Financial Crime World

Judicial Perspective on Corporate Accountability: A Look into Indonesia’s Regulatory Framework

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Indonesia’s Supreme Court Regulation No. 13 of 2016 has introduced new tests for evaluating corporate criminal liability in criminal cases involving companies. This regulation assesses whether a company has established preventive measures against criminal action, rather than explicitly criminalizing the absence of compliance programs.

Evaluating Corporate Liability

Under this framework, courts consider several factors to determine corporate liability, including:

  • Whether the company had established preventive measures against criminal action
  • Whether the company gained a profit or benefit from the crime
  • Whether the crime was committed in the company’s interest
  • Whether the company permitted the crime to occur

The Role of the Anti-Corruption Law

The Anti-Corruption Law in Indonesia plays a crucial role in regulating corporate accountability. The law defines several categories of corruption and outlines various corrupt practices subject to criminal prosecution.

Corporate Compliance: A Top Concern

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In the context of corporate compliance, bribery, gratification, and anti-money laundering prevention emerge as key concerns for companies’ compliance programs. The Anti-Bribery Law and the Anti-Corruption Law explicitly identify expenses related to hospitality, including gifts, travel, meals, and entertainment, as forms of gratification.

Individual Accountability

While fines may be imposed on companies found guilty of corruption-related offenses, individuals involved in such activities can face criminal sanctions, including imprisonment. Senior management and governing bodies may also face civil liability for breach of risk and compliance management obligations.

Administrative and Regulatory Consequences

Members of governing bodies and senior management may face administrative or regulatory consequences for breach of risk and compliance management obligations. For instance:

  • Directors of state-owned companies can be imposed with certain administrative sanctions, including postponement of bonus payment or dismissal from the board position.
  • OJK (Financial Services Authority) can impose administrative sanctions on companies that fail to maintain proper risk mitigation measures, including prohibition from appointing members of the Board of Directors or senior management in other companies under their supervision.

Criminal Liability

Members of governing bodies and senior management may also face criminal liability for breach of risk and compliance management obligations. Various laws and regulations impose criminal sanctions on individuals who violate these regulations, including:

  • Indonesian Criminal Code
  • Laws and regulations concerning manpower
  • Tax law
  • Anti-Money Laundering Law
  • Bribery Law
  • Anti-Corruption Law

Conclusion

Indonesia’s regulatory framework provides a comprehensive approach to corporate accountability, with various laws and regulations imposing criminal, civil, administrative, and regulatory consequences for non-compliance.