47.
18
KPK-RI, 2018 Annual Report, p. 73.
19
Ibid.
20
Ibid.
21
Attorney General Office, (2017), 2016 Annual Report, Jakarta: AGO, p. 64.
22
Ibid.
23
Attorney General Office, (2016), 2015 Annual Report, Jakarta: AGO, p. 58.
24
KPK-RI, 2015 Annual Report, Jakarta: KPK-RI, p. 72-102.
25
Attorney General Office, (2015), 2014 Annual Report, Jakarta: AGO, p. 53.
26
KPK-RI, 2014 Annual Report, Jakarta: KPK-RI, p. 41.
27
Attorney General Office, (2014), 2013 Annual Report, Jakarta: AGO, p. 49.
28
KPK-RI, 2013 Annual Report, Jakarta: KPK-RI, p. 59-83.
29
Attorney General Office, (2013), 2012 Annual Report, Jakarta: AGO, p. 47.
30
KPK-RI, 2011 Annual Report, p. 64-72.
9

10

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Table 2. Recapitulation of Asset Recovery in 2012-2021 31

No

Period

1
1
2
3
4
5
6
7
8
9
10

2
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012

Asset Recovery
by AGO
Million
USD
Trillion Rupiah(1USD~
Rp15,247)3
4
22.1351,453
19.563
1,284
2.237
147
0.843
55.3
0.734
48.2
0.579
37.9
1.347
88.4
1.614
105.8
0.607
39.8
0.404
26.5

Asset Recovery
by KPK-RI
Million
USD
Billion Rupiah(1USD~
Rp15,247)
5
6
249.6
16.4
122
8
330.6321.7
528.1234.6
315.15
20.7
512.3
33.6
211.92
13.9
112.7
7.4
260.6217.1
146.38
9.6

IV. CORRUPTION IN THE STOCK MARKET SECTORThe Deputy Attorney General on Special Crime Affairs focuses on corruption with a large
scale of state financial losses and complex case corruption that is difficult to prove. As per the
Corruption Crime Law, Indonesia categorizes corruption as a crime that is challenging to prove,with the following indicators:
a. cross-sector;
b. conducted using advanced technology; orc. committed by the suspect/defendant as a state administrator.
The explanation of Article 27 of the Corruption Crimes Law states that those categories
include: corruption in the banking sector, taxation, capital market, trade and industry,
commodity futures, or in the monetary and financial sector.
In the last ten years, AGO-RI has shown a significant role in dismantling and proving casesthat are categorized as difficult. Cases categorized as complex cases include the following:
1.
2.
3.
4.
5.
6.

the perpetrator is a high-ranking public official;
the perpetrator is from the private sector (corporations and other businesses);using a pattern of financial transactions that are complicated;
capital market and banking sector;
export/import of commodities needed by the public, especially during periods of crisis;
enormous state losses.

In handling complex cases, the Investigators and Prosecutors of the AGO no longer performa simple proof mechanism but have also optimized scientific evidence, including electronic
Processed from the Annual Reports of the Attorney General Office of the Republic of Indonesia and Corruption
Eradication Commission (KPK-RI) from 2012-2021.

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INDONESIA
evidence. Forensic analysis of electronic evidence is one of the important sources of
information used in investigations, including interception technology.
Several other methods are used in the investigation of trading on the stock market,
investigation of companies that are nominees who are facilitators of corruption, andconcealment of corruption proceeds.
These “high profile” cases also involve foreign jurisdictions in concealing the proceeds ofcorruption. For example, in the Jiwasraya corruption case, the Investigator utilized electronic
evidence to prove the corruption, by analysing electronic data from computers, mobile phones
and other electronic devices.
A. Summary of the Jiwasraya Corruption Case
Jiwasraya's finances, which have been worsened since 2008, were used by the suspects(Benny Tjokrosaputro, Heru Hidayat, and friends) to benefit themselves by pretending to havesaved Jiwasraya's finances. First, Heru Prasetyo, Finance Director of Jiwasraya, made anagreement with Heru Hidayat and Benny Trokrosaputro, that Jiwasraya would place its funds
in shares owned by Heru Hidayat and Benny Tjokrosaputro. Jiwasraya bought shares owned
by Benny and Heru Hidayat without proper analysis. The shares purchased are third-liner
shares which are not liquid and are “pump and dump” shares. The shares were pumped anddumped for window dressing so that Jiwasraya's financial statements seemed to be making a
profit.
Because the composition of shares affiliated with Heru Hidayat and Benny Tjokro in the
Jiwasraya portfolio exceeded the regulatory limit, then Hery Prasetyo made an agreement with
13 Investment Managers to create a special Mutual Fund (Reksa Dana) for Jiwasraya only. The
mutual funds (reksa dana) are not managed professionally by Investment Management but arecontrolled by Benny Tjokro and Heru Hidayat through Joko Hartono Tirto. Underlying the
Mutual Funds (Reksa Dana) are also shares owned by Benny Tjokro and Heru Hidayat. The
shares as an underlying Mutual Fund are also third-liner shares which also are not liquid andare “pump and dump” shares.
The consequences of the actions of the suspects have caused a state financial loss of
Rp16.81 trillion (equivalent to USD1.1 billion).
B. Money-LaunderingState financial losses amounting to Rp16.8 trillion (equivalent to USD1.1 billion) werereceived by Benny Tjokrosaputro and Heru Hidayat, through the accounts in the names ofBenny Tjokrosaputro and Heru Hidayat and on behalf of several nominees. For example, from26 November to 22 December 2015, Benny Tjokrosaputro received payment of the Medium
Term Note (MTN) of PT Armidian Karyatama and PT Hanson International, in the amount of
Rp880 billion. Furthermore, Benny Tjokrosaputro hid or disguised the origin of the funds, used
the proceeds to purchase property in Jakarta, Bekasi, Maja, Lebak, Jogjakarta, Singapore, New
Zealand, and also used the proceeds to purchase shares in the name of another person (nominee)
and companies.
The money-laundering carried out by Benny Tjokrosaputro and Heru Hidayat involved
more than 100 companies affiliated with Heru Hidayat and Benny Tjokrosaputro, more than
200 bank accounts belonging to suspects and nominees.

