Supreme Court of Indonesia Ordinance No 13 of 2016: A Breakthrough to Combat Corporate Crime

Selasa, 24 Januari 2017 | 16:41 WIB oleh Tiara Ika Winarni

oleh: Mursal Maulana

Corporate crime has been proliferating in Indonesia. Traditionally, the concept of corporate crime has yet either to be recognized or even regulated in specific rule. Nowadays, because of development of technology and the impact of globalization, all states are facing the proliferation of new emergence crimes especially arising from economic activity conducting both by individual (natural person) and corporate (juridical person). Corporate crimes, unlike traditional crimes, involves crimes that are committed by a pen or computer rather than at the point of a revolver or knife[i]. Due to its extraordinary difficulties, rarely have the states (now is being developed) codified specific rule regarding crime perpetrating by juridical persons including in Indonesia.

Corporate crime refers to acts in violation of the law that are committed by businesses, corporations, or individuals within those entities. Corporate crime is also closely associated with white-collar crime, organized crime, and state-corporate crime. Although most of us do not think of businesses, corporations, or presidents and CEOs of companies when we think of criminals, corporate and white-collar offenses actually cause more deaths, physical injury, and property loss[ii].

As former Dutch colony, Indonesia has been adopting criminal law code inherited from Dutch Penal Code (DPC) which came into force since 1918. Since its enactment almost a century ago, only minor harmonizations were  made but there had been no fundamental changes. Relying solely upon the DPC, Criminal Code of Indonesia did not insert any rules regarding crimes conducted by juridical person because it still adopted the principle “Societas Delinquere non Potest” or Universitas Delinquere non Potest” which excluded juridical person as subject of criminal law.

The effort to regulate such crime was only embodied by legislating specific substantive law as to Corruption Eradication Law No 20 year 2001. Although Indonesia had legislated several substantive laws regulating corporate crimes,[iii] never in its history had Indonesia codified the procedural rules referring to crimes conducted by corporate. It means that even though the perpetrators (in this case refer to corporation) breached substantive law they still could not be prosecuted.

The lack of procedural law hampered the law enforcement toward corporate conducting criminal in Indonesia. According to research conducted by Kristian S.H[iv], there were some corporate crimes occurred in Indonesia which raised detrimental effect, including the following:

1.Corruption case in Riau Forest

This case was initiated by former Chief of Riau Forestry Agency in 2008. He was suspecting of committing corruption. After verdict against his indictment issued by Corruption Court, it was decided that he was found guilty. Then, based on further investigation, it was also revealed that not only did individual involve in this case, but also it was committed by 17 corporations including PT Riau Andalan Pulp and Paper, PT Selaras Abadi Utama, PT Uni Seraya. From this case we could see that the verdict (No 06/PID.B/TPK/2008/PN.JKT.PST) was issued merely upon individual not against those corporations that had proven collectively conducting corporate crime.

2.    PT Lapindo Brantas Mudflow Case

Due to blowout of natural gas well drilled by PT Lapindo Brantas since 29th of May 2006, it caused environmental effect such as drowning homes and land, depletion of fresh water resource and any other social impacts in the sub district of Porong, Siduarjo. Lapindo Brantas  is a corporation controlled by well reputed entrepreneur from Indonesia, Aburizal Bakrie.

3.    Golden Key Case

This case took place in 1994 when the owner of the company Eddy Tanzil collaborated with officials of Indonesia Development Bank (BAPINDO) illegally had convicted conducting collusion in order to support Golden Key’s subsidiary company (PT MSMW, PT PWT, PT GSP, etc). Similar to previous case in Riau, The Court decided that only individual, in this case refer to Eddy Tanzil was sentenced with 20 years of imprisonment followed by penalty and paying compensation of 5 Billion Rupiah.

Based on cases mentioned above, it can be concluded that although corporate committed crime in Indonesia by violating substantive law, it does not mean that those corporates can be sued before The Court. In other words, if corporation commit a crime, only its official will be prosecuted. Corporation is explicitly excluded from the jurisdiction of The Court.

Breakthrough from Supreme Court

To avoid creating legal void, Supreme Court of Indonesia teamed up with other institutions finally formulated a breakthrough in combating corporate crime by issuing Ordinance no 13 of 2016 which had officially entered into force since 29th of December 2016. The Ordinance is fairly straightforward and has long been awaited by other law enforcement agencies to implement substantive law regarding crimes conducted by corporate such as bankruptcy, embezzlement, illegal fishing, money laundering, forest fire, corruption, etc. It is expected that if the Ordinance come into force effectively, it will break the barriers in prosecuting the perpetrators.

