28 Apr 2017
GUIDANCE ON THE HANDLING OF CORPORATE CRIMES - SUPREME COURT REGULATION NO.13 OF 2016
The Supreme Court made a significant move which marks a new development in the Indonesian corporate criminal liability legislation, by enacting its Regulation Number 13 of 2016 regarding Manner and Procedure for the Handling of Crimes Committed by Corporations (“Regulation 13/2016”).
Consisting of 37 articles, this Regulation 13/2016 is meant to provide law enforcers with guidance in handling corporate crime cases. It strengthens and complements the existing regulations, comprising (i) Letter from the Attorney General (Jaksa Agung) to all Chairmen of the Provincial Public Prosecutor’s Offices (Kejaksaan Tinggi) No. B-036/A/Ft.1/06/2009 dated 29 July 2009 concerning Corporations As Suspects/Defendants In Corruption Criminal Cases and (ii) Regulation of the Attorney General (Peraturan Jaksa Agung) No. PER-028/A/JA/10/2014 dated 1 October 2014 concerning Guidance for the Handling of Criminal Cases with Corporations as the Legal Subject (Pedoman Penanganan Perkara Pidana Dengan Subjek Hukum Korporasi).
Officially signed by the Chairman of the Supreme Court on December 21st, 2016, Regulation 3/12016 defines “crimes committed by corporations“ as crimes committed by person(s) on the basis of work relationship or other relationship, either severally or jointly, for and on behalf of the respective corporation, either inside or outside of the “corporation’s environment”. “Corporation’s environment” is further defined as scope of the corporation or scope of the corporation’s business or the work scope included in and/or which supports the business activities of the corporation, either directly or indirectly.
Corporations should take note of the following new rules set out by Regulation 13/2016:
Corporate liability in a corporate crime:
- In a corporation group situation, the parent and/or subsidiary and/or affiliate company (including sister company) of the prosecuted corporation may be prosecuted for involvement in the crime. In this case, the criminal liability will be apportioned based on the actual role/involvement of each corporation.
- In a merger or consolidation situation, the liability is limited to the value of assets placed in the surviving corporation or the newly established corporation.
- In a spin-off situation, the liability is imposed upon the spun off corporation or the corporation conducting the spin-off and/or both in accordance with their respective roles in the corporate crime.
- In a dissolution situation, the liability is still imposed on the dissolving corporation. A corporation that has been dissolved after a corporate crime occurs is immune from criminal proceedings. However, the dissolved corporation’s assets that are allegedly being used for committing the crime and/or constituting the result of the crime are subject to the law enforcements’ measures under the prevailing criminal law. Civil lawsuits may also be launched against the ex-board members as well as against heirs or other third parties that control the assets deriving from the dissolution of the corporation. If there are concerns that the corporation intends to avoid its liabilities by way of dissolving itself, the investigators or prosecutors may request a court order to suspend the dissolution process.
Judges can determine whether a corporation is liable for a corporate crime by considering the following:
- Whether the corporation might gain profit or benefit from the criminal act or whether the criminal act is committed in furtherance of the corporation’s interest;
- Whether the corporation allows the crime to take place; or
- Whether the corporation omitted to take the required steps to prevent the crime, to prevent the bigger impacts and to ensure compliance with prevailing laws and regulations for the purpose of avoiding criminal acts.
Judges have the power to sentence the corporation or the Board or both the corporation and/or the Board, as well as the accomplices, for a corporate crime.
The implementation of criminal (either primary or additional) and other disciplinary sanctions on corporations is regulated as follows:
- Criminal and other disciplinary sanctions on corporations must be executed on the basis of a final and binding court decision;
- Primary criminal sanctions in the form of fines being imposed on corporations must be complied by the corporations within 1 month as of the date the court decision becomes final and binding (which period can be extended for another month if there is a justified reason for the extension). Otherwise, the public prosecutor has the right to confiscate and auction the corporations’ assets to satisfy the fine.
- Confiscation of goods from corporations for evidence purposes as an additional sanction can only be done for 1 month at the longest as of the date the court decision becomes final and binding. Any profit in the form of assets gained from the crime will be confiscated by the State.
- Additional sanctions in the form of compensation, indemnity and restitution must be implemented in the manner stipulated by the prevailing laws and regulations. The respective corporation has 1 month as of the date the court decision becomes final and binding to comply with the sanction, which period can be extended for another month if there is a justified reason for the extension. Otherwise, the public prosecutor has the right to confiscate and auction the corporation’s assets to satisfy the sanction.
- Additional sanctions in the form of orders to take remedial actions to cure the damage resulting from the crime must be implemented in the manner stipulated by the prevailing laws and regulations.
Laws on corporate crimes and liability had been enacted in the past in Indonesia, including: Emergency Law Number 7 of 1955 regarding Investigation, Prosecution and Trial of Economic Crimes, Law Number 5 of 1997 concerning Psychotropic, Law Number 31 of 1999 as amended regarding Eradication of Corruption, Law No. 41 of 1999 as amended concerning Forestry, Law Number 35 of 2009 concerning Narcotics, Law Number 31 of 2004 as amended regarding Fishery, Law Number 38 of 2004 regarding Road, Law Number 32 of 2009 regarding Environment Protection and Management and Law No. 8 of 2010 concerning Prevention and Eradication of Money Laundering.
Prior to the enactment of Regulation 13/2016, a decision which was issued by the Supreme Court, No. 936 K/Pid.Sus/2009, became a case law. This Supreme Court decision declared the respective corporation as guilty of committing continuous corruption and imposed on it primary and additional penalty in the form of (i) temporary closure and (ii) seizure of its assets. (by: Kevin Sidharta)