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C. Asset Recovery
Benny Tjokrosaputra and Heru Hidayat have testified at trial that they purchased assets in
Singapore and New Zealand. Accordingly, AGO RI pursued international cooperation torecover the proceeds of crime.
To recover the state’s financial losses, the AGO has made efforts to request cooperation
with several regional countries to assist the Government of Indonesia in the forfeiture of assets
by sending requests for mutual legal assistance (MLA). The AGO also cooperates with New
Zealand in asset recovery in the country through the informal asset recovery network, ARINAP.
Regarding asset recovery, Indonesia issued Law No. 8/2010 on Anti-Money Laundering,which provides more opportunities to investigate with a “follow the money” approach. Thislaw has been implemented in Indonesia as an instrument to recover assets from the perpetratorsof corruption. With the Anti-Money Laundering Law, crime proceeds can be recovered andcontrolled by the state. These have been done by forfeiture and prosecution so that the assets
can be recovered by the State, following the asset recovery strategy of UNCAC.
AGO RI has investigated and prosecuted the Jiwasraya corruption for 5 (five) months, from27 December 2019 to 11 May 2020. In the forfeiture of assets, Investigators and Prosecutors
seized assets of the suspects worth Rp18.5 trillion (equivalent to USD1.17 billion) in the formof land, buildings, apartments, hotels, factories, coal mining, cash, mutual funds, insurance
policies, and securities/shares as well as companies.
V. CHALLENGES OF ASSET TRACING AND ASSET RECOVERY
Modern communication tools as well as the easy mobility of assets and funds allow
individual perpetrators to transfer their illicit proceeds around the globe. So that requires very
close cooperation on a supranational level, especially in Asia and the Far East. Secondly, laws
in the relevant jurisdictions need to provide powerful tools to freeze assets, which arepotentially proceeds of corruption.
The international community has recognized the importance of asset tracing and recovery,i.e., First, the United Nations Convention Against Corruption considers the return of stolen
assets one of its fundamental principles, and requires its signatories to provide a factual andlegal framework for the effective cross-border recovery of assets. Secondly, the European
Union has introduced several legal instruments aimed at simplifying asset recovery and tracing– considered to be a strategic priority – across the jurisdictions of its member states. 32
In the Jiwasraya corruption case, until now after the final judgment, not a single asset fromoverseas has been recovered by AGO RI. The Government of Indonesia has requested
assistance through an MLA request to Singapore for the freezing and returning of the following
assets:1. Forfeiture of 28 apartment units;
2. Freezing of 7 bank accounts.
Knoetzl, B. and Marsch, P. 2016. Article: Challenges of Asset Tracing and Asset Recovery.
<www.whoswholegal.com>

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INDONESIA
Based on court sentences/criminal decisions, all assets indicated above stemmed from
corruption. Hence, AGO RI requested help from Singapore to freeze and forfeit all these assets.
However, until now, no agreement has been met to obtain the MLA agreement approval.
Therefore, through this meeting, AGO RI hopes to develop solutions with other countries
in the region to provide practical steps for each country facing obstacles in enforcing corruption
laws overseas. We hope to get assistance in the form of a quick reaction that is certainly
beneficial for asset recovery, as envisioned by UNCAC.
VI. COUNTERMEASURES
A. Imposing Maximum Penalties in Corruption Cases
According to the Supreme Court's decision, Heru Hidayat and Benny Tjokrosaputro weresentenced to life imprisonment, as well as compensation for state financial losses of Rp 10.78
trillion (Heru Hidayat) and Rp6,078 trillion (Benny Tjokro). Meanwhile, Hary Prasetyo,
Hendrisman Rahim, and Joko Hartono Tirto were sentenced to 20 years in prison. Syahmirwan
was sentenced to 18 years in prison.
This is an historical judgment in the effort to eradicate corruption in Indonesia and provesthat the Attorney General's Office of the Republic of Indonesia is very serious about eradicating
mega corruption.
B. Forfeiture of All Proceeds of Crime and Criminal Instruments
In the Jiwasraya corruption case, investigators and prosecutors carried out asset tracing andrecovery with an estimated value of around Rp18.5 trillion in the form of property, cash, mutual
funds, insurance policies, and securities/shares as well as companies.
C. Implementation of Corruption Impact Assessment
The Deputy Attorney General on Special Crime Affairs is committed to implementing the
Corruption Impact Assessment as a key mechanism to identify and remove corruption-causing
factors in legislation and supporting institutional arrangements.
The corruption impact assessment is designed to examine, evaluate and remove, whereappropriate, corruption-causing factors in laws, regulations, and other legal instruments.
The Guidelines are designed to assist government agencies with identifying corruptioncausing factors in legislation, regulations, and other legal instruments and the supporting
institutional arrangements, and to develop and implement appropriate strategies to remove
identified corruption-causing factors.
VII.

