Wednesday, January 25, 2017
Corporate Corruption Cases: A Review
Marcell Sihombing, Novrieza Rahmi
Prior to the issuance of Supreme Court Regulation No. 13 of 2016 on Procedures for the Settlement of Criminal Acts Committed by Corporations (“Regulation 13/2016”), corporations were rarely named as alleged perpetrators in corruption cases under the previous framework of Law No. 31 of 1999 on the Eradication of Corruption Crimes (“Anti-Corruption Law”) and its amendment, Law No. 20 of 2001. In fact, the Corruption Eradication Commission (KPK) had never previously made any corruption allegations against any corporations.
In this context then, it is important to note that the Banjarmasin District Prosecutor’s Office recently managed to bring PT Giri Jaladhi Wana before the court as part of a corruption case. Indeed, PT Giri Jaladhi Wana was ultimately found guilty through the issuance of a final-and-binding court decision, was sentenced to IDR 1.3 billion in fines and was also sanctioned with an additional sentence in the form of a temporary suspension of its business activities.
In spite of this success however, Indonesia’s various law-enforcement institutions still seem reluctant to invoke the Anti-Corruption Law against corporations who are the alleged perpetrators in corruption cases, due to the fact that the Anti-Corruption Law does not clearly regulate procedures for the handling of corruption cases involving corporations. This reluctance is being reinforced by the difficulties involved in proving that given corporations are engaged in corrupt practices, as well as the problems involved in ascertaining whether a given member of a corporate-management structure has acted solely on his/her own behalf or on behalf of his/her employer.
Nevertheless, the KPK and the Public Prosecutor’s Office have attempted to incorporate the concept of corporate responsibility into indictments which have been made against individual suspects during recent corruption cases. These attempts have ultimately led to the successful issuance of legal-and-binding court decisions on a number of occasions, although most of the judges involved in these cases ultimately rejected the inclusion of corporate responsibility, claiming that the corporations in question were not originally addressed in the official indictment letters.
Hukumonlinehas compiled at least six individual corruption cases in which both the KPK and the Public Prosecutor’s Office attempted to incorporate the concept of corporate crime into their indictments. This was undertaken in a bid to ensure that the various corporations concerned were forced to pay compensation to the victims involved, as well as to allow for corporate assets which were generated as a result of alleged corruption cases to be seized by the government. These six cases break down as follows:
1. The Chevron Case
The Attorney General’s Office found itself in the legal spotlight during the investigation into the bioremediation corruption case involving PT Chevron Pacific Indonesia (CPI). Aside from the involvement of a US company, this case was also seen as important in terms of the huge state loss that was involved (around USD 19.9 million).
In addition to several PT CPI employees, the Attorney General’s Office also indicted the directors of PT CPI’s partners, namely Ricksy Prematury from PT Green Planet Indonesia (GPI) and Herland bin Ompo from PT Sumigita Jaya (SJ). These three companies were accused of colluding in order to gain illegal profit from a restoration project involving oil-contaminated land and the use of the bioremediation method.
The Indonesian Court for Corruption Crime in Jakarta ultimately convicted all of the abovementioned parties. Moreover, the presiding judges in this case also granted the Attorney General’s Office’s indictment and sentenced both PT GPI and PT SJ to pay compensation amounting to USD 3.089 million and USD 6.9 million respectively.
However, the Jakarta Appellate Court rectified the above court decision. The presiding judges in the appeal case asserted that Mr. Prematury had not received any portion of the corrupted assets in question, and thus the decision to sentence PT GPI with a compensation fine was deemed to have no legal basis in light of the fact that PT GPI as a company was not the subject of the original indictment. A similar decision was also reached by the judges presiding over Mr. Ompo’s appeal case and PT SJ was also released from its obligation to pay the original USD 6.9 million fine.
