By MAKARIM & TAIRA S.

INTRODUCTION

It is not the intention of this article to discuss the prevalence of corruption in Indonesia nor the reasons why corruption exists here. It is also not this article's purpose to pontificate on how corruption hinders the growth of the nation's development or how it may be eradicated. Rather, this article is intended solely to advise businessmen and investors, foreign and local, on how corruption is defined and dealt with by Indonesia's legal and regulatory framework and what penalties and sanctions may be imposed when corrupt acts are dealt with by the courts.

Over the past ten years, the focus on and criticism of the ingrained nature of "KKN" or corruption, collusion and nepotism, in Indonesia's economy has brought out into the open many of the previous administration's misdeeds which went unpunished. However, this is not to say that there were then no penalties for corruption. On the contrary, it is true to say that there has been an ample framework for the punishment of corrupt acts for a long time. However, and as is commonly known, it was of course the absence of effective enforcement of violations of the laws in place, the overwhelming and all-encompassing power of the violators, and the in-built prevalence of corruption throughout the framework of the state's economy, which has led to today's problems in and intense focus on this area.

Along with the increasing openness and ability to criticise which has marked the last few years, has come a strong public desire for the government to act firmly and decisively to deal with the problems of criminal corruption. The government has responded by introducing a number of laws and regulations which have the stated intention of more effectively preventing and eradicating corruption. We will see later how these laws and regulations have tried, over the last eleven years, to make it easier to investigate, prosecute and, ultimately, eradicate the criminal act of corruption.

Whilst the government no doubt continues to recognise the enormity of its task (on the 2009 Transparency International Corruption Perception Index, Indonesia recently ranked equal 111th least transparent out of 180 countries), it is also true to say that there is widespread scepticism that corruption can ever be eliminated in Indonesia, and the most that can be hoped for is some form of management or containment. Notwithstanding this, it is of course important to ensure that we are all knowledgeable of the actions or inactions which may fall foul of the legal provisions. In doing this, we shall review first the existing provisions of the Indonesian Criminal Code, then look at Law No. 31 of 1999 on the Eradication of the Criminal Act of Corruption ("Law No. 31/1999") and Law No. 20/2001 on the Amendment to Law No. 31/1999 on the Eradication of the Criminal Act of Corruption ("Law No. 20/2001"). We will then check out some of the other, ancillary legislation which also attempts to put into place a framework which will make corruption easier to detect and for offenders to be prosecuted. This will include a discussion of other more recent developments. Finally, we shall review some international aspects of bribery and corruption as they relate to Indonesian businesses. Particular regard will be had to how the laws may affect and should be considered by, foreign and local businessmen and investors in their everyday dealings.

Finally, this article does not discuss in any detail the Indonesian position with regards to facilitating payments, travel and entertainment, nor on sanctions for accounting or financial record keeping violations.

A. THE CRIMINAL CODE OFFENCES

The principal provisions which relate to corruption offences are contained in Indonesia's Criminal Code. However, Law No. 31 of 1999 on the Eradication of the Criminal Act of Corruption ("Law No. 31/1999") as amended by Law No. 20/2001 on the Amendment to Law No. 31/1999 on the Eradication of the Criminal Act of Corruption ("Law No. 20/2001"), expands upon and adds to these criminal offences and, not surprisingly, increases significantly the penalties for breach of the Criminal Code provisions (which, to a large extent are now fully incorporated into Law No. 31/1999).

A few of the provisions of Law No. 31/1999 which have been taken from the Criminal Code and which are relevant for our purposes are as follows (note that in October 2010, Rp.1,000,000.- was approximately equal to US$90):

