The UK Bribery Act 2011 has just been given royal assent. Some of its offences covers British companies overseas.

s. 12 (5): An offence is committed under section 7 irrespective of whether the acts or omissions which form part of the offence take place in the United Kingdom or elsewhere.

 

s.7 Failure of commercial organisations to prevent bribery

(1) A relevant commercial organisation (“C”) is guilty of an offence under this
section if a person (“A”) associated with C bribes another person intending—
(a) to obtain or retain business for C, or
(b) to obtain or retain an advantage in the conduct of business for C.

Download the Original version of the Bribery Act here.

The Serious Fraud Office is in charge in enforcing these laws. There has been prosecutions involving Indonesian subsidiaries of an English companies in the past.

Indian economist Kaushik Basu argued that in order to deter corruption, legal immunity should be given to bribe-giver (but not bribe-taker). That is, when an act of bribery is committed and both of the doers are caught, the bribe giver should be set free and allowed to collect their money, but the bribe taker should be punished.

This is indeed an interesting method for deterring corruption by managing its supply-side. It provides incentives for suppliers (bribe-giver) to report and turn over the bribe-taker to the police. He provides caveats however, that bribe giver may have an interest to manage his or her reputation in the underworld (I can imagine that someone like Ayin will have to be ‘credible’ enough in order to earn trust from the bureaucrat – that is to say, to have some sort of an underworld moral code). He also warn the possibilities that false charges of bribery on behalf of the public officials may rise, but this can be managed by increasing penalties for false charges – somewhat dilemmatic for a lawyer.

Anyway, download the paper here.

H.T. Marginal Revolution

Separately, Gayus Lumbuun from the Indonesian Democratic Party of Struggle (PDI-P) said that the House leaders had to explain what really happened on the documents which should have been completely sent to the KPK.

Deputy House speaker Priyo Budi Santoso from the Golkar Party said he too was surprised by the fact that the KPK had yet to receive all the necessary documents and that the House leaders would investigate into the issue.

The Indonesian Attorney General Office has started to investigate the allegation of corruption in the water sector. The amount money involved is 1 billion IDR. The project, which is fully funded by Makassar's regional budget is supposed to improve Makassar city's water supply. Read more (in Bahasa)

According to the Jakarta Post:

65. It is not known how many ad hoc funds there were, nor responses for one off payments, though there is reference to a number within documentation provided to the SFO by Innospec. These additional payments were variously referred to as the “Lead Defense”4 fund; “Lim WS account”5; “compensation fund”6; “extraordinary costs”7; “cumulative costs”8; “special funds”9; “promotion fund”10 or “exceptional promotional work”11; “special bonus”12; “cranes” 13 and the “Rachmat Sudibyo fund”.

 66. This fund was conceived and largely operated during a period predating the Indictment. In the first instance between 2000 until his departure in August 2002, a recipient of ad hoc bribes was Rachmat Sudibyo (“Sudibyo”). The “Rachmat Sudibyo Fund” was a corrupt vehicle to pay Sudibyo, the Indonesian Director General of Oil and Gas at the Ministry of Energy and Mineral Resources. He was in post until August 2002, whereupon he was appointed Chairman of BPMigas – the newly established oil and gas authority.

69. The Special Committee retained KPMG to examine all payments made to PTSI. KPMG found two large payments, one in 2001 ($265,000) and one on 8 January 2002 ($295,150) with invoices stating that they were: “For payment all Pertamina/Migas & Lemigas Personnel (sic) travel, hotel, daily expenses overseas during the year 2001 spent in promotion of OCTEL’s products, as earlier agreed.”.

76. Innospec’s agents therefore made corrupt payments to public officials at Pertamina which were not dependent upon or related to specific orders for TEL being made. Corrupt payments were made as general sweeteners “to clear the air”, through various mechanisms including the agents’ general commission, to “buy of [sic] some Pertamina people”, to maintain or increase market share.

77. Furthermore, Innospec’s agents also requested further funds in order to make corrupt payments to a rival agent – Wisnu – who had apparently been tasked with marketing Chinese-sourced TEL to Pertamina.

83. In 2003 and 2004, Innospec’s agent, Sebastian, targeted Suroso, who became the Refinery Director of Pertamina. It is believed that this position was second only to the President or CEO of Pertamina. In effect Suroso had authority, at least until 2005, to sign and agree purchase orders on behalf of Pertamina. Even after the creation of MIGAS, individual refineries and Pertamina more generally had certain autonomy to enter into contracts with particular suppliers.

The Jakarta Globe reported:

In a move to address persistent allegations of corruption in the multibillion dollar oil and gas sector, the Energy and Mineral Resources Ministry on Friday appointed an officer of the Corruption Eradication Commission to the board of directors of upstream oil and gas regulator BPMigas.

