Indonesian Corruption Court Convicts, Fines Indonesian Construction Company on Corruption Charges

On January 4, the Jakarta Post reported that the Corruption Court in Jakarta convicted Indonesian construction company PT Nusa Konstruksi Enjiniring (NKE) (formerly PT Duta Graha Indah (DGI) on charges of corruption relating to several construction projects.  It also sentenced NKE to a fine of IDR (Indonesian rupiah) 700 million ($48,631), restitution of IDR 85.4 billion to the Indonesian government, and a six-month ban on NKE’s undertaking any government projects.

This conviction and sentence are significant because they are reportedly the first against any company since 2016, when the Indonesian Supreme Court issued Regulation Number 13 to address “legal ambiguities that were impeding prosecutors and investigators to pursue corporations for committing criminal offences, including corruption.”  According to the Indonesian Corruption Eradication Commission (KPK) Commissioner Laode M. Syarif, before Regulation Number 13 only two other corporations had ever been prosecuted under the Indonesian Anti Corruption Act.

The judges on the Corruption Court stated that NKE had received illicit funds totaling IDR 240.09 billion from eight construction projects, through rigged tenders with the help of former Indonesian official Muhammad Nazaruddin.  Approximately IDR 87 billion of the projects’ combined profit of IDR 239.9 billion was given to the state, and IDR 67.5 billion was transferred to Nazaruddin in spurious “fees.”  The Court accordingly ordered NKE to pay IDR 85.4 billion in restitution within one month of its ruling.  NKE’s President Director Joko Eko Suprastowo told the Court that NKE accepted the court’s ruling, and did not plan to appeal.

Note: Although the Corruption Court over the last two years has imposed substantial prison sentences on prominent former Indonesian officials, including former Speaker of the House Setya Novanto and former Constitutional Court judge Patrialis Akbar, the NKE verdict sets an important precedent for the Indonesian government’s investigation and prosecution of companies for corruption.

At the same time, it should be noted that the NKE fine and restitution reportedly were well below the recommendation by the KPK prosecutor that NKE be fined IDR 1 billion and pay IDR 188.7 billion in restitution.  While the circumstances and the underlying laws are different, based on initial reports the KPK sentence appears especially moderate when compared with the almost-simultaneous ruling by the Indonesian Supreme Court that upheld fines of IDR 1 trillion ($69 million) against plantation company PT National Sago Prima for causing forest fires in 2015.  Further reporting and future corporate prosecutions by the KPK will be necessary to establish the NKE sentence’s long-term significance.

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