Opposing the Appellate Court’s decision, the Attorney General’s Office directly filed for a cassation at the Supreme Court. At the Supreme Court, the judges presiding over both Mr. Prematury and Mr. Ompo’s cassation cases rectified the decision issued by the Appellate Court, arguing that Mr. Prematury and Mr. Ompo had indeed acted on behalf of PT GPI and PT SJ in order to generate profit for their respective companies and must therefore be held accountable for their actions. As a result, both of the original fines payable by PT GPI and PT SJ were reinstated.
Unfortunately however, the cassation decision could not be executed by the General Attorney’s Office because both Mr. Prematury and Mr. Ompo decided to file for a case review, which ultimately decided in their favor. Having eventually been handed innocent verdicts after a lengthy legal process, Mr. Prematury and Mr. Ompo’s case-review decisions encouraged the other parties involved in this particular case to also file for case reviews.
2. The IM2 Case
In addition to the abovementioned Chevron Case, another corruption case involving the misappropriation of PT Indosat Tbk’s 2.1 Ghz/3G (third generation) frequency network by PT Indosat Mega Media (IM2) also hit the headlines. As a result of this case, the General Attorney’s Office ended up indicting Indar Atmanto, PT IM2’s former Executive Director, for corruption which amounted to some IDR 1.358 trillion in state losses.
Jakarta’s Corruption Crime Court initially rendered a decision favoring the Attorney General’s Office’s indictment and sentenced PT IM2 to pay compensation fines amounting to IDR 1.358 trillion. However, this decision was subsequently rectified by the Appellate Court, as the presiding judges for this appeal case offered similar arguments to the ones offered during the appellate proceedings for the Chevron Case and found that the conviction of PT IM2 and its sentence of compensation fines had no legal basis, since PT IM2 had not been officially indicted in the first place.
Ultimately, the appellate court’s decision was further rectified by the judge presiding over the cassation case, who reinstated the conviction and demanded that PT IM2 pay the IDR 1.358 trillion in compensation. Mr. Atmanto also filed for a case review at the Supreme Court, however this time the petition for review was rejected.
3. The Bank Century Case
During the Bank Century corruption case, which was alleged to have led to some IDR 7.4 trillion in state losses, the KPK only managed to bring a single perpetrator before the courts. The alleged perpetrator’s name was Budi Mulya, former Deputy Governor of Bank Indonesia’s Division IV of Foreign Exchange and Monetary Management.
Mr. Mulya was indicted for committing a corruption crime relating to the stipulation of PT Bank Century Tbk as a systemic bank (i.e. a bank whose failure may end up having a serious systemic financial impact upon the country) and also relating to the granting of the Short-Term Funding Facility (FPJP) to said bank.
In the indictment, the KPK attempted to charge Bank Century, which is now known as PT Bank Mutiara Tbk, with corporate responsibility and demanded that the presiding judges in this case sentence the bank to pay compensation to the tune of IDR 1.581 trillion.
The presiding judges, however, rejected this indictment based upon the argument that a compensation fine could not be imposed upon any parties who were not specifically designated as defendants under the initial indictment. Thus, the presiding judges argued that sentencing Bank Mutiara to pay compensation fines amounting to IDR 1.581 trillion was not proper.
The KPK immediately filed an appeal at the Appellate Court in Jakarta. However, the presiding judges in this appeal case reinforced the Indonesian Court for Corruption Crime’s decision and therefore refused to sentence Bank Mutiara as regards the payment of a compensation fine.
As a last resort, the KPK attempted to file for a cassation at the Supreme Court. However, in spite of approving the KPK’s application, the presiding judges did not sentence Bank Mutiara and three former controlling Bank Century stockholders and reinstate the original compensation fine. Instead, the judges merely altered the imprisonment period and the fine amount which had been imposed upon Budi Mulya.
4. The East Java PLN Project Corruption Case
This particular case is a pertinent example of the KPK’s success as regards incorporating corporate responsibility alongside the indictment of individual suspects in corruption cases. In this case, the KPK indicted R. Saleh Abdul Malik, a former member of PT Altelindo Karya Mandiri’s Board of Commissioners, as the prime perpetrator in a corruption case which involved the East Java State Electricity Company’s (PLN) Customer Management Service (CMS) Project.