  • Article 5:
    1. Sentenced to a minimum of 1 (one) year and maximum of 5 (five) years imprisonment and or fined a minimum Rp.50,000,000 (fifty million rupiah) and maximum of Rp.250,000,000 (two hundred and fifty million rupiah) shall be anyone who:
      1. gives or promises something to a civil servant or state operator with the intention for such civil servant or state operator to commit or not to commit something in his position, that contradicts with his obligations; or
      2. gives something to a civil servant or state operator due to or in relation to something which the official has done or not done in his position and which contradicts with his obligation.
    3. A civil servant or state operator receiving gifts or promises as mentioned in paragraph (1) letter a or letter b, may be sentenced with the sentences as referred to in paragraph (1).
  • Article 11:
    Sentenced to a minimum of 1 (one) year and maximum of 5 (five) years of imprisonment and fined a minimum of Rp.50,000,000 (fifty million rupiah) and maximum of Rp.250,000,000 (two hundred and fifty million rupiah), shall be any civil servant or state operator who receives presents or promises whereby it is known or can be suspected that such presents or promises were given due to the power and authority attaching to his position, or in the opinion of the person providing the presents or promises, such presents/promises are related to his position.
  • Article 12:
    Sentenced to life or a minimum of 4 (four) years and maximum of 20 (twenty) years of imprisonment and fined a minimum of Rp.200,000,000 (two hundred million rupiah) and maximum of Rp.1,000,000,000 (one billion rupiah) shall be any:
    1. civil servant or state operator receiving presents or promises, where it is known or can be suspected that such presents or promises were given to influence the civil servant or state operator to commit or not to commit something under his position, which contradicts with his obligations;
    2. civil servant or state operator receiving presents or promises, where it is known or is reasonably suspected that such presents were given due to or caused by something that has or has not been committed with regard to his position that contradicts with his obligations;
    3. judge receiving presents or promises, where it is known or is reasonably suspected that such presents or promises were given to influence the decision of a case handed to the judge for trial;
    4. person who according to provisions of the law is appointed as an advocate to be present at a court trial, and who receives presents or promises, where it is known or is reasonably suspected that such presents or promises were given to influence the advice and opinion that will be given, in relation to a case handed to the court for trial;
    5. civil servant or state operator who with illegal intention to make himself or another person rich, or by way of abusing the authority forces someone to give something, pay, or to accept payment with discount, or to commit something for himself;
    6. civil servant or state operator who at the time he undertakes his duties, requests, receives from, or withholds payment to another civil servant or state operator or to general cash, as if the other civil servant or state operator or public account is indebted to him, although it is known that such matter is not a debt;
    7. civil servant or state operator who at the time he undertakes his duties, requests or accepts work, or delivers goods, as if such is considered as a debt to him, while it is known that such is not a debt;
    8. civil servant or state operator who at the time he undertakes his duties, has used state land with the Right to Use title, as if in accordance with regulations, and has caused loss to the rightful holder, while it is known that such act is not in accordance with laws and regulations; or
    9. civil servant or state operator who directly or indirectly participates intentionally in any contracting, procurement or leasing, and who while committing such act, is fully or partially assigned to manage and supervise it.

There are a number of other provisions but these, for the most part, relate to specific circumstances such as the bribery of judges, corruption in government procurement contracts and extortion by government officials.

B. LAW NO. 31/1999 AND LAW NO. 20/2001

Law No. 31/1999, replaces and revokes the previous law on the eradication of the criminal act of corruption, namely Law No. 3/1971. It is important to understand how Law No. 31/1999 (as amended by Law No. 20/2001) improves and expands upon and differs from, Law No. 3/1971. In brief, Law No. 31/1999 does the following:

  • it expands the definition of "government official
  • it adds new, and increases the minimum and maximum fines and custodial sentences for old, offences
  • it expands the definition of the criminal act of corruption and introduces a cross-border or transnational element.
  • it details the concept of the officers of a company being liable for the criminal actions of the company's employees.
  • it attempts to ease the investigation and prosecution of criminal acts.
  • it provides for the establishment of, initially, both a joint team and, ultimately, a commission for eradication of the criminal act of corruption (see D.4 below).
  • it enables the public to assist and participate in eradicating corruption (see D.1 below).

These, together with other important provisions of Law No. 31/1999 and Law No. 20/2001 will now be looked at in further detail.

  1. Expanded Definition of Government Employee

    One of the major concepts introduced by Law No. 31/1999 and Law No. 20/2001 is the broader definition of a "government employee". The definition in full is as follows:

    "In this Law:

    [2] Government Employees shall cover:

    1. Government Employees as referred to in the Employment Law1
    2. Government Employees as referred to in the Criminal Code.2
    3. People receiving salaries or wages from state finance or regional finance.
    4. People receiving salaries or wages from a corporation which receives assistance from state finance or regional finance, or
    5. People receiving salaries or wages from other corporations which use capital or facilities from the state or from the public.