The exhaustive content of ordinance can be seen below:

1.    Consideration of The Ordinance No 13 year 2016

In its consideration, it insists that the need for availability of procedural law to combat corporate crime in Indonesia is unavoidable. Latter day, not only can individual perpetrate crime, but also by juridical person such as corporate. The existence of corporate has given vices and virtues toward economic development and law reform in Indonesia. It is expected that the issuance of The Ordinance no 13 of 2016 could generate new spirit in combating crimes committing by corporate.

2.    Scope of The Ordinance No 13 year 2016

The scope of the ordinance has given comprehensive explanation regarding corporate crimes. Although it is not as perfect as definition given by other scholars[v] it is felt sufficient enough. The scope of Ordinance is listed as follow: 

a)   Definition of corporate: 

  • Corporate is defined as both legal entity and non-legal entity. The former includes Limited Company and other Institutions; the latter includes Commanditaire Vennootschap (CV), Firm and other associations which are not recognized as legal entity[vi]. The Ordinance also explicitly asserts that not only does parent company is subjected to the Ordinance, but also its subsidiary company and sister company as well.
  • Corporate crime is defined as crime committed by person based on work relationship or any other relations carried out individually or collectively on behalf of the interest of corporation.

b)   Merger, acquisition, consolidation, liquidation and spin-off. 

The ordinance explicitly regulates legal consequences and liability when the corporate is facing merger, acquisition, consolidation, liquidation and spin-off.

c)    The ultimate objectives of the Ordinance are: 

  1. To be guidance for law enforcement;
  2. to prevent law void;and
  3. to promote the effectiveness in adjudicating corporate crime.

d)   Wrongful act, including the following acts:

  • Each illegal act that is intentionally aimed to gain profit to the corporate, and /or:
  • Corporate act allowing criminal offence occurs without taking necessary effort to prevent it.

e)    Investigation procedure:

  • Summon is directed to the main address of corporate, if the address is unknown, the summon can be delivered to the address of corporate representatives (optional). If the address of representative can not be found too, it can be published through print or electronic media and will be announced to the Court which has jurisdiction on it.
  • When the investigation process takes place, representatives of corporate are obliged to attend it. In the case of the corporate representatives are not able to attend and had been called properly then rejected to it, or did not delegate the presence to other representatives, they would be given one last final call. If they still neglected the order, the law enforcement officers may undertake forceful measures.
  • The representatives of corporate are also obliged to attend when the trial takes place. If not, the previous procedure will be applied against them.

f)    Claim and restitution procedure

All legal claims and restitution are conducted by using civil law procedure.

g)   Pre-trial hearing

There is a new rule regarding Pre-trial hearing especially related to the method of recovering asset. If Pre-trial judge decided the corporate was not guilty, the status of suspect would automatically be terminated. The court decision also affected to the auction sale of confiscated goods belonging to the corporate and it had to reimburse at least 30 days since the verdict was announced. There is also another additional rule regarding confiscated goods which are perishable and fragile or can not be stored until the verdict is determined. Those goods can only be be sold by auction on the condition that they are not purchased by the suspect or his/her family.

h)   Form of sentences.

The ordinance divided the sentences as follows:

  • For the corporate, sentences including:

ü Main sentences.

Because corporate can not be sentenced by imprisonment, only penalty in specific term prevails.

ü Additional sentences.

If corporate legally found guilty, it also can be sentenced by using additional sentences, including: rectification of damages, corporate liability, restitution and disciplinary action.

  • For Individual, sentence including:

Director or other representatives of corporate committing crime will be  sentenced both (imprisonment and penalty).

i)     Non-retroactive principle

The ordinance adopted non-retroactive principle which means only corporate crime committed after the ordinance entered into force can be prosecuted.

[i] This term is used by Sally Simpson on his book: “White Collar and Corporate Crime A Documentary and Reference Guide.

[ii] Richard D Hartley, Corporate Crime, ABC-CLIO, Inc, USA, 2008.

[iii] Money Laundring Law (Law no. 8 year 2010), look at article 6 through 9.

[iv] Kristian, The Law of Corporate Crime (Integral Policy of Corporate Liability in Indonesia), Nuansa Aulia Press, Bandung, 2014, p.6-11.

[v] J Smith & Brian Hogen define corporation as a legal person but it has no physical existence and cannot, therefore, act or form an intention of any kind except through its directors or servants. As each director or servant is also a legal person quite distinct from the corporation, it follows that a corporation’s legal liabilities are all, in a sense, vicarious. This line of thinking is epitomized in the catchphrase “corporation do not commit crimes”; “people do”.

[vi] According to Article 16 Indonesia’s Commercial Code (KUHD), firm is not considered as legal entity.