The alleged corruption case related to Pertamina’s Participating Interest investment in Manta Gummy Block, Australia, in 2009, at first, dragged some names as suspects liable for causing state loss of 586 billion Rupiah. Among those names is the name Frederick ST Siahaan (Frederick Siahaan), an ex-finance director of PT Pertamina.

In his case, Frederick Siahaan is involved in signing the Sale Purchase Agreement as a guarantor under the mandate from Karen Agustiawan as the President Director of PT Pertamina (Persero). Karen Agustiawan herself, in a separate case, is also dragged into the case, and on 10 June 2019 was sentenced by the Corruption Court to 8 years of imprisonment.

In the first place, the Corruption Court at the Central Jakarta District Court declared Frederick Siahaan guilty and sentenced him to 8 years of imprisonment and subsidiary fine for 1 billion Rupiah and subsidiary 4 (four) months of detention. This decision also was strengthened by the High Court of Jakarta at the appeal level. The Corruption Court found Frederick Siahaan guilty according to Article 3 in conjunction with Article 18 paragraph (1) point b of the Law Number 31 Year 1999 regarding the Eradication of Criminal Act of Corruption as amended with the Law Number 20 Year 2001 in conjunction with Article 55 paragraph 1 of the Criminal Code (“Criminal Code”). [1]

However, in the Cassation Level, the Supreme Court issued a different verdict than the Corruption Court and the High Court. The Supreme Court dismissed Frederick Siahaan from all of the prosecutor’s charges. The Supreme Court reasoned that the prosecutor’s charges are true and proven but Frederic’s action does not constitute a criminal act.

The Supreme Court’s decision is based on two arguments. Firstly, Frederic signed the Sale Purchase Agreement as a guarantor under the mandate from Karen Agustiawan, the current President Director of Pertamina at that time. According to the Supreme Court, Frederic signed the agreement as a guarantor and this is deemed to be under Superior Order pursuant to Article 51 paragraph (1) of the Criminal Code, and therefore he cannot be held guilty. Secondly, the Supreme Court argued that PT Pertamina Hulu Energi’s (“PHE”) finance, which is a subsidiary of PT Pertamina, is not considered as the State’s finance, the share capital of PHE does not originate from the states’ direct injection, and therefore PHE’s loss is not considered as the state’s loss.

As an additional note, in the Sale Purchase Agreement, the acquiring party is indeed PT Pertamina Hulu Energi.

Thus, these two Supreme Court arguments used in deciding the case are interesting issues to be further elaborated here. These issues are under Superior Order and the Finance of the State-Owned Enterprise’s (“SOE”) subsidiary.

Under Superior Order

The provision related to under Superior Order in the Criminal Code can be found in Article 51 of the Criminal Code, which states:

1. Anyone who commits an act in the course of performing a superior order given by the authority shall not be sentenced.
2. A superior order without authority, shall not eliminate the punishment, unless if the person who receives the order, with good faith assumes that the order was granted with an authority, and its performance is in the scope of its job.

As stated in Article 51 paragraph (1) of the Criminal Code, it is clear that if a person commits a crime, but such action is performed under a superior order, then the person cannot be punished. In the theory of criminal law, this is considered as a basis of justification for a crime.

In a glance, if it is applied to Frederic’s case, where he committed an action alleged to be a crime, the action is committed under Superior Order that he received from Karen Agustiawan, as the President Director of Pertamina, and then the Supreme Court’s legal consideration is considered acceptable. However, if we elaborate further, in relation to this issue, it needs a deeper consideration regarding the applicability of Article 51 paragraph (1) of the Criminal Code to Frederic’s case.

According to R. Soesilo (Kitab Undang-Undang Hukum Pidana, serta komentar-komentarnya lengkap pasal demi pasal, on Page 48)

“The first requirement mentioned in this article is that the person commits an action under a superior order, between the giver and the receiver there should be a relationship that is public officials and not private employment. It is not necessary that the receiver should be the subordinate of the giver. It may be at the same level, but what is important is that between the receiver and the giver there exist an obligation to obey the order.

The second requirement is that the order should be given by the authority that has the power to issue the order. If the authority has no power, then the person who executes or performs the order may still be punished for the action he/she commits, but if the person in good faith assumes, that the order is valid and is given by the authority who has the power to do it, is that is the case, then according to the second paragraph of this article, such person cannot be punished.”