    As can be noted, c., d., and e. above will include a large number of enterprises. These might conceivably even include all foreign investment companies which enjoy master list facilities, as well as banks which have received liquidity loans.

  2. New Criminal Offences and Increased Penalties

    Law No. 31/1999 increased the penalties for many of the Criminal Code offences referred to in B. above.

    Another interesting concept introduced by Law No. 31/1999 and which relates to penalties is the ability of the court to order the confiscation of assets and even the revocation of business licences and permits.

    So far as "new" offences are concerned, the provisions of Articles 2, 3, and 13 should be noted, as follows:

    Article 2

    1. Anybody who illegally commits an act to enrich himself or another person or a corporation which may cause loss to the state finance or state economy, shall be sentenced to life imprisonment or minimum imprisonment of 4 (four) years and a maximum of 20 (twenty) years, and a minimum fine of Rp.200,000,000 (two hundred million rupiah) and a maximum fine of Rp.1,000,000,000 (one billion rupiah).
    2. In the event that the criminal act of corruption as referred to in paragraph (1) is committed under certain circumstances, the person concerned may be sentenced to life imprisonment."

    Article 3

    "Anybody who with the intention to earn profit for himself or another person or a corporation, abuses the authority, opportunity or facilities given to him on account of his post or position which may cause loss to the state finance or state economy, shall be sentenced to life imprisonment or a minimum sentence of 1 (one) year and a maximum of 20 (twenty years) or a minimum fine of Rp.50,000,000 (fifty million rupiah) and a maximum fine of Rp.1,000,000,000 (one billion rupiah)."

    Article 13

    "Anybody giving presents or promises to a Government Employee in relation to the power or authority vested in the post or position, or by giving gifts or promises considered as vested in the post or position, shall be sentenced to a maximum of 3 (three years) imprisonment and or a maximum fine of Rp.150,000,000 (one hundred and fifty million rupiah)."

  3. Equitable Sentences and Gratifications

    Following on from the above, Law No. 20/2001 introduced two new and interesting additions to the sentencing/punishment provisions of Law No. 31/1999.

    First, the increased imprisonment and fines imposed for breach of Articles 5 to 12 of Law No. 31/1999 are not applicable for corrupt acts involving amounts of less than Rp.5,000,000. In such circumstances, the maximum term of imprisonment is 3 years and the maximum fine is Rp.50,000,000.

    Secondly, Law No. 20/2001 introduced the concept of "gratifications" (gratifikasi) given to public officials and determines when and how these may be considered as bribery. If the gratification (which can be a gift in basically any form, including free travel tickets, accommodation, discounts, commissions or medical treatment among others) has a value of Rp.10,000,000 or more then the recipient is obliged to prove that the gratification is not bribery. If the value is less than Rp.10,000,000 then proof of bribery remains with the public prosecutor.

    In the case of gratifications two further points are of interest. First, the penalty for breach of the relevant article is only imposed on the recipient. Secondly, the receipt of a gratification is not a crime if the recipient reports the gift to the Commission for the Eradication of the Criminal Act of Corruption. The Commission will then decide whether the gratification can be kept by the reporting recipient or should become State property.

  4. Expansion of Definition and Cross-Border Element

    The criminal act of corruption now covers those who attempt or assist or consult in such acts. In addition, anybody (this can be an individual or a corporation) outside the territory of Indonesia "who provides assistance, opportunity, facilities or information to create a criminal act of corruption" shall also be guilty of the relevant offence. Accordingly, if a foreign investment company's regional or head office provides funds which are used to bribe government officials then the regional or head office will also be subject to punishment.

  5. Management Responsibility for Corporate Actions

    Law No. 31/1999 has important implications for the Board of Directors of all Indonesian companies as Article 20 states that "In the event that the criminal act of corruption is committed by or on behalf of a corporation, the lawsuit and the sentence may be instituted against and imposed on the corporation or the board". Judges can order that the board of directors to be brought to the court.

    Directors of companies under investigation should also be aware of further provisions of Law No. 31/1999 which impose heavy custodial sentences and fines on those who prevent, hinder or foil, investigations and lawsuits, or who provide false information to the authorities or to the court.

