THE DEVELOPMENT OF CORPORATE CRIMINAL LIABILITY IN
INDONESIA: CORRUPTION CASE
Yudi Kristiana* and Surya Tarmiani†

I. INTRODUCTION
Corruption is recognized as a world phenomenon where its existence follows the historyof human kind. 1 There is no primordial indigenous culture without corruption; there is no
system (from that of the USA to that of Japan) which is free from vast areas of corruption;
there is no center of government (from the prairies of America to the communist
collectivization) which has not been vitiated or distorted by corruption; there is no religion(eastern, Judeo-Christian or Islamic) which has not had to confront evils connected tocorruption; there is no empire (be it Persian, Roman, British or Soviet) which has notexperienced and has not been damaged by corruption.
Corruption is a serious phenomenon in Indonesia. Corruption used to be defined as “theuse of public power for private profit, in a way that constitutes a violation of the law. This
covers the case not only of an official who receives bribes either to act or not to act, but alsoof the one who takes none, but uses his offices to enrich himself illegally”. The term of private
is to be understood as not limited to the official, but also including a group or class with which
he identifies, while profit should be taken to cover all forms of advantage or benefit, not merely
financial.2
It is an undeniable fact that corruption has been widespread over all dimensions of lifein the nation. However, the most worrisome fact is that corruption does not originate frompeople at the lower social level, who may need more income to meet their living needs, but, on
the contrary, it originates at first from the elites.
Law enforcement frequently deals with corruption, and prosecutors routinely send theoffender to jail, but the assets which are the result of the crime or a predicate to crime, are not
identified and traced properly. Sending people to jail has become mainstream in the work of
the criminal justice system. Of course, the fact that the proceeds of the crime are often notrecovered is worrisome. So we need a paradigm shift.
In dealing with the effort to confiscate these assets, corporate criminal liability isimportant.

Head of Sub-Directorate of Other General Crime, Attorney General Office, Indonesia.
Investigator, Corruption Eradication Commission, Indonesia.
1
Adolfo Beria, “Global Strategies Against Corruption”, in Responding for Corruption: Social Defence,
Corruption, and the Protection of Public Administration and the Independence of Justice, updated documents on
the XIII International Congress on Social Defence, Lecce Italy, 1996, edited by Paolo Bernasconi, 2000, page 23.
2Leslie Palmer, The Control of Bureaucratic Corruption, Case Study in Asia, Allied Publishers Private Limited,
New Delhi Bombay Calcutta Madras Bangalore Hyderabad Ahmedabad, 1985, page 1.
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II. CORPORATE CRIMINAL LIABILITY UNDER THE ANTI-CORRUPTION
LAW
For a long time, Indonesia has had regulations establishing corporate criminal
responsibility, such as those founded on tax fraud, economic fraud, banking fraud, etc.,
including in corruption matters. However, implementation has not been done effectively.
Under Law No. 31 Year 1999 regarding the Eradication of the Criminal Act ofCorruption, as amended by Law No. 20 Year 2001 (the Anti-Corruption Law), a company
and/or individual directors may be exposed to potential criminal charges for corruption.
Articles 2, 3 and 5 through 16 of the Anti-Corruption Law delineate the perpetrator ofa criminal act of corruption with the phrase setiap orang (any person). Orang (person) itself isdefined under Article 1, point 3 of the Anti-Corruption Law to include a company. Pursuant to
Article 1, point 1 of the Anti-Corruption Law, a company is a group of persons and/or assetsorganized either as a legal entity or as a non-legal entity. Therefore, any person, which includes
a company committing a criminal act of corruption under one of the foregoing provisions of
the Corruption Law may be punished with criminal sanctions.
The liability of a company for criminal acts under The Anti-Corruption Law is
specifically enshrined in Article 20 of the law, which, in the relevant part, reads as follows:
1. If a criminal act of corruption is committed by or in the name of a company,
the criminal charges and verdict may be made against the company and/or
its officers.
2. Criminal acts of corruption are committed by the company if such criminal
acts are committed by persons based on an employment relationship or otherrelationship, acting in the corporate scope, whether alone or in concert.
Despite the clear language of the Anti-Corruption Law, there are very few cases inwhich the Indonesian courts have subjected a company to criminal liability for corruption.
Thus, while the anti-corruption law permits the bringing of charges against a company,
the fact remains that law enforcement agencies have been reluctant to invoke its provisions
against companies as opposed to individuals.
A.
1.

