Corporate Crime in The New Criminal Code

Alexandra Gerungan

After approximately 60 (sixty) years, a new criminal law code was finally promulgated in Law Number 1 of 2023 (“New Criminal Code”) on January 2, 2023. Compared to the previous criminal law code inherited from the old Dutch-colonial era, the New Criminal Code has added many new criminal law provisions, one of which is crimes committed by corporations, or so-called corporate crimes. Even though corporate crimes are not new within the scope of criminal law in Indonesia, the inclusion of these provisions in the new code means that corporations can be held liable for committing any of the corporate crimes regulated in the New Criminal Code (as opposed to the previous regime where corporate crimes are regulated in separate specific statutes such as the Environment Law, Anti-Corruption Law, etc.).

A. CORPORATION AS A CRIMINAL SUBJECT

The New Criminal Code strictly regulates corporations as subjects of crimes and defines “any person” as individuals, which include corporations.

The term corporation is defined as an organized group of persons and/or assets in the form of either legal entities, incorporated and unincorporated associations, or business entities.

Form of Legal Entities	Form of Business Entities
1)    limited liability companies; 2)    foundations; 3)    associations; 4)    cooperatives; 5)    state-owned enterprises; 6)    regionally-owned enterprises; 7)    village-owned enterprises; or 8)    the equivalent;	1)    firm partnerships; 2)    limited partnerships; or 3)    the equivalent.

 

In the New Criminal Code, corporate crimes are crimes committed by:

1. management having a functional position within the corporation’s organizational structure;
2. persons who, based on work relationships or based on other relationships, act for and on behalf of the corporation, or act in the interests of the corporation, within the scope of the corporation’s business or activities, either individually or collectively;
3. anyone giving orders or instructions;
4. controllers; or
5. beneficial owners of the corporation who are outside the organizational structure, but can control the corporation.

The New Criminal Code also regulates unlawful corporate actions that must be accounted for by the corporation, that is, if the actions:

1. are included in the scope of business or activity as determined in the articles of association or other provisions applicable to the corporation
2. benefit the corporation unlawfully;
3. are accepted as corporate policy;
4. are the result of the corporation’s failure to take necessary measures in order to implement prevention from a greater impact, and failure to ensure compliance with the prevailing legal provisions in order to prevent crimes from occurring; and/or
5. take place because the corporation allows the crimes to occur.

It should be noted that the above provisions are optional, not cumulative. Therefore, if one of the provisions is fulfilled, then a corporation can be held accountable in accordance with the New Criminal Code.

Read More: Legal Action Against Personal Guarantor 

B. CRIMINAL SENTENCE AND MEASURE FOR CORPORATIONS

The New Criminal Code divides sentences for corporate crimes into 2 (two) types i.e., principal sentence in the form of a fine of minimum IDR 200,000,000 (two hundred million rupiah), and additional sentence in the form of:

1. payment of compensations;
2. remedy for the consequences of crimes;
3. implementation of neglected obligations;
4. fulfillment of customary obligations;
5. financing of job training;
6. confiscation of goods or profits obtained from crimes;
7. announcement of the court decision;
8. revocation of certain licenses with a maximum term of 2 (two) years;
9. permanent ban on certain actions;
10. closure of all parts of the corporation’s places of business activities with a maximum term of 2 (two) years;
11. suspension of all or parts of the corporation’s business activities with a maximum term of 2 (two) years; and
12. Corporation dissolution.

Furthermore, the New Criminal Code stipulates a maximum principal sentence for corporate crimes, as follows:

2. Rp 2.000.000.000,- (two billion rupiah) for crimes with the threat of imprisonment under 7 (seven) years;
3. Rp 5.000.000.000,- (five billion rupiah) for crimes with the threat of imprisonment of 7 (seven) years to 15 (fifteen) years;
4. Rp 50.000.000.000,- (fifty billion rupiah) for crimes with the threat of capital punishment, life imprisonment, or imprisonment for a maximum of 20 (twenty) years.

Apart from the forms of criminal sentences for corporate crimes above, a corporation that commits a crime may be subject to measures such as expropriation and placement under supervision or guardianship.

Procedures for the implementation of principal sentences, additional sentences, and measures will be further regulated in government regulations. Therefore, currently, the procedures for the implementation of sentences and measures for corporate crimes are still unclear.

Read More: Liability of Personal Guarantor on Debtor’s Debt

C. CLOSING

The New Criminal Code strictly regulates corporate crimes. Business actors must be really aware of who can commit corporate crimes because the New Criminal Code stipulates that the subjects of corporate crimes are not only the management who has a functional position in the corporation’s organizational structure but also beneficial owners outside the corporation’s organizational structure who can control the corporation. Therefore, in carrying out their business, business actors must be careful and aware of their actions and decisions because the New Criminal Code defines corporations as “every person” in each article regulating corporate crimes. Thus, if a business actor violates applicable regulations or commits a corporate crime, the corporation can also be held liable and responsible.

In addition, there is a provision regarding a transitional period of 3 (three) years before the New Criminal Code becomes effective, during which there is a high possibility of judicial review of the articles of the New Criminal Code. Thus, there is a possibility that when the New Criminal Code becomes effective after 3 (three) years since its promulgation, there will possibly be articles with changed substances due to judicial review efforts. This transitional period must be put to good use by business actors to prepare themselves for the new regulations that have been contained in the New Criminal Code, especially those relating to corporate crimes.

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Disclaimer: This article has been prepared for scientific reading and marketing purposes only from ADCO Law. Accordingly, all the writings contained herein do not constitute the formal legal opinion of ADCO Law. Therefore, ADCO Law should be held harmless of and/or cannot be held responsible for anything performed by entities who use this writing outside the purposes of ADCO Law.