  6. Investigation and Prosecution of Corruption

    The government acknowledges that investigating corruption is not easy and bringing successful prosecutions is extremely hard. With this in mind, the drafters of Law No. 31/1999 and Law No. 20/2001 tried to ease the burden on prosecutors and the courts by introducing a number of (in some cases, somewhat controversial) measures. These measures (other than the establishment of the joint team and commission on corruption, as well as the role of the public, all of which are dealt with in section C. below) include, among others, the following:

    • investigators are authorised to use wire-tapping. The Government are presently preparing a draft regulation regarding wire-tapping.
    • the prosecuting authorities and the court may request financial information on the suspect or the accused from banks and request that deposit accounts be blocked (both requests to be made through Bank Indonesia).
    • suspects can be required to provide information on their and their family's assets.
    • investigators are given authority to open, examine, confiscate and use nearly all types of information, records, correspondence and other evidence which may be relevant to the suspected criminal act.
    • an acquittal verdict in a criminal prosecution does not abolish the right to reclaim the loss inflicted on the state.
    • if a suspect dies during an inquiry or prosecution, the lawsuit may, in some circumstances, be continued against the suspect's heir(s).
    • except for certain, close relatives and Catholic priests in respect of confessions, witnesses or experts cannot invoke client confidentiality or otherwise refuse to provide information.
    • if an accused chooses to but cannot prove that his wealth or assets was not obtained unlawfully then this can be used against him by the prosecution and the assets may be confiscated by the state. The Government are presently discussing a draft bill on civil forfeiture.
    • it is clarified in Law No. 20/2001 that criminal acts of corruption occurring prior to the enactment of Law No. 31/1999 may be examined based on the previous Law No. 3 of 1971 but the maximum (but not the minimum) sentences of Law No. 31/1999 and Law No. 20/2001 shall apply.
    Some of the above provisions have become controversial over the years since their first introduction. Indeed, by deviating from the Criminal Code, certain provisions are seen by some jurists as leading perilously close to altering the burden of proof from the prosecution to the accused.

C. OTHER LEGISLATION AND DEVELOPMENTS

As mentioned above, the government recognised the need for facilitating the often difficult, not to mention technical, tasks of investigating and proving criminal corruption. It has obviously been the case over the years that acts of criminal corruption have become increasingly refined and, in many cases, difficult to detect. This is especially true in the fields of banking, tax, capital markets and finance. In addition, the government also recognised that its own departments and agencies are not free from corruption and that its greatest ally in its fight against corruption is the general public. With these factors in mind, the government has implemented certain ancillary legislation which, together with other recent developments in the field of corruption, are detailed below:

  1. Public Participation in Eradication of Corruption

    Law No. 31/1999 acknowledges the role and rights of the public in the fight against corruption. In order to implement this, the government issued Government Regulation No. 71/2000 on Procedures for Implementation of Public Participation and Provision of Appreciation in the Prevention and Eradication of the Criminal Act of Corruption. This regulation gives certain rights to the public to obtain responses from the authorities in respect of complaints or information provided to the authorities. It also tries to provide protection to members of the public who offer information. Finally, those individuals or corporations who assist in the fight against corruption may be given tokens of appreciation, either in the form of certificates or cash.

  2. Eradication of Corruption by State Organizers

    In November 1998, the People's Consultative Assembly or MPR made a Stipulation (No. XI/MPR/1998) that state organizers (loosely, senior government officials) should perform their functions and tasks honestly, fairly, transparently and reliably, and free from practices of corruption, collusion and nepotism. State organizers should also be willing to disclose their wealth and to have their wealth investigated before and after assuming office.

    This Stipulation was followed up in 1998 by Law No. 28/1999 on The State Organizer Who is Free from Corruption, Collusion and Nepotism. This law, among other matters, prescribes penalties for offences of "collusion" and "nepotism" by state organizers and provides for an independent Investigating Commission to prevent corruption, collusion and nepotism by state organizers.