Strengthening Measures
Capacity Building
Prosecutors, investigators from the AGO, National Police and also investigators fromthe KPK have undergone a comprehensive training programme to enhance their knowledge
and capacities to address corporate corruption in Indonesia. The training came on the back ofa landmark legal development that strengthened legal mechanisms to investigate and prosecutecorporate corruption offences.
2.

Providing Guidelines
We realized that we already have regulations for corporate criminal liability based on
Law No. 31 Year 1999 regarding Eradication of the Criminal Act of Corruption, as amended
by Law No. 20 Year 2001, but the regulation lacks complete detail, which is why we needguidelines.

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In December 2016, the Supreme Court of Indonesia issued a set of regulations (theSupreme Court Regulations No. 13 Year 2016), which addressed legal ambiguities that wereimpeding prosecutors and investigators from pursuing corporations for committing criminal
offences, including corruption. Particularly this regulation makes criminal procedure incorruption cases more efficient, and guides prosecutors and law enforcement in the handlingof corruption cases.
The important provisions found in the SCR are:(a) Group and Successor Liability
The SCR apply to any type of corporation, whether it is the in the form ofa limited liability company or a partnership. The SCR do not differentiate
between local and foreign corporations. Given the board definition of
corporation and the non-differentiation of local and foreign corporation.
The SCR define the corporate criminal offence as a criminal act done by
any person who, based on an employment relationship or other relationship,acts whether alone or with others, for and on behalf of the corporation withinor outside the corporation business environment.
Criminal liability is not only limited to corporations, but can also be
applied to a group of corporations.
(b) The Requirement for Corporation Liability
There are 3 (three) requirements to hold a corporation liable for a criminal
offence: (1) the corporation might receive profit or benefit from the criminalact, or the criminal act was done on behalf of the corporation; (2) the
corporation let the criminal act be performed; (3) the corporation failed to takenecessary steps to prevent the criminal act, to prevent a greater impact, andfailed to ensure compliance with applicable laws in order to prevent a criminal
act; (4) during the investigation of a suspected corporation, the corporation will
be represented by a member of the Board of Directors. Summonses or
subpoenas will be addressed and delivered to the address of the corporation’sseat or where the corporation operates.
The SCR adopts a broad interpretation of management, as it is defined
not only to include people having the authority to manage or represent a
corporation, but also those that have control over or who can influence a
corporation’s policies or decisions. This means that management is not only
limited to members of the board of directors of the corporation being prosecuted.
(c) The Punishment for Corporations
The SCR also provide that sanctions can be imposed on the corporation,
management or both. The punishment could be basic and additional punishment.
The basic punishment imposed on a liable corporation is to fine the corporation.
Thus, the corporation is not sentenced to imprisonment or light imprisonment.
Additional punishment can include seizure of evidence or the corporation’s
assets or an order to pay compensation or restitution.
If a fine is sanctioned against a corporation and it fails to pay, theprosecutor’s office can confiscate the assets of the corporation to be auctioned
off. However, if a fine is sanctioned against a member of the management andhe or she fails to pay, he or she will be put in confinement.

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III. BEST PRACTICESA.

