Sanctioning Corporation in Digital Age: The Indonesian Perspective

Maradona

Faculty of Law, Universitas Airlangga, Indonesia

Keywords: Corporate, Criminal Liability, Indonesian, Criminal Legal System, Modern Crimes.

Abstract: Nowadays, when manufacturing is going digital characterized by remarkable technologies such as the Internet

of Things (IoT) and artificial intelligence, the corporations strengthen their position by dominating all aspects

of human life. The growing interconnectedness among countries around the globe also gives opportunities for

corporations to gain immense profit. The activities of corporations have evolved from containment within the

national scope to multinational reach. Apart from the advantages of corporations to society, corporations can

also create extensive damages to the society. The Facebook data breach scandal was the latest example from

Indonesia about multinational corporations that could cause more than 1 million Indonesian Facebook users’

private data illegally harvested by the third party. The question then emerges, whether criminal law regime

can be used to deal with the misconduct of corporations especially in the digital era when crimes become

more sophisticated, modern, complicated and also borderless. This paper discusses the way the criminal law

regime can be used to deal with the misconduct of modern corporations from the Indonesian perspective. This

paper argues that although the Indonesian criminal code has not recognized the criminal liability of

corporations, the Indonesian criminal legal system has sufficient basis for sanctioning modern corporate

crimes.

1 INTRODUCTION

The daily life of modern society cannot be separated

from the involvement of corporations since

corporations fulfill almost all aspects of society needs.

Since the mechanization in the first revolution

industry that began in Britain three centuries ago until

the digital era in the fourth revolution industry

nowadays, corporations always become important

actors in business activities. Corporations do not only

possess a considerable power in economic activities

but also in political aspect. Many corporations such as

Google and Shell have more significant annual

revenue compared to Gross National Product (GDP)

of an individual country (Business Insider, 2011).

That condition can lead to unbalance position between

corporations and countries which may lead to

difficulty to sanction the misconduct of corporations.

The economic activities of corporations on one side

give benefit for society by supplying primary and

secondary needs of society. On the other side, the

severe threats by corporations’ activities to the society

are also real and more massive than crimes by natural

persons. The Lapindo mud disaster in Indonesia can

be an example of how the activities of a corporation

can give disadvantages to the society. The gas drilling

activities of Lapindo, an oil company, located in

Sidoarjo East Java Indonesia caused more than 1400

acres of land covered by mud, displaced more than 30

thousand people from their villages and caused more

than 20 people to lose their life (new york times,

2015).

The fact that corporations activities can cause the

harm to the society leads to a question about how to

deal with the actions of corporations that harm the

society and whether criminal sanction, instead of civil

and administrative sanction, can be imposed on the

corporations as moral condemnation for that conduct?

The question of the possibility to impute criminal

liability to corporations has created a separation

among countries in the world into two sides that pro

or against the criminal liability of corporations. In the

Indonesian perspective, sanctioning corporations for

their misconduct is necessary to protect the society

from their illegal activities. Even though the

Indonesian criminal code has not recognized

corporations as its subject, several Special Laws open

the possibility to sanction corporations for their

misconducts. Based on all those facts, this paper aims

to discuss how the Indonesian criminal law regime can

Maradona, .

Sanctioning Corporation in Digital Age: The Indonesian Perspective.

DOI: 10.5220/0010053103210325

In Proceedings of the International Law Conference (iN-LAC 2018) - Law, Technology and the Imperative of Change in the 21st Century, pages 321-325

ISBN: 978-989-758-482-4

321

be used to deal with the misconduct of corporations in

the high technology and borderless crime era.

2 MATERIALS AND METHODS

This paper uses statute and case approaches as

primary sources in order to explain the question of the

paper (Campbell, 1979). The statute approach will be

used to explain the theoretical background of the

recognition of corporations as criminal law subject

since the original criminal law only recognizes

persons in term of flesh and blood that can criminally

liable. The statute approach will also be used to

explain the system to establish the criminal liability

of corporations among Indonesian Special Criminal

Laws. Therefore, several Laws which recognize

corporations as its criminal law subject will be used

as the primary source to explain the Indonesian

system to establish the criminal liability of

corporations.

The case approach is essential as a tool to explain

the implementation of the Laws recognizing the

criminal liability of corporations in the perspective of

the Indonesian courts, especially the view of the

Indonesian Supreme Court toward corporate crimes.

This paper uses several important final and binding

cases to describe the implementation of the Laws

toward corporations.

To answer this paper’s question, it firstly

elaborates the way the Laws outside criminal code

regulate the criminal liability of corporations along

with the problems faced by Indonesia. Several

essential case laws will also be discussed to get a

comprehensive understanding of the Indonesian

system. Secondly, it discusses whether the

contemporary Indonesian system in establishing the

criminal liability of corporations can be used to deal

with the high technology and borderless crime.

