What must Indonesia do to keep up with shifting trends in global corruption practices?

The saga of war against corruption in Indonesia is a never ending story. Recently, the Corruption Eradication Commission (KPK) has named Emirsyah Satar, the former president director of Garuda Indonesia, Indonesia’s state owned airline, as a suspect after they allegedly received a bribe from the world’s leading producers of aero engines –Rolls-Royce. The anti-graft body also labelled Soetikno Soedarjo, the former beneficial owner of consultant firm Connaught International and ex-chief executive of media, entertainment and lifestyle company MRA, for allegedly working as an intermediary during the bribe that took place in Singapore.

While the case against both suspects is strong, the involvement of Rolls-Royce as an overseas company that indirectly conspired with state officials will prove challenging, given the commission rarely hunts down fraudulent foreign companies.

Rolls-Royce has been investigated by the Serious Fraud Office (SFO), the UK’s anti-corruption agency, since 2013 following allegations of bribery and corruption at the company spanning three decades arching across seven national jurisdictions, including Indonesia.

The results of the investigation are shocking. Rolls-Royce was found to have conducted fraudulent business in Indonesia across two periods. From1989- until 1998, Rolls-Royce paid off an agent working for the office of the President of Indonesia with $2.25 million and a Rolls-Royce car, as a reward for helping them secure a contract to supply  Trent 700 engines to Garuda Indonesia.  In the second period,  between 2011and- 2012, in Rolls-Royce was accused of failing to prevent bribery.

Legally speaking, the commission cannot extend their jurisdiction over the first instance as it occurred before the Eradication of Corruption Law was enforced. However, the KPK can investigate the second instance.

Should the anti-graft agency declare Rolls-Royce a suspect, they can leverage bribery indictment or extraterritorial jurisdiction provisions enshrined in Article 16 of the Eradication of Corruption Law. The KPK, no rookie to handling transnational corruption cases, would strategically cooperate with the SFO to do so.

The commission could ask Rolls-Royce to pay a fine in accordance with the underlying law. The fine would probably not be a big deal for Rolls-Royce, but the domino effect for the company’s reputation could be striking. For the KPK, this could be a bold proclamation that every corporation, overseas or domestic, should think twice before committing corrupt practices in Indonesia.

Aside from tracking down foreign companies, it is imperative to strengthen Indonesia’s own laws to deter corrupt corporate practices in the long run. Our government and lawmakers should take example from the UK, US, and Brazil in sanctioning Rolls Royce. Both the UK along with the US are implementing Deferred Prosecution Agreements (DPA), while Brazil is wielding a Leniency Agreement in countervailing the state’s monetary loss caused by  bribery.

A DPA allows prosecution to be suspended for a defined period if the organisation meets specified conditions. The agreement is arranged between a prosecutor and an organisation to be prosecuted, under judicial supervision with justice and transparency at its core. Most often, DPA will include a number of terms such as a financial penalty, paying compensation and co-operating with future prosecutions of individuals.

DPA is well-known method of  tackling corporate criminal activities, such as corporate fraud, bribery and corruption. If Indonesia adopts this type of agreement, it will furnish an alternative legal method that will maximise the return of state monetary losses from corrupt corporation practices, while and efficiently circumventing time-consuming and costly trials. In the UK, US and Brazil, this method has been perceived by many as an alternative way to shatter corrupt corporate practices. In this instance, it has also proven successful in granting damages to those countries along with several further requirements to be fulfilled by Rolls-Royce.

By implementing DPA into anti-corruption law, Indonesia could open a new path for the long-standing war against corruption. Government and lawmakers must recognise that there is a shifting trend in global corruption practices that targets not only local corporations, but also the complex network of multinational companies outside state borders. The Rolls-Royce case presents a perfect opportunity for stakeholders to identify the weakness of current anti-corruption law, and enhance the necessary tools to triumph in Indonesia’s battle against corruption.

Ardi Hendharto is a LLM Candidate in International Criminal Law at University of Sussex.

Dimas Kuncoro Jati is a LLM Candidate in International Dispute Resolution at King’s College London.

Both are Awardees of the LPDP Scholarship by Ministry of Finance of the Republic of Indonesia.