The First Corporation Corruption Case, PT GJW (AGO cases)
PT GJW entered into a contract with the Banjarmasin City Government for thedevelopment of Antasari Sentra Market for a period from 1998 to 2008. Under the contract,
the PT GJW is obliged to pay a replacement levy of IDR250,000,000 per annum, repay theAntasari Central Market Credit amounting to IDR3,750,000,000, and build Antasari Central
Market within a 24-month deadline. The development project included 3,459 kiosks / stalls
built over a 25,171 sqm area. On 15 August 2000, an addendum of the contract was made:a. The PT GJW paid IDR250,000,000 per year for the replacement levy subsidy;b. The number of units built was increased to 5,145 units over an area of 34,992.36
sqm;
c. Units would be sold to merchants under a 25-year lease, which for 25 years is alease-free period;d. For 25 years as a replacement subsidy, the PT GJW paid IDR2,500,000,000 incompensation, and if the department store is not rented, then the compensation is
only IDR2,000,000,000.
Until December 2002 the construction of Antasari Sentra Market had not been
completed so the Mayor of Banjarmasin extended the deadline until February 10, 2003. But by
August 2003 it was still not finished, so the Mayor of Banjarmasin revoked the legal orderappointment of the PT GJW as partners and canceled the contract. According to the addendum,PT GJW should build only 5,145 units but without the approval of Parliament Banjarmasin,
6,045 units were built by PT GJW, meaning that an additional 900 units were built. A total of
900 units were sold at IDR16,691,713,166, which was not deposited into the local treasury.
The PT GJW had the obligation to pay compensation amounting to IDR500.000.000, which
included paying rent of IDR2,500,000,000, and making the credit repayment of Inpres Pasar
Antasari in the amount of IDR3,750.000.000. The total amount to be paid was
IDR6,750.000.000, but PT GJW only paid IDR1,000,000,000, so there was a shortfall of
IDR5.750.000.000. The PT GJW gave false information by stating that the construction ofAntasari Sentra Market had not been completed yet. But according to the Project Manager ofMarket Building and the completion report as of September 2004, the development had been
100% completed and as of October 2004 there was a surplus of IDR64,579,000,000.
The PT GJW deliberately did not pay the money management of Antasari Sentra
Market and provided information that was not true as if the project was operating at a loss.
According to the financial statements of July 2004–December 2007 collected funds amounted
to IDR7,650,143,645. Based on the calculation of government auditor, PT GJW had failed to
pay the Banjarmasin City Government in an amount equal to IDR7,332,361,516,00.
The PT GJW used Banjarmasin municipal assets in the form of land and market
buildings to guarantee credit obtained from M Bank amounting to IDR100,000,000,000. In
accordance with the agreement, PT GJW had the obligation to deposit all proceeds of cash andcredit sales in an escrow account at M Bank, but PT GJW only deposited a portion of theproceeds of sale. As of February 19, 2010, related to the use of the working capital loan fromM Bank, PT GJW still had a principal liability of IDR83,429,070,000,00, interest payable of－ 123 －

IDR 63,732,298,096.66, and a penalty of IDR52,374,696,578.99 the total amount of
IDR199,536,064,675.65.
On May 23, 2011, the case of PT GJW was decided by the judge. PT GJW was foundguilty and was ordered to pay a fine of IDR1,300,000,000 and was temporarily closed for 6
months. This is the first case of corporate corruption in Indonesia in which a corporation was
found guilty by a judge.
B.

PT DGI (KPK Case)
In July 2017, the Corruption Eradication Commission of the Republic of Indonesia(KPK) opened an investigation of PT DGI under suspicion of corruption as a result of thedevelopment of a criminal corruption case investigation connected with the project work of theSpecial Education Hospital of Infectious Diseases and Tour Travel Universities Dayan in Fiscal
Year 2009-2010. The company allegedly lost the state IDR25 billion from the IDR138 billion
project budget. Currently PT DGI has changed its name to PT NKE. This is the first case of
the KPK in a criminal act of corruption with a corporation suspect.
In the previous stages, the corporate executives, the PT DGI executives were designatedas suspects several months before, and the former Director of PT DGI has also been made asuspect. In the previous case in the decision of the Marketing Manager of PT DGI, MEI,
mentioned that this company gave IDR4.34 billion to NZ for PT DGI to be the winner in the
procurement of development projects Wisma Atlet and Multipurpose Building of South
Sumatra. PT DGI first appeared when the KPK managed to uncover the alleged bribery casein the Wisma Atlet project. The case began from a KPK red-handed operation against MRM,
MEI, and WM.

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