One matter that is needed to be noted in relation to Article 51 of the Criminal Code is related to the term of the superior/the official or “ambtelijke bevel”. According to Noyon-Langemeijer, as quoted by P.A.F. Lamintang, S.H, in his book “Dasar-Dasar Hukum Pidana Indonesia”, 5^th ed, Published by Citra Aditya Bakti, on page 525, states:

“The term “ambtelijke bevel” or “superior order” itself means as an order given by a superior, wherein such authority to give the order is originated from an “ambtelijke positie” or a position according to a title, both from the person who gives the order and the person who receives the order.”  

In the abovementioned R. Soesilo’s comment, he gives a requirement to Article 51 of the Criminal Code that between the giver and the receiver there should be a relationship that is between public officials in nature and not private. The same is also stated by experts, such as:

1. Professor SIMONS:

“It is unnecessary that the order must be given by its subordinates, it can also be given to other persons, and as long as the order has been given in accordance with the law, then the punishment for committing the action under superior order shall be eliminated.”

2. Professor POMPE:

“With the word “subordinate” means everyone, to whom an order is given, and it is not necessary in the permanent relationship of a subordinate of the giver. Moreover, he/she does not necessarily have to be a public official. However, the relationship between a person who executes the order with the person who gives the order must be public in nature or publiek rechtelijke.”

3. Professor van HAMEL:

“The law has given requirements that the order must be ‘ambtelijke’ in nature, which means that it must be given under an ambt or a “title/position” to subordinates, that is to public officials or other people.”

Advocaat-general BESIER in his conclusion before the HOGE RAAD in its arrest on 21 May 1918 decides as follows:

“Here does not only means subordinate nature in title, but also every obligation of the citizen to obey orders from the state authority’s organs.”

P.A.F. Lamintang concludes the expert’s doctrine in relation to Article 51 paragraph (1) of the Criminal Code as follows:

“From the formulation of Article 51 paragraph 1 of the Criminal Code, we can see that the law requires that the “superior order” should be given by “het bevoegde gezag” or by the “authority” to issue such order.”  

Then, from R Soesilo’s comment and abovementioned doctrines, it becomes a question whether in Frederic’s case, between the giver, that is Karen Agustiawan as the President Director of Pertamina and Frederick ST Siahaan, there exist a relationship that is between public officials in nature? Or the relationship between them is public law in nature? Considering that the President Director of Pertamina is a title in a company, which is a State-Owned Enterprise.

It needs to be considered, that the Law Number 28 Year 1999 Regarding The State Organizer Who Is Clean And Free From Corruption, Collusion, And Nepotism (“Law No. 28/1999”) regulates that the State’s Organizer as the State’s Official who runs the executive, legislative, and judicative functions and other official whose functions and main duties are related to the organization of the state in accordance with the prevailing law and regulations (Article 1 point 1). Further in Article 2 point 7 of the Law No. 28/1999, it states that the State’s Organizer shall include other Official who has strategic function in connection to the running of the state in accordance with the prevailing law and regulation, which is further elaborated in elucidation of Article 2 point 7 of the Law No. 28/1999 shall include the Director, Commissioner, and other structural officials in the State-Owned Enterprise and Company-Owned by Regional Government.

By considering the provision of Law No. 28/1999, it can be concluded that the President Director of a State-Owned Enterprise is considered as State’s Organizer or State’s Official. Therefore, the Order given by Karen Agustiawan, in her capacity as the President Director of Pertamina (SOE) to Frederick Siahaan fulfills the provisions of Article 51 paragraph 1 of the Criminal Code.

The Finance of a Subsidiary of a State-Owned Enterprise Is Not State Finance

Lately, this topic has been hotly discussed since the lawsuit related to the candidates for presidential vice-president Prabowo Subianto-Sandiaga Uno over the results of the 2019 presidential election in the Constitutional Court. In the lawsuit hearing at the Constitutional Court on Friday, 14 June 2019, Prabowo-Sandiaga questioned Ma’aruf Amin’s position as Chairman of the Supervisory Board at Bank Syariah Mandiri and Bank BNI Syariah. However, this article will not discuss about the presidential election lawsuit in the Constitutional Court in which a copy of the decision regarding that lawsuit can already be accessed on the official website of the Constitutional Court with decision number 01/PHPU-PRES/XVII/2019, but rather whether the financials of State-Owned Enterprise (“SOE”) subsidiaries are the same as state finance or not.