3 THE CRIMINAL LAW

PRINCIPLE AND THE

CRIMINAL LIABILITY OF

CORPORATIONS

The fundamental principle of criminal

responsibility originally only concerned about the

liability of natural persons in term of the person in

blood and flesh for their misconducts. For that reason,

the criminal law then develops within the idea and

moral stance of individualism which emphasizes the

moral worth of the individual (Wells, 1994). Since

criminal sanctions are only for natural persons, to

apply the criminal sanctions to corporations then

leads to several theoretical questions. The First

question is about to determine that a corporation has

committed a criminal act (actus reus), since a

criminal act requires a bodily movement from the

perpetrator. Then the second question is about to

establish the moral blameworthiness (mens rea) of

corporations. A corporation is only a law creation

entity based on legal fiction doctrine. This entity is

established for certain aims based on their corporate

charter (ultra vires doctrine). Committing a criminal

offense is absolutely impossible in their corporate

charter. Therefore, based on ultra vires doctrine, the

corporations cannot commit criminal offenses

because there are no laws or bylaws give them a legal

foundation to commit a crime (Leigh, 1969). Only the

natural persons within a corporation can commit a

crime and corporation cannot be criminally liable for

the misconduct of natural persons within its

organization.

However, the criminal law development among

countries around the globe shows a different

perspective. Nowadays, there are many countries

which already recognize corporations as the criminal

law subject in their criminal legal system. Criminal

law can be seen as an instrument or symbol or

ideology to achieve a purpose or to make a moral

statement of specific conduct (Wells, 1994). Criminal

sanction represents a statement of moral or values

relate to the conception of the society. For a country

which already recognizes the criminal liability of

corporations, it can also mean that their society

already believes that corporations deserve to be

criminally sanctioned for their misconduct similar to

natural persons. Since a corporation cannot commit

misconduct by itself and also has no mental state, the

act and intention of a corporation are formless.

Therefore, to establish the corporate blameworthiness

of a corporation, the attribution of the conduct and

intention of the natural person to the corporation are

important bases in the development of corporate

criminal liability.

4 INDONESIAN LAWS RELATED

TO THE CRIMINAL

LIABILITY OF

CORPORATIONS

In the middle of pros and cons on the possibility to

establish the criminal liability of corporations,

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Indonesia has recognized the criminal liability of

corporations since the early day of Indonesia as an

independent country. However, Indonesia started to

recognize the criminal liability of corporations in a

specific crime outside the Indonesian criminal code

(KUHP) in 1951. Until now, this country still

preserves its approach to sanction corporations by

recognizing corporations within the Laws outside the

general criminal law both in the KUHP and in the

Indonesian criminal procedural code (KUHAP). To

some extent, that approach has created problems. The

fact that both the general substantive criminal law

code (KUHP) and the general criminal procedural law

code (KUHAP) regulate nothing about corporations,

law enforcers should have a comprehensive

understanding about all different systems of the

criminal liability of corporations among the Special

Laws. Furthermore, as a system, there is a gap

between the special Laws (lex specialis) and the

general criminal Law (lex generalis). The Special

Laws cannot refer to both KUHP and KUHAP when

those Special Laws do not stipulate certain issues

related to corporations.

Until now there are more than 120 Laws outside

the KUHP which recognize corporations as their

subject (Priyatno, 2017). In general, there is no

uniform system among those Laws in establishing the

criminal liability of corporations. The system of

corporate criminal liability in Indonesia based on the

Laws can be categorized into three different

categories i.e. (Reksodiputro, 1989):

1. the Laws which do not recognize corporations as

a law subject, therefore corporations cannot be

held criminally liable and become the subject of

punishment;

2. the Laws which recognize criminal acts by

corporations, but it is only the natural person

within the corporations who can be held

criminally liable on behalf of the corporation;

3. the Laws which recognize that a corporation is

criminally liable and the subject of criminal

punishment.

The KUHP is the example of a law in the first

category which has not recognized corporations as

criminal law subject in its stipulation. The example

for the second category is the stipulation on Banking

Law. Article 46 Paragraph 2 Banking Law regulates

that a corporation could commit a crime in unlicensed

collecting fund from the public, but based on that

article the prosecution and the punishment could only

be imposed to the natural person, in this case to those

who order such activities, or those who are

responsible for the management of these acts, or

against both parties. Lastly, The Law Number 31

Year 1999 as amended by The Law Number 20 Year

2001 on Eradication of the Criminal Act of

Corruption (Anti-Corruption Law) and The Law

Number 8 Year 2010 concerning the Prevention and

Combating of Money Laundering (Anti-Money

Laundering Law) are the examples of several special

criminal Laws outside the KUHP which stipulate

criminal liability of corporations based on the third

category. Anti-Money Laundering Law, for example,

does not only stipulate the way corporation can be

considered to commit a crime and be held criminally

liable, but also stipulates on punishment for

corporations. On the other hand, Anti-Corruption

Law also stipulates similar aspects to Anti Money

Laundering Law, but both Laws do not stipulate what

if the corporation fails to pay the fine.