  3. State Ombudsman

    A National Ombudsman Commission was established pursuant to Presidential Decree No. 44 of 2000 with the aim of supervising and monitoring the services of the executive and the judiciary. The powers of the Ombudsman are limited and the body primarily fulfils a supervisory role. On 7 September 2008, Law No. 37 of 2008 on the Ombudsman of the Republic of Indonesia ("Law No. 37 of 2008") was enacted and the National Ombudsman Commission was declared to be the Ombudsman of the Republic of Indonesia ("Ombudsman"). The organizational structure, membership, duties, authorities, examination procedures and the settlement of Reports (see below) of the National Ombudsman Commission must be adjusted to Law No. 37 of 2008 at the latest 1 (one) year as of the effective date of Law No. 37 of 2008.

    Law No. 37 of 2008 defines a Report as a complaint or fact submission to be settled or followed up by the Ombudsman submitted in writing or orally by anyone who falls victim to an act of maladministration (maladministrasi). Maladministration is defined as a certain action in relation to the performance of public services by the State Administrator and Government which causes a material and/or immaterial loss to the public and an individual.

    The Ombudsman's function is to supervise the public services provided by the State Administrator and the Government to the public (including by state-owned enterprises (Badan Usaha Milik Negara), regional government-owned enterprises (Badan Usaha Milik Daerah), state-owned legal entities (Badan Hukum Milik Negara), private enterprises (Badan Swasta) or individuals (perseorangan)).

    In order to perform its function, the Ombudsman has the following duties:

    • to receive Reports containing allegations of maladministration regarding the performance of public services;
    • to carry out the substantive examination of Reports;
    • to process Reports which are included in the Ombudsman's scope of authorities;
    • to investigate, on its own initiative, the provision of the public services alleged to involve maladministration;
    • to coordinate and cooperate with other state agencies or government agencies, social agencies and individuals;
    • to develop the work network;
    • to prevent maladministration in the performance of public services;
    • to perform other duties as provided in the law.

    Law No. 37 of 2008 provides criminal sanctions up to 2 years in prison or a fine of up to Rp. 1.000.000.000,00 (one billion Rupiah), for anyone who hinders an examination conducted by the Ombudsman.

  4. Corruption Eradication Commission (the "KPK")

    The KPK was established by Law No. 30 of 2002 on the Corruption Eradication Commission ("Law No. 30/2002") and is intended to implement Article 43 of Law No. 31/1999 (as amended). Law No. 30/2002 sets out the details of the KPK's authorities to enforce the provisions of Law No. 31/1999. A 2009 amendment to Law No.30/2002 was revoked in June 2010.

    The role of the KPK is to:

    1. coordinate with the agencies having the authority to eradicate corruption;
    2. supervise the agencies having the authority to eradicate corruption;
    3. conduct investigations, interrogations and prosecutions with respect to corruption;
    4. take steps to prevent corruption; and
    5. monitor the management of government.

    The KPK is authorized to supervise and assess the agencies whose tasks and authority are related to the eradication of corruption and the agencies whose activities are related to public services; the KPK is even authorized to take over investigations or indictments against perpetrators of corruption offences from the police or the district attorney's office. Taking over such investigations and indictments should be on the grounds that:

    1. reports from the public on a corruption offence need to be followed up;
    2. the handling of a corruption offence drags on or is suspended without any acceptable reasons;
    3. the handling of a corruption case is designed to protect the real perpetrators of the corruption offences;
    4. the handling of a corruption offence is tainted by corrupt practices;
    5. the handling of a corruption offence is obstructed by the intervention of the executive, judicial or legislative body; or
    6. other circumstances which according to the police or the district attorney make it difficult to handle a corruption offence in a proper and responsible way.

    In carrying out investigations, interrogations and prosecutions, the KPK is authorized to investigate, interrogate and prosecute corruption offences:

    1. involving law enforcers, state apparatuses and other parties involved in corruption offences committed by such law enforcers or state apparatuses.
    2. upsetting the community; and/or
    3. inflicting at least Rp.1,000,000,000 (one billion rupiah) in losses to the state.

    To carry out its enforcement duties, the KPK is granted powers under Article 12 of Law No. 30/2002 to take certain measures, among others:

    1. to use wire-tapping;
    2. to instruct a relevant institution to issue a travel ban;
    3. to request clarification from banks or other financial institutions regarding the financial status of suspects or defendants under investigation;
    4. to order banks or other financial institutions to block accounts potentially holding the proceeds of corruption owned by suspects or defendants or other relevant parties; and
    5. to request data on the assets or taxes of suspects or defendants from relevant institutions.