CONCLUSION

From the above description, the following conclusions can be conveyed:
1. In the last ten years, AGO has revealed many cases of corruption, and new andemerging forms is corruption are arising in the stock market sector;
2. Corruption in the stock market sector is a “high profile” and very complicated casebecause it involves so many parties, i.e., brokers, investment management, nominees,

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more than 100 companies affiliated with Heru Hidayat and Benny Tjokrosaputro, andmore than 200 bank accounts belonging to suspects and nominees;
3. Effective countermeasures include the imposition of maximum penalties, forfeiture ofassets, and the application of the Corruption Impact Assessment (CIA); and4. The effectiveness of asset tracing and recovery will depend on the degree of cooperation
between countries, especially in Asia and the Far East.
VIII. RECOMMENDATIONAGO-RI supports regional solutions to provide practical steps for each country facing
obstacles in enforcing corruption laws overseas. The Deputy Attorney General of Special
Crime Affairs hopes to get assistance in the form of a quick response that is certainly beneficial
for asset recovery, as envisioned by UNCAC.
IX. CLOSING
The work of AGO RI in dealing with corruption cases has increasingly gained trust andappreciation from the public. This is shown by the results of the 2022 national survey regarding
the Public Evaluation of Government in the field of Economy, Politics, Law Enforcement, andCorruption Reduction, which shows an increase in public trust toward AGO RI.
Previously on April 2022, AGO RI placed eighth on the survey. The institution has now
climbed to fourth place in July 2022 with 74.5 per cent. This is a result of our success inhandling and resolving massive and complex cases, and resulting in significant state loss, andeven impact on the state economy. We managed to handle the Jiwasraya case with a state
financial loss totalling Rp16.81 trillion (equivalent to USD1.1 billion), the Asabri case with
Rp22.788 trillion (equivalent to USD1.5 billion), and a corruption case committed by a public
administrator resulting in the rarity of cooking oil in a period of crisis with current calculated
loss of 20 trillion rupiahs, and Duta Palma which caused state financial losses and state
economic losses of around Rp78 trillion (equivalent to USD5 billion), both of which are still
being tried.

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INDONESIAREFERENCES
Alsherfawi AlJazaerli, Sirop, Mouselli. 2016. Corruption and stock Market Development: New
Evidence from GCC Countries. Journal: Verslas: Teorija ir praktika.
Attorney General Office of The Republic of Indonesia. 2012-2021 Annual Report. Jakarta:
AGO-RI.
Corruption Eradication Commission (KPK-RI). 2012-2021 Annual Report. Jakarta: KPK-RI.
Hasan Ayaydin, Nuri Baltaci. 2013. Corruption, Banking Sector, And Stock Market
Development: A Panel Data Analysis, European, Journal of Research on Education.
Secretariat of Deputy Attorney General on Special Crime Affairs. 2022. Recapitulation of
Corruption Cases in 2021. Jakarta.
Kennedy, Osoro. 2013. Kenya’s Foreign Trade Balance: An Empirical Investigation. European
Scientific Journal July 2013 edition vol.9, No.19 ISSN: 1857 – 7881. School of
Economics, University of Nairobi, Kenya.
Kuntadi. 2022. Introduction to the 2nd Panel with the Theme: “Current Developments andChallenges in Investigating and Prosecuting Complex Corruption Cases in the Region”.
Speech of Director of Investigation of Deputy Attorney General on Special Crime in
The Regional Anti-Corruption Conference for Law Enforcement Professionals inSoutheast Asia, August 28th up to Sept 1st, 2022 di Royal Orchid Sheraton Bangkok,
Thailand.
Supardi, S. 2020. The collapse of our insurance: the chaos of Jiwasraya Insurance, the Dutch
Heritage to the Absence of the State. Jakarta: IPB Press.
Zulkipli. 2016. Legal Policy of Corruption Eradication at State-Owned Enterprises Sector inIndonesia, International Journal of Scientific & Technology Research Volume 5, Issue
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