[co-author: Andera Rabbani]
In the implementing of one of its duties to prevent corruption from happening in Indonesia, the Corruption Eradication Commission (KPK) as Indonesian Corruption Watchdog issued Circular Letter No. 19 of 2021 regarding Gratification Control within Financial Services Sector (Gratification Control) on 23 July 2021. The Gratification Control is intended to be a guideline for business actors within the financial services sector by emphasising the prohibition on providing any form of direct and indirect gratification relating to public officials’ positions.
Financial services is one of the most regulated sectors in Indonesia due to its complexity and risk exposure from certain aspects, such as, among others, cybersecurity and corruption. Apart from direct supervision by the Financial Services Authority or Otoritas Jasa Keuangan towards the business actors’ conduct, the Indonesian government wanted to go the extra mile to protect and ensure the compliance of this sector by issuing the Gratification Control.
Based on KPK’s 2020 annual report, the private sector contributed 31 out of 109 suspects in corruption cases within 2020, while the other suspects are mainly members of the House of Representatives or Regional House of Representatives and other public officials. Such statistics show how significant the corruption risk in the private sector is.
Unlawful gratification
Indonesian Anti-Corruption Law provides that every gratification provided to state and/or public officials will be deemed as bribery if it relates to their positions and contradicts their statutory duties. Violation of such provision will be subject to penal sanctions under Article 5 or Article 13 of the Anti-Corruption Law in the form of imprisonment ranging from a year up to five years and fines amounting from IDR50,000,000 (approx. USD3,475) up to IDR250,000,000 (approx. USD17,379).
The Gratification Control expressly provides that business actors within the financial services sector are prohibited from providing unlawful gratification in the form of fee marketing, collection fees, refunds, etc.
Prevention needed
The Gratification Control provides that certain preventive actions need to be undertaken by the business actors to prevent the greater impact and ensure compliance with the prevailing laws. The absence of such policy will attributed to the business actors’ fault which could be subject to corporate criminal liability in courts.
Enhanced internal policies and training in anti-bribery and anti-corruption principles in the workplace is needed as one of the preventive actions. Such actions are intended to preserve the compliance of business actors’ conduct with the prevailing laws. In addition, those will be the mitigating factors should the business actors undergo corporate criminal proceedings.
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