As is known, the legal protection for SOE is Law No. 19 of 2003 concerning State-Owned Enterprises (“SOE Law”), while for Limited Liability Companies (“LLC”) is Law No. 40 of 2007 concerning Limited Liability Companies (“Company Law”). The definition of State-Owned Enterprises (“SOE”) is contained in the SOE Law and Regulation of the Minister of State-Owned Enterprises Number: PER-03/MBU/2012 concerning Guidelines for Appointment of Members of the Directors and Board of Commissioners of Subsidiaries of State-Owned Enterprises (“MSOE Regulation 03/2012”).

Article 1 number 1 of the SOE Law states that:

 “State-Owned Enterprises, hereinafter referred to as SOEs, are business entities whose entire or most of their capital is owned by the state through direct participation from separated State Assets.”

While the definition of SOE in MSOE Regulation 03/2012 is the same as the definition of SOE in SOE Law, the definition of SOE in MSOE Regulation 03/2012 is also contained in Article 1 number 1, namely:

“State-Owned Enterprises, hereinafter referred to as SOEs, are business entities whose entire or most of their capital is owned by the State through direct participation from separated State Assets.”

Seeing the SOE definition, it needs to clarify that SOE has capital derived from separated State Assets. Separated State Assets are state assets originating from the state budget or other legitimate acquisition and used as state capital investment in SOEs as a company.^[2]

The definition of SOE subsidiaries is not found in the SOE Law but in Presidential Decree of the Republic of Indonesia Number 122 of 2001 concerning Policy Team for Privatization of State-Owned Enterprises (“PDRI 122/2001”) and MSOE Regulation 03/2012.

Article 1 number 3 PDRI 122/2001 states that:

“A subsidiary of a state-owned enterprise is a Limited Liability Company whose entire or most of its shares are owned by a state-owned enterprise.”

The definition of SOE subsidiary is contained in the newer regulation found in MSOE Regulation 03/2012.

Article 1 number 2 MSOE Regulation 03/2012 states that:

“SOE Subsidiaries, hereinafter referred to as Subsidiaries, are limited liability companies whose shares are mostly owned by SOEs or limited liability companies controlled by SOEs.”

Furthermore, the Regulation of the Minister of State-Owned Enterprises Number: PER-15/MBU/2012 concerning Amendments to the Regulation of the Minister of State-Owned Enterprises Number: Per-05/MBU/2008 concerning General Guidelines for Procurement of Goods and Services of State-Owned Enterprises (“MSOE Regulation 15/2012”) is also relevant.

In Article 1 number 6 MSOE Regulation 15/2012 regulates the criteria of SOE subsidiaries, namely:

By looking at various definitions about the SOE subsidiary above, it can conclude that the capital of the SOE subsidiary is from the SOE, not from the State Assets. This is clearly different from SOE’s capital that comes from Separated State Assets. Separated State Assets are state assets originating from the state budget or other legitimate acquisition and used as state capital investment in SOEs as a company. Placing state assets to be managed in a company produces benefits for improving the country’s economy. Therefore, if an SOE and SOE subsidiary formed to carry out capital participation as a Parent Company, it means that the capital does not come from the state, but from the SOE in the form of a Limited Liability Company as a legal entity that has separate assets from shareholders.^[3]

Based on this construction above, it can be interpreted that if an SOE as a legal entity forms a subsidiary and has a stake in it, then the ownership of shares in the subsidiary comes from the assets of SOEs. If you look at that construction, it can be said that the SOE subsidiary is not an SOE, so it is not subject to the SOE Law but is subject to the Company Law.^[4]

Besides that, Dr. W. Riawan Tjandra, S.H., M.Hum. in the copy of the decision of the Constitutional Court Number 01/PHPU-PRES/XVII/2019 gives his opinion on the differences between SOEs and SOE subsidiaries, namely:

“So, herein lies the difference between a SOE and a SOE subsidiary, because what determines that business entity is an SOE is that the state owns most of the capital through direct participation, whereas an SOE subsidiary is established through the inclusion of state-owned shares in SOEs in other SOEs so that most shares are owned by other SOEs that are subsidiaries of SOEs (indirect capital participation). With grammatical and teleological interpretations, it can be said here that SOEs and SOE subsidiaries are different legal entities. However, there are 2 (two) conditional criteria that can treat SOE subsidiaries the same as SOE, namely, if at any time:

1. get Government assignments or carry out public services; and/or;
2. get special policies of the state and/or the Government, including in the management of natural resources with certain treatment as applied to SOEs.”