During the CMS Project, which was being funded by PLN’s East Java budgetary post during the 2004-2007 period, PT Altelindo Karya Mandiri was alleged to have colluded with PT Arti Duta Aneka Usaha as regards corruption involving the funding in question. It was alleged that this corruption ultimately resulted in IDR 175 billion in state losses. Upon becoming a legal-and-binding decision, Indonesian Court for Corruption Crime Decision No. 2/Pid.B/TPK/PN.Jkt.Pst dated 25 May 2010 strengthened the KPK’s indictment and resulted in the conviction of PT Altelindo Karya Mandiri and PT Arti Duta Aneka Usaha, who were subsequently sentenced to pay IDR 47.101 billion and IDR 15.052 billion in compensation respectively.
5. The Pelalawan Regent Corruption Case
Another example of the KPK’s success over alleged corporate perpetrators of corruption crime involved Tengku Azmun Jaafar, the former Regent of the Pelalawan Regency, and the granting of official Utilization Permits for Timber Products in Areas of Plantation Forest (IUPHHK-HT) to 15 companies. It was alleged that these permits ultimately led to IDR 1.2 trillion in state losses.
Although the court in this case did not sentence the defendants to pay any compensation, the KPK managed to successfully seize the assets of the 15 companies involved. Indeed, the presiding judges in this case, through the issuance of Decision No. 12/PID/TPK/2008/PT.DKI dated 6 January 2009, ordered the seizure of goods relating to the case, specifically a number of timber products in the possession of the following 15 companies:
|No.||Company||Value (Billion)||No.||Company||Value (Billion)|
|1||PT Madukoro||IDR 124.033||9||PT Rimba Mutiara Permai||IDR 106.798|
|2||CV Harapan Jaya||IDR 65.371||10||PT Uniseraya||IDR 19.842|
|3||CV Alam Lestari||IDR 87.737||11||PT Selaras Abadi Utama||IDR 309.958|
|4||PT Mitra Hutani Jaya||IDR 61.265||12||PT Merbau Palalawan Lestari||IDR 77.521|
|5||PT Satria Perkasa Agung||IDR 40.517||13||CV Mutiara Lestari||IDR 5.776|
|6||PT Trio Mas FDI||IDR 26.262||14||PT Putri Lindung Bulan||IDR 49.021|
|7||CV Bhakti Praja Mulia||IDR 66.442||15||CV Tuah Negeri||IDR 25.908|
|8||PT Mitra Tani Nusa Sejati||IDR 142.167||Total||IDR 1.208 Trillion|
6. The Kimia Farma Executive-Director Corruption Case
Gunawan Pranoto, former Executive Director of PT Kimia Farma Tbk, and Rinaldi Yusuf, former Executive Director of PT Rifa Jaya Mula, were proven guilty in a corruption case which involved the Health Department’s Hospital Renovation and Health-Equipment Procurement Project in the Eastern Indonesia Region (KTI) back in 2003. It is alleged that this case led to IDR 104.4 billion in state losses.
According to Supreme Court Decision No. 2127K/Pid.Sus/2010 dated 13 January 2011, the presiding judges ordered that the IDR 37.279 billion in profit generated by PT Kimia Farma Trading and Distribution which was originally seized as a part of the corruption case should be returned to the state.
It is hoped that Regulation 13/2016 will finally enable both the KPK and the Public Prosecutor’s Office to actually to put corporations on trial as a result of corruption allegations, instead of only indirectly incorporating them into indictments which are made against individual suspects. After all, and as also discussed in Hukumonline English’s Indonesian Legal Brief No. 3038, Regulation 13/2016 was, at the end of the day, issued in order to serve as a guideline for the processing and settlement of corporate crimes by the country’s law-enforcement agencies.