Financial Crime World

Judicial Perspective on Corporate Accountability: A Framework for Criminal Liability

In a landmark move, Indonesia’s Supreme Court Regulation No. 13 of 2016 has introduced a new framework for evaluating corporate criminal liability in cases involving companies. This regulation provides crucial guidance on the handling of criminal cases involving corporate entities and serves as a benchmark for courts to assess the accountability of businesses.

Tests for Corporate Criminal Liability

Under the regulation, courts will consider several key factors when determining whether a company is criminally liable for a particular offense:

  • Preventive measures: Whether the company has established preventive measures against criminal action, such as compliance programs and training
  • Profit or benefit: Whether the company gained a profit or benefit from the crime
  • Company interest: Whether the crime was committed in the company’s interest
  • Permitted crime: Whether the company permitted the crime to occur

Anti-Corruption Law: A Key Player

The Anti-Corruption Law is another crucial piece of legislation that shapes corporate accountability in Indonesia. The law criminalizes various forms of corruption, including bribery and gratification, and provides for severe penalties, including imprisonment and fines.

Governing Bodies and Senior Management

Members of governing bodies and senior management are not immune from liability for breach of risk and compliance management obligations. Under the Company Law, senior managers who fail to establish adequate risk and compliance management systems may face:

  • Civil liabilities: Part of the senior management who are not members of the board of directors or board of commissioners may be subject to civil liabilities under the Anti-Corruption Law
  • Administrative sanctions: Directors who cause a breach of risk management compliances may be imposed with administrative sanctions by the Ministry of State-Owned Companies or the Financial Services Authority (OJK)

Administrative and Regulatory Consequences

In addition to criminal penalties, governing bodies and senior management may also face:

  • Administrative sanctions: Imposed by the Ministry of State-Owned Companies or the Financial Services Authority (OJK) for breach of risk and compliance management obligations
  • Criminal liability: Members of governing bodies and senior management may face criminal liability for breach of risk and compliance management obligations under the Indonesian Criminal Code and various other laws, including the Anti-Corruption Law

Environmental Crimes

The Environmental Protection and Management Law has introduced a dual liability framework for environmental crimes committed by corporations. This means that both:

  • Corporate entity: The corporate entity itself may be held liable for environmental offenses
  • Individual actors: Individual actors within the corporation may also be held liable for environmental offenses

In conclusion, Indonesia’s judicial perspective on corporate accountability is shaped by a complex web of regulations and laws. Companies must establish effective compliance programs and risk management systems to avoid criminal liability. Senior managers and governing bodies are not immune from liability, and failure to comply with regulatory requirements can result in severe penalties, including imprisonment and fines.