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24 December 2018
Outside observers are often surprised by the low number of complex, multi-layered corruption schemes uncovered through whistleblowers in Indonesia, despite such schemes frequently involving numerous participants.
On 18 September 2018 the Government Regulation on Public Participation in the Prevention and Suppression of Corruption (43/2018) was issued to incentivise more whistleblowers to come forward and encourage public participation in the fight against corruption. The regulation revokes and supersedes the little-used Government Regulation 71/2000.
Government Regulation 43/2018, which applies to whistleblowers in both the public and private sectors, gives members of the public the right to "seek, obtain and provide information related to suspected corruption". A whistleblower whose report proves to be well founded – as evidenced by a final and conclusive judicial decision – is entitled to a reward equalling 2% of the total state losses that are recovered, up to a maximum of Rp200 million (approximately $13,500). Should the act of corruption involve a bribe, the whistleblower is entitled to a reward equalling 2% of the value of the bribe and/or the liquidated value of seized goods that are disposed of at auction, up to a maximum of Rp10 million.
Arguably, Government Regulation 43/2018 is unlikely to encourage significantly greater whistleblower participation in the fight against corruption as the rewards cap of 2% of recovered state losses is the same as that provided under Government Regulation 71/2000. Further, Government Regulation 43/2018 actually reduces the incentive to report wrongdoings by imposing a cap of Rp200 million on rewards and only Rp10 million in the case of a bribe. These limits did not exist under Government Regulation 71/2000. Given the dire consequences that could await whistleblowers in terms of their personal safety, the possibility of punishment through the misplaced use of the criminal defamation law and doubts over the reliability of witness protection guarantees, only a very brave person would take the risk based on the incentives provided for in Government Regulation 43/2018.
In early 2018 the Corruption Eradication Commission (KPK) brought its first-ever prosecution against a corporation, PT Duta Graha Indah (now PT Nusa Konstruksi Enjiniring Tbk), for its alleged involvement in a rigged tender for the construction of the Udayana University Hospital in Bali. The case, which dates back to 2009, is said to have led to Rp25 billion in taxpayer losses.
The KPK's previous lack of action against corporations was primarily due to a longstanding loophole in Indonesia's criminal law, which is based primarily on the colonial-era Criminal Code. The code confines criminal liability to 'persons', which was traditionally interpreted as encompassing only natural persons.
Nonetheless, a raft of legislative enactments in recent years have established corporate criminal liability in specific sectors. Some of these statutes (eg, Law 31/1999 on the Eradication of Corruption (as amended by Law 20/2001)) clearly define 'persons' as encompassing not just individuals, but also corporations.
Despite these legislative changes, securing convictions against corporations has continued to prove difficult due to ongoing confusion and general disagreement over the scope of 'person' and the lack of a specific procedure for handling corporate crimes.
With the country's proposed new Criminal Code having apparently stalled in the House of Representatives, the Supreme Court took the initiative by issuing the Supreme Court Regulation on Procedures for the Handling of Corporate Crimes (13/2016), which establishes detailed rules governing:
With the issuance of Regulation 13/2016, errant corporations are much more likely the to find themselves in the dock. In order to avoid this, corporations should make every effort to avoid becoming ensnared in corruption by, at a minimum:
For further information on this topic please contact Ulyarta Naibaho or Bilal Anwari at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125) or email (firstname.lastname@example.org or email@example.com). The Ali Budiardjo, Nugroho, Reksodiputro website can be accessed at www.abnrlaw.com.
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