    Any investigations, interrogations or prosecutions conducted by the KPK should follow the provisions of the Indonesian Criminal Procedural Law and Law No. 31/1999, as amended by Law No. 20/2001.

    Unlike the Official Government Investigator (Penyidik Pejabat Pegawai Negeri Sipil), the tasks of the KPK are not supervised by or coordinated with the police.

    In 2004, the Supreme Court issued a letter (Fatwa) granting the KPK the right to examine the private bank accounts of corruption suspects. The KPK can access private bank accounts without obtaining prior approval from the Governor of Bank Indonesia.

    Law No. 30/2002 provides criminal sanctions, i.e. a maximum 3 years imprisonment, for members or employees of the KPK who are convicted of the following:

    1. having direct or indirect links to a suspect or other party involved in a corruption case being handled by the KPK for whatever reason;
    2. handling a corruption case in which a perpetrator is related by kinship or marriage down to the third degree vertically to the relevant member or employee of the KPK;
    3. serving as the director or executive director of a limited liability company, the organ of a foundation or the supervisor or manager of a cooperative or occupying another professional post or carrying out other activities related to the post.

    Any member or employee of the KPK who commits a corruption offence is liable to a sanction which may be increased by 1/3 on top of the principal sanction.

  5. The Corruption Court

    In late October 2009, the House of Representatives finally approved the new law on the Court of Acts of Corruption by the issuance of Law No. 46 of 2009 regarding the Court of Criminal Acts of Corruption. The law was approved just before the expiry of the time allowed by the Constitutional Court for the issuance of a new law. In 2006, the Constitutional Court declared that the initial establishment of the Court of Acts of Corruption was unconstitutional, but also declared that the Court of Acts of Corruption could still perform its duties and functions for three years after the issuance of the decision of the Constitutional Court (ie until late 2009). Pursuant to Law No. 46 of 2009, the new anti-corruption court, although a special court, is also part of the public courts.

    Many observers state that the public courts are not enthusiastic about the eradication of corruption. According to a survey by Corruption Watch Indonesia in 2008, more than half the corruption cases were exonerated by the public courts i.e. of 444 defendants tried by the public courts, 277 defendants (62.38 percent) were found not guilty, while the remaining defendants or 167 defendants (37.61 percent) were sentenced. However the punishment meted out did not have much of an impact on the defendants. The culprits were given prison sentences ranging from 5 months to 1 year and 3 months. This is different to corruption cases handled by the Corruption Court where (it was reported) in 2008, 31 defendants were tried and all were found guilty and sentenced to an average of 50 months or over 4 years in prison.

    It is intended that eventually, a corruption court will be established in every capital city of each regency/municipality in Indonesia. Pursuant to Law No. 46/2009, for the first time, corruption courts located in capital city of each province must be formed at the latest 2 (two) years after the enactment of Law No. 46/2009 (i.e. 29 October 2011). In the meantime, corruption offences raised by public prosecutors are examined, administered and settled by the District Court pursuant to prevailing laws.

  6. Foreign Bribery

    The principal Indonesian law prohibiting bribery of foreign public officials is Law No. 7/2006, which ratifies the Convention. However, there is currently no implementing legislation for the Convention with regards to foreign bribery laws; without such implementing regulations, the provisions of the Convention cannot be enforced. However, the above could change in the near future, as it appears that under the draft new Law regarding the Eradication of the Criminal Act of Corruption being circulated for discussion (and which will revoke Law No. 31/1999 and Law No. 20/2001), there are provisions that will prohibit bribery of foreign public officials. Sanctions will be imposed on anyone who bribes foreign public officials as well as the foreign public officials who receive the bribes. Nevertheless, the draft new Law regarding the Eradication of the Criminal Act of Corruption is still at the discussion stage and these provisions may still be subject to change or even omitted in their entirety. It is still uncertain when the draft new Law regarding the Eradication of the Criminal Act of Corruption will be approved by the House of Representatives and enacted by the Government.

