Corruption is usually committed by a person who occupies a certain position and is intellectually capable to execute their intention, but first and foremost, money or asset is the “vein” that drives a person to commit it. Money, as the “vein”, streams blood in order to activate corruption; without money, corruption is unable to be proceeded. Therefore the one of the most effective measure to stop corruption is by cutting the vein of corruption through the seizure of money or asset in order to impoverish the corruptor. This is because if the corruptor was not impoverished, he or she could still commit crime inside the jail with the money they obtained from corruption. We have seen a convict, such as Gayus Tambunan, escapes the prison, and enjoyed leisure such as gambling in Macau and watch tennis tournament in Bali. Such freedom for corruptors to do anything as they wish can be facilitated because they still have a lot of money. The question is, can the corruptor still have a lot of money even though they are in prison? One of the ways for such condition to happen is through committing money laundering. The money obtained from corruption can be “laundered” by placing the fund on a legal business activity, inside or outside the country, covering the trace of the money’s origin , for example by transferring the money to a fictitious company and paying a big amount of money with cash. The corruptors could also set up a fictitious company located in tax haven country, after which the company will pay a very big salary to them or report a high or unreasonable income. Therefore, due to the possibility of money laundering if a corruptor was only imprisoned, not impoverished, it is suggested for corruptors to be impoverished by cutting the “vein” of corruption. Below are several steps that can be taken to cut the “vein” of corruption.
Maximize the Application of Money Laundering Law
So far, the Corruption Eradication Commission (Komisi Pemberantasan Korupsi or “KPK”) has not been optimal in utilizing Money Laundering Law to charge convicted corruptor. As a result, the rate of return of asset from corruption is way smaller than the state’s loss due to corruption. Based on the research conducted by the author, there are 534 corruption cases from 2014 to 2018, meanwhile the indictment that used money laundering law in the same period were only against 23 defendants. From various sources that the author has learned, it appears that KPK Investigators have been overburdened and therefore are more focused on following the suspect, not following the money. In a TV discussion, the coordinator of Indonesian Corruption Watch (“ICW”) explained that according to the communication between ICW and the East Java Police, they seldom interact with Financial Transaction Reports and Analysis Centre (Pusat Pelaporan dan Analisis Transaksi Keuangan or “PPATK”), therefore, they are unable to maximize the benefit of applying Money Laundering Law to catch the corruptor, as PPATK is one of the most important instrument in money laundering. Considering that one of the ways of earning the return of assets by KPK is from the seizure of the corruptor’s asset, Dr. Yenti Garnasih, a money laundering expert, opines that the corruption money has been used to buy an asset, suggesting that money laundering has occurred.. Hence, The KPK is expected to change the paradigm that corruption should be prioritized first then money laundering because Article 75 of Money Laundering Law states that in the event the investigator finds a sufficient preliminary evidence that money laundering and original crime happened, the Investigator combines the original crime investigation with money laundering investigation and notifies PPATK.
To apply Money Laundering Law, asset tracing needs to be conducted. Asset tracing is conducted by the Investigator assisted by Forensic Auditor by collecting and evaluating financial and non-financial transaction evidence related to the asset resulting from criminal act. The purpose of asset tracing is to know the existence and type of assets that are hidden which originated from the criminal act. The information of such assets comes from financial service provider, PPATK and the research resulted from Dispute Academy in the court and KPK. The success of asset tracing will help KPK in collecting accurate information regarding money or asset that a corruptor tries to hide. In order to support KPK’s performance and effort in returning the assets, a task force needs to be formed to trace the corruptor’s asset.
Returning the State Asset through Civil Claim
A lot of corruptors remain “rich” even after being imprisoned, suggesting that the application of Article 32, Article 33, Article 34 and Article 38C Corruption Law regarding civil claim needs to be maximized. Through conducting a good asset tracing, accurate information regarding a corruptor’s assets can be found and used as the object of a claim. However in reality, civil claim is rarely conducted, even though money is corruptor’s “vein”. Due to this existing fact, the effort to impoverish corruptors through civil claim needs to be intensified. In corruption case, civil claim needs to be placed as the main legal remedy besides criminal law effort, not merely as complement to criminal penalties.
Seizing Assets without a Criminal Decision or Non-Conviction Based (“NCB”) or Civil Forfeiture
NCB is regulated in United Nations Conventions Against Corruption (UNCAC) which has been ratified by Indonesia. According to the convention, one of the mechanisms that can be done to recover state losses is the seizure of assets without a criminal decision either by reason of death, running away, or not being able to attend. The application of NCB in Indonesia can be seen in Article 67 of the Money Laundering Law which authorizes Investigators to submit an application to the District Court so that the court decides the assets that are known or reasonably suspected to be proceeds of crime to become state assets or returned to the rightful ones. As a comparison, According to the US Department of State website, the Department of Justice is allowed to conduct NCB for assets suspected to be the result of corruption. NCB can be performed on assets outside the United States. To apply the concept of NCB in Indonesia, Supreme Court Regulation No. 1 of 2013 concerning Procedures for the Settlement of Requests for Handling Assets in Money Laundering or Other Criminal Acts (“SCR 1/2013”) needs to be studied because the SCR 1/2013 covers the scope of the Money Laundering Law. To commit NCB to corporations suspected of enjoying profits from proceeds of crime, it is necessary to study Presidential Regulation No. 13 of 2018 concerning the Application of the Principle of Recognizing the Beneficiary Owner of the Corporation (“PR 13/2018”). The PR 13/2018 can be a legal umbrella for disclosing ownership and activities of a company, tracking the source of suspicious transaction flow and freezing the assets of corporations or individuals suspected of being involved in crime or benefiting from crime.
Maximization of Legal Mutual Assistance (“MLA”)
Indonesia has signed MLA with several countries and for that we need to study the analysis from, among other, INDEF that around IDR 98,000 trillion global assets being hidden up until now has not been discovered and revealed. This number refers to the data from Gabriel Zucman in his book titled “The Hidden Wealth of Nations: The Scourge of Tax Havens”1. The CITA Executive explained that due to the existence of MLA with Swiss, Indonesia can ask for assistance to conduct trace, seizure, freeze, and repatriation of asset. Therefore, Indonesia should ratify the MLA into the law soon. Furthermore based on Gabriel Zucman’s research in 2017, Indonesians deposit their fund in offshore for more than US$331 billion or IDR 4,600 trillion, and that the amount of money included in amnesty is approximately IDR 1,100 trillion. This means there is still IDR 3,500 trillion fund owned by Indonesians abroad. Assuming that 45% of the fund is in Swiss, it means there are IDR 1,700 trillion funds in Swiss, or, if 28% used by Zucman as minimum estimation, it means there are IDR 800 trillion fund owned by Indonesian in Swiss.
Hope this is helpful.
FREDRIK J. PINAKUNARY LAW OFFICES