Lambok Hamonangan, the director of gratuity oversight at the commission, better known as the KPK, was inaugurated as BPMigas’s deputy for evaluation and legal advocacy, a newly created position.

NYT posted a story on the recent polemic between the gecko and the crocodile:

An interesting story from Reason Magazine:

However, although the Indonesian legal system provides the sorts of rights and protections for the accused that might be expected in Australian courts, they are not always upheld in the same way in practice.

The institutionalised bribery of the Soeharto period left its mark on the judiciary. Corruption is common in many courts around the country, partly because salaries are very low and facilities poor. As money became more persuasive than legal argument in some Indonesian courtrooms, the skills base of many judges and other law enforcement officials also plummeted.

• First, there is no evidence whatsoever that regulating the Corruption Court in the same law as the Corruption Eradication Commission (KPK) automatically violates the Constitution. The Constitution only mandates that the composition, membership, appointment and procedural law of the courts existing below the Supreme Court is regulated by a law. The KPK law has fulfilled such requirements and should therefore be consistent with the Constitution.
• Second, there is no guarantee that "equality before the law" will be observed by simply segregating the corruption court in a new law other than the KPK law. In order to be fully constitutional, the future corruption court must have specific competencies in adjudicating all corruption cases, as part of a "one-roof" system.
• Third, the Constitutional Court did not clearly establish the link between a violation of the "equality before the law principle" and why the existence of the corruption court under the KPK law violates such a principle. The reference made by the court in justifying its argument is more to "a custom of regulation", and not directly about the Constitution itself. It is a custom in Indonesia that special courts are regulated through specific legislation, but this custom does not imply that it is a Constitutional requirement to regulate specific courts in an exclusive law.
• Fourth, there is presently no direct constitutional injury suffered by anyone due to these measures, so the dangers as seen by the court are potential, not actual. It is true that there has been discrimination against people in corruption cases -- those who go to ordinary courts are generally treated more lightly compared to those detained by the KPK. However, these are not direct constitutional injuries but merely injuries caused by a corrupt legal system. Had the legal machinery functioned properly, these negative effects could be minimized as the law has already outlined the exact competencies of each institution.

1. Influence of the Supreme Court to the new Corruption Court
2. Composition of ad hoc judges at the new Corruption Court and influence from political parties
   
3. Extension of Corruption Court to regions and the influence of regional government

Experience with the establishment of the existing Anticorruption Court as a chamber of the Central Jakarta District Court shows the importance of thorough preparation to ensure the timely availability of the necessary funding and infrastructure.

There is certainly a lot that will need to be discussed in detail, decided on and prepared over the next three years. While doing all this, the overriding common cause should be constantly kept in mind: the eradication of corruption and the promotion of legal certainty and public welfare.

Well, let's keep an eye!

"It's about time the government considers setting up such a court to ensure those responsible for illegal logging do not always escape justice." Chalid believed judges and prosecutors tended to try illegal logging offenses as "ordinary" crimes and gave perpetrators light penalties or acquitted them.

Sounds like a classic Juridification problem to me. If an institution is not functioning properly, set up another institution in addition to the former. If the the new institution doesn't work, set up another institution to supervise the ailing institution. If the supervising institution cannot properly supervise the supervisee, set up another institution as an oversight body. Consider the corruption, how many institutions do we have? We have the BPK, KPKPN, BPKP, inspectorate general in many state organisations, we have the police, we have of course the beloved KPK, we have the courts (there are two, in fact, state court and corruption court and each may have competence to try the case) and we have the state attorneys. Still, corruption is a problem.

Maybe the Walhi activist have another consideration in their mind. But instead of forming a new court, why not reform the judges selection process and adopt ad hoc judges?

State Secretary Yusril Ihza Mahendra said the Constitutional Court's ruling posed a serious judicial problem, as those tried and convicted by the Corruption Court would have grounds for complaint if the court turned out to be unconstitutional. "Article 53 of the law on the KPK is clearly against the Constitution, but its existence has been extended for three years. This will be a problem for those who feel their rights have been violated," he said.

Anti-graft activists on Thursday blasted the Constitutional Court's verdict, calling it a "symbolic victory" for those involved in corruption. "The ruling is nonsense. The Corruption Court does not violate the Constitution. Its existence under the law on the KPK does not have any effect on its independence or impartiality," Bambang Widjojanto, who chairs the ethics department at Indonesian Corruption Watch, said at a news conference.

I also have my own view on the matter, which tends to be in the same position with anti graft activists. I have wrapped an article for the Jakarta Post discussing it. We will discuss it in this blog after it is published.