A Forced Redefinition of Corruption
JAKARTA — Recommendations by National Economic Council (DEN) chair Luhut B Panjaitan (LBP), backed by Prof Yusril Ihza Mahendra, on redefining corruption—particularly in relation to state losses—appear to be forced. There are several important points in the debate.
First, the former KPK leaders involved were those who challenged Articles 2 and 3 at the Constitutional Court, where their petition was rejected. Many other former KPK leaders hold different views.
Second, the proposal ignores the top ten major cases involving the US Foreign Corrupt Practices Act 1977 that overlap with corruption cases in Indonesia, including Rolls-Royce, which was linked to a corruption case at PT Garuda Indonesia. In the US Department of Justice (DOJ) case against Rolls-Royce plc, the governments of the United States and Brazil received criminal penalties totalling US$195,496,880, or about US$195.5 million. In the DOJ indictment of Alstom S.A. on 22 December 2014, related to the Tarahan steam power plant case, the US government received a criminal penalty of US$772.29 million.
Not a single cent of either of these huge penalties went to the Indonesian government, as we confirmed during a visit to the United States when I was serving as a KPK leader, even though Indonesia’s losses were substantial.
The size of the penalties was based on the 1991 US Sentencing Guidelines in conjunction with Title 18 of the US Code. These provisions allow for a maximum criminal fine equal to the greater of twice the gross pecuniary gain obtained from the offence or twice the gross pecuniary loss caused to another party.
The 1991 US Sentencing Guidelines, together with Title 18 of the US Code, are clear evidence that losses—or even gains—are factors in imposing penalties in the United States, under rules that predate Indonesia’s Anti-Corruption Law.
Third, the DEN study has too narrow a scope. It overlooks various international initiatives that have gathered momentum since 2003. In September 2023, Transparency International issued a proposed legal definition of grand corruption and recommendations for addressing it.
Other initiatives include UN General Assembly Resolution A/RES/79/190 (2024); the 11th Conference of the States Parties to the UN Convention against Corruption (UNCAC CoSP) in Doha in December 2025; European Union Directive (EU) 2026/1021, adopted on 29 April 2026; the UK Anti-Corruption Strategy 2025; and, most relevantly, the UNCAC Coalition’s proposal in June 2025 that state capture be recognised as a specific threat to UNCAC and discussed through the convention’s formal mechanisms.
State capture is a form of systemic corruption in which elite actors—including politicians, state officials and private-sector figures or oligarchs—work together to control, influence or “hijack” the making of laws, public policies and state regulations for their own or their group’s benefit. The e-KTP case is a widely known example of state-capture corruption.
In fact, UNCAC does not have a single, simple definition of corruption, contrary to what LBP has said. This was a deliberate choice by the convention’s negotiators, so that the meaning of corruption would not be restricted by an overly narrow legal formulation. UNCAC instead identifies various acts that constitute corruption or corruption-related offences, without setting out one general definition that covers every form of corruption.
This is confirmed by the United Nations Office on Drugs and Crime (UNODC). UNCAC sets out 11 forms of criminal offence, with its main provisions contained in Chapter III, particularly Articles 15–25.
The most frequently cited definition of corruption comes from Transparency International: “the abuse of entrusted power for private gain”.
The DEN should instead focus on promoting corruption prevention by improving organisational governance in the following ways.
First, SNI ISO 37001:2016, the Anti-Bribery Management System (SMAP). SMAP gained momentum when it was made mandatory for state-owned enterprises (SOEs). Ten courts also implemented the system. It is regrettable that the mandatory status of SMAP lasted only briefly before being revoked by the then Minister of SOEs.
Second, the SNI ISO 37000 series, including SNI ISO 37009 on conflicts of interest; COSO (the Committee of Sponsoring Organisations); the Global Internal Audit Standards (GIAS); and the Indonesian General Guidelines for Corporate Governance (PUGKI), issued by the National Committee on Governance Policy (KNKG), an institution under the Coordinating Minister for Economic Affairs.
Third, a Governance, Risk and Compliance (GRC) management system should serve as the front line of governance, with risk as the primary factor to consider before a corporate action is decided.
Concerns about the threat of criminal prosecution for corruption seem excessive. Many directors of SOEs have completed their tenure without facing corruption proceedings, provided there was no conflict of interest and they were not risk-takers in the sense of taking risks through intervention. The following instrument can be used to protect decisions involving risk.
Fourth, the Business Judgment Rule (BJR). The ruling in the ASDP case, which found the company’s president director guilty, and the Pertamina case, which acquitted Pertamina’s president director, show that the BJR applies in Indonesia.
Supreme Court Regulation No. 13 of 2016 on Procedures for Handling Criminal Cases by Corporations, Article 4(2), directs judges to consider whether a corporation benefited from an offence, allowed it to occur or failed to take steps to prevent it.
Conflicts of interest, governed by the Company Law and SNI ISO 37009, are the “mother of all corruption”. Almost every corruption case involves a conflict of interest.