The Supreme Court's enactment of the Regulation regarding the Manner and Procedure for the Handling of Crimes Committed by Corporations (13/2016) is a significant milestone in the development of Indonesia's corporate criminal liability legislation.
Regulation 13/2016 consists of 37 articles and aims to provide law enforcers with guidance on handling corporate crimes. The regulation strengthens and complements the existing regulations – namely:
- the attorney general's letter to provincial public prosecutor office chairs concerning corporations as suspects and defendants in criminal corruption cases (B-036/A/Ft.1/06/2009, July 29 2009); and
- the attorney general's Regulation concerning Guidance for the Handling of Criminal Cases with Corporations as the Legal Subject (PER-028/A/JA/10/2014, October 1 2014).
Regulation 13/2016 was officially signed by the Supreme Court chair on December 21 2016. It defines 'crimes committed by corporations' as crimes committed jointly or severally by parties on the basis of a work or non-work relationship for or on behalf of the respective corporation, either inside or outside the corporation's environment. A 'corporation's environment' is further defined as the scope of the corporation or its business, including work which directly or indirectly supports the corporation's business activities.
Corporations should note the following new rules set out by Regulation 13/2016.
Corporate liability in corporate crimes As regards corporate groups, the prosecuted corporation's parent, subsidiary or affiliate company (including its sister company) may be prosecuted for its involvement in a crime. In such cases, the criminal liability will be apportioned based on each corporation's actual role and involvement.
In a merger or consolidation, liability is limited to the value of the assets placed in the surviving corporation or the newly established corporation.
As regards spin offs, liability is imposed on the spun-off corporation, the corporation conducting the spin off or both, in accordance with their respective roles in the corporate crime.
In case of a dissolution, 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 were allegedly used when committing the crime or constitute the result of the crime are subject to law enforcement measures under the prevailing criminal law. Civil lawsuits may also be launched against ex-board members, as well as heirs and other third parties that control the assets deriving from the corporation's dissolution. 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 liability Judges can determine whether a corporation is liable for a corporate crime by considering whether the corporation:
- might gain profit or benefit from the criminal act or whether it was committed to further the corporation's interest;
- allowed the crime to take place; or
- failed to take the required steps to prevent the crime and its wider impact and ensure compliance with prevailing laws and regulations for the purpose of avoiding criminal acts.
Sentencing Judges can sentence a corporation, its board or both, as well as accomplices, for a corporate crime.
Penalties The implementation of criminal (primary or additional) and other disciplinary penalties on corporations is regulated as follows:
- Criminal and other disciplinary penalties imposed on corporations must be executed on the basis of a final and binding court decision.
- Corporations must comply with primary criminal penalties in the form of fines within one month from the date on which the court decision becomes final and binding, which can be extended for another month if there is a justified reason for doing so. If the corporation fails to comply with the penalty, the public prosecutor can confiscate and auction its assets to satisfy the fine.
- The confiscation of a corporation's goods for evidence purposes as an additional penalty must occur within one month from the date on which 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 penalties 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 one month from the date on which the court decision becomes final and binding to comply with the penalty, which can be extended for another month if there is a justified reason for doing so. If the corporation fails to comply with this requirement, the public prosecutor can confiscate and auction its assets to satisfy the penalty.
- Additional penalties 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 have previously been enacted, including:
- the Emergency Law regarding the Investigation, Prosecution and Trial of Economic Crimes (7/1955);
- the Law concerning Psychotropics (5/1997);
- the Law regarding the Eradication of Corruption (31/1999), as amended;
- the Law concerning Forestry, as amended (41/1999);
- the Law concerning Narcotics (35/2009);
- the Law regarding Fishery (31/2004), as amended;
- the Law regarding Roads (38/2004);
- the Law regarding Environment Protection and Management (32/2009); and
- the Law concerning the Prevention and Eradication of Money Laundering (8/2010).
Before Regulation 13/2016 was enacted, a Supreme Court decision (936 K/Pid.Sus/2009) was case law. This decision declared that the respective corporation was guilty of committing continuous corruption and imposed primary and additional penalties on it in the form of:
- temporary closure; and
- the seizure of its assets.
For further information on this topic please contact Kevin Omar Sidharta at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125) or email (email@example.com). The Ali Budiardjo, Nugroho, Reksodiputro website can be accessed at www.abnrlaw.com.
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