The author cites the legal considerations of the Constitutional Court in the same decision (Decision of the Constitutional Court Number 01/PHPU-PRES/XVII/2019) regarding this matter, namely:

Whereas with regard to the Applicant’s argument about the requirements of Candidate Vice President Candidate 01 above, the Court considers the following:

1. Whereas Article 1 of Law Number 19 Year 2003 concerning State-Owned Enterprises (SOE Law) defines SOEs as business entities whose capital is wholly or partly owned by the state through direct participation from the separated state assets. Based on these definitions, to be able to find out whether Bank BNI Syariah and Bank Syariah Mandiri are SOEs or not, one of the ways is by knowing the capital or stock composition of the two banks;
2. That the capital or shares of Bank BNI Syariah is owned by PT Bank Negara Indonesia (Persero) Tbk and PT BNI Life Insurance (evidence PT-20). The composition of Bank Syariah Mandiri’s shareholders is PT Bank Mandiri (Persero) Tbk and PT Mandiri Sekuritas (evidence PT-21). Therefore, because there is no direct capital or shares from the state which are mostly owned by the state, the two banks cannot be defined as SOEs, but are SOE subsidiaries because they established through the inclusion of shares owned by SOEs or in other words capital or shares of the two banks are mostly owned by SOEs;
3. Furthermore, in the SOE Law, there are also company categories, namely state-owned limited liability companies and public companies, each of which has a different corporate organ. The state-owned limited liability companies have organs consisting of General Meeting of Shareholders (GMS), Directors and Commissioners (vide Article 13 of the SOE Law), while Public Companies have organs consisting of Minister, Directors and Supervisory Board (vide Article 37 of the SOE Law). Referring to the organ related to, the Sharia Supervisory Board (SSB) is not known in the state-owned limited liability companies;

Based on the description above, it can be concluded that the finances of SOE subsidiaries are not the same as or not SOE finances because SOE subsidiaries are independent entities and separate from SOEs as the largest shareholder. Capital given to SOE subsidiaries is derived from SOEs, not from state assets. Even in the case of financial reports, SOE subsidiaries report to SOEs as their shareholders and not to the state. Plus, in terms of regulations, SOEs and SOE subsidiaries are subject to two different laws. SOEs are subject to the SOE Law, while SOE Subsidiaries are subject to the Company Law.

Hope it is useful,

FREDRIK J PINAKUNARY LAW OFFICES

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[1] Article 3 Law No 31 Year 1999

“Every person with the purpose to benefit oneself or another person or corporation, misuse the authority, opportunity or facilities that is in him/her because of his/her office or position, that cause loss to the state finance or state economy is sentenced to life imprisonment or minimum sentence of 1 (one) year and maximum sentence of 20 (twenty) years or minimum fine of Rp Rp. 50.000.000,00 (fifty million Rupiah) and maximum fine of Rp. 1.000.000.000,00 (one billion Rupiah).”

Article 18 paragraph (1) point b of the Law No 31 Year 1999

“(1) other than additional punishment as referred to in the Criminal Code, as an additional punishment shall be: … b. payment of compensation payment in amount of the maximum of the asset that is obtained from the corruption;”

Article 55 paragraph 1 point (1) of the Criminal Code

“(1) shall be punished as a perpetrator: 1.those who commit, those who ordered a crime and the accomplice of the crime”

[2] Status Kepemilikan Anak Perusahaan BUMN, Julio Thimotius Kapitan Smaud Natun, https://media.neliti.com/media/publications/278225-status-kepemilikan-anak-perusahaan-bumn-4ebf8f09.pdf

[3] Ibid

[4] Ibid