5 ESTABLISHING THE

CRIMINAL LIABILITY OF

CORPORATIONS IN

INDONESIAN COURTS

The massive development in establishing the criminal

liability of the corporation in Indonesia has just begun

in the last ten years. Before that, it was difficult to find

cases which directly related to corporations as the

defendants (Sjahdeni, 2006). Apart from that

difficulty, in several cases that are already final and

binding, the law enforcers try to deal with the

problems caused by the gap between the criminal

code and Special Laws. The example is the way the

court adjusted the form of the bill of indictment for

the corporation. Based on the KUHAP, the bill of

indictment should contain the full name, place of

birth, age or date of birth, gender, nationality, address,

religion, and occupation of the defendant. If the bill

of indictment does not satisfy those requirements,

based on the Article 143 (3) jo. Article 197 (2)

KUHAP, the bill of indictment shall be void. When

corporations become the defendant, it is impossible to

satisfy all those requirements. Corporations cannot

theoretically meet requirements such as religion and

gender. Therefore, the court decided that the bill of

indictment for corporations does not need to mention

the gender and religion. In PT Giri Jaladhi Wana Case

(PT GJW case), the defendant filed an objection

based on a reason that the requirement was not met.

However, the court decided to dismiss the objection

from the defendant.

There are several different views of the

Indonesian courts in establishing the criminal liability

of corporations. Firstly, in the Dongwoo case in

Sanctioning Corporation in Digital Age: The Indonesian Perspective

323

2010, the Court based its decision to sanction a

corporation on several facts. The first was the fact that

the misconduct was committed and commanded by a

natural person, in this case, the director of the

corporation. The second was the fact that the director

as a natural person has found guilty of causing the

environmental pollution in the earlier trial. This

became a solid proof that the corporation could also

be considered as the perpetrator in the misconduct.

Then thirdly, the court also based its decision on the

fact that the misconduct of the corporation was

committed within the daily activity of the corporation

and was related to the business core of the

corporation. Therefore, the court decided that the

corporation was considered intentionally committing

the environmental pollution.

Secondly, in the PT GJW case. The fact that the

director of the PT GJW had been found guilty for

committing corruption crime in the previous case

became a solid proof to decide that the corporation

had also committed corruption because the director of

the PT GJW was identified as the directing mind of

the corporation. Then, to determine that the

misconduct is committed within the sphere of the

corporation, the court used intra vires doctrine. It

means that the misconduct can be said committed

within the scope of the corporation when the

misconduct is in line with the activities of a

corporation based on their articles of corporation.

After that, the fact that the corporation got benefit

from the misconduct also became the consideration of

the court to sanction the corporation. In addition, the

opinion of the criminal law expert in that case was

also used by the court in its consideration of the

decision. The expert stated that in order to establish

the criminal liability of a corporation, several criteria

should be met, i.e.:

1. The criminal offense is conducted or ordered by

the corporate personnel either within the structure

or outside the structure of the corporation who has

the position as the directing mind of the

corporation.

2. The criminal offense is committed in the

framework of the objectives or purposes of the

corporation.

3. The criminal offense is committed in accordance

with the function of the perpetrator or the person

who gives the order within the corporation.

4. The criminal offense is committed to give benefit

to the corporation.

5. The perpetrator or the person who gives the order

does not have ground for excuse or justification.

Thirdly, the Kalista Alam case. In this case, the

court has different criteria in establishing the criminal

liability of a corporation. The court mentioned that

the company must implement the prudential principle

when running the business. The fact that the company

used fire to open the land and failed to handle the land

burning because of the limited equipment lead to the

conviction of corporations.

6 CONCLUSION

After the discussion about how the Indonesia criminal

legal system regulates and implements the system in

establishing the criminal liability of corporations

along with the problems surrounding it, this

conclusion chapter will answer whether the

contemporary Indonesian system in establishing the

criminal liability of corporations can be used to deal

with the high technology and borderless crime.

Even though the KUHP and the KUHAP have not

recognized the criminal liability of corporations, most

of Laws outside the criminal code have recognized

corporations as criminal law subject to counteract the

development of new crimes. Several Special Laws are

enacted or amended to comply with the new shape of

crimes which involve high technology and operate

across countries. Several cases related to the criminal

liability of corporations also demonstrate that the

Indonesian courts apply the extensive and various

criteria in establishing the criminal liability of

corporations. Even though the Indonesian criminal

code has not recognized the criminal liability of

corporations, the Indonesian criminal legal system

has sufficient basis for sanctioning modern corporate

crimes.

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