  7. The Judicial Corruption Eradication Taskforce

    The Judicial Corruption Eradication Taskforce ("Taskforce") was formed by President Susilo Bambang Yudhoyono under Presidential Decree No. 37 of 2009 issued on 30 December 2009. The purpose of the establishment of the Taskforce is to accelerate the eradication of judicial corruption. The Taskforce's term of duty is two years, extendable if necessary. The Taskforce is responsible to the President through the Presidential Working Unit for the Supervision and Control of Development (Unit Kerja Presiden Bidang Pengawasan dan Pengendalian Pembangunan).

D. INTERNATIONAL ASPECTS

It is not strictly within the scope of this article to examine any overseas anti-corruption legislation which may impact upon Indonesian entities or Indonesian or foreign businessmen here. However, it is true to say that, with the spread of globalization and cross-border transactions, businessmen in Indonesia have to be aware of the increasing role of foreign governments in trying to prevent bribery in international business transactions. This is nothing new as Indonesian subsidiaries of U.S. corporations have come within the ambit of the Foreign Corrupt Practices Act for many years. However, the number of similar or equivalent regulations in other jurisdictions has increased dramatically since the adoption in late 1997 by OECD countries, of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "Convention on Combating Bribery"). One of the most recent examples is the introduction in the UK of the far-reaching Bribery Act 2010.

Whilst Indonesia has not ratified the Convention on Combating Bribery, a number of countries (including Australia, France, Germany, Japan, the UK and the USA) have both signed the Convention on Combating Bribery and adopted or are in the process of adopting implementing legislation. In some cases, existing legislation has been adapted to the standards of the Convention on Combating Bribery. So far as foreign nationals working in Indonesia are concerned, they will likely be covered by their relevant home jurisdiction's legislation. This is pursuant to Article 4(2) of the Convention on Combating Bribery which states that "Each Party which has jurisdiction to prosecute its nationals for offences committed abroad shall take such measures as may be necessary to establish its jurisdiction to do so in respect of the bribery of a foreign public official, according to the same principles."

Another important international convention, namely the United Nations Convention against Corruption ("UN Convention") was adopted by the General Assembly of the United Nations on 31 October 2003 in New York City and came into force on 14 December 2005. Indonesia signed the UN Convention on 18 December 2003 and ratified it on 19 September 2006.

Reservation is made in relation to Article 66 paragraph 2 of the UN Convention whereby the government has stipulated that disputes relating to the interpretation and application of the UN Convention that cannot be settled through the channel provided for in paragraph 2 of Article 66 may be referred to the International Court of Justice only with the consent of the parties to the dispute.

E. CONCLUSION

Since the introduction of Law No. 31/1999 it is true to say that there has not been a tidal wave of successful prosecutions of corruption cases, other than a number of high-profile judgements brought by the KPK. Indeed, there are cynics who maintain that corruption is both endemic and as prevalent as it was eleven years ago. However, it must also be acknowledged that the difficulties faced by the government authorities in bringing actions in the courts against offenders have been and still are substantial, particularly when the vehicle for bringing such actions, the Indonesian judiciary, has itself been under intense scrutiny and the subject of criticism and accusation.

Although certain provisions of Law No. 20/2001, particularly those dealing with the shifting of the burden of proof and the Rp.10,000,000 limitation on "gratifications", have been criticized, it is fair to say that Law No. 20/2001 has strengthened significantly the ability of the prosecuting authorities and progress has been made in closing certain loopholes previously used by individuals who have been accused of earlier acts of corruption. It has been pointed out, however, that the shifting of the burden of proof is only applicable at the court level and not at the investigative level.

Setting aside the successes or failures of the recent legislation, what we can conclude from the foregoing is that there is ample provision in Law No. 31/1999 and Law No. 20/2001, not to mention the establishment of the KPK and the Corruption Court, to warn businessmen against committing (or allowing their businesses to commit) the criminal act of corruption. With an (albeit unlikely) worst case scenario of a KPK investigation, imprisonment, a Rp.1 billion fine, confiscation of assets, loss of corporate licence and the ignominy of being the subject of a criminal investigation, it is certainly to be hoped that Indonesia's anti-corruption laws will continue to assist in reducing, if not preventing or eradicating, the criminal act of corruption.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.