The Indonesian government does not have a legislated procedure for prosecuting corporate crime. Indonesian law enforcement officials often point to this inadequacy to justify the fact that very few corporations have been successfully prosecuted for their roles in crimes, ranging from human rights abuses to money laundering. As a consequence, the Indonesian state has developed a reputation for tolerating corporate crime. Recruitment agencies are rarely punished severely, despite the long-held popular perception that they operate ‘similarly to trafficking rings’.Footnote 1 These agencies often use deceit to secure consent, falsify identity documents, and restrict the freedom of movement of would-be migrants, especially women. However, in 2014, the Bekasi District Court sentenced two senior employees of an agency to prison, imposed fines, and required each of them to pay restitution to some of their victims after finding them guilty of committing human trafficking.Footnote 2 Almost one year later, in 2015, the recruitment agency itself was convicted of the same offence, but punished differently. It was required to pay a larger fine and was then dissolved. Footnote 3 This first – and so far the only – conviction of a recruitment agency for human trafficking reveals much relevant detail about how the crime is punished in Indonesia.
Observers of Indonesia's formal labour export programme have long claimed that trafficking-like practices occur at each stage of the migration process. Many reports single out the actions of recruitment agents for particular attention. For example, the United States Trafficking in Persons (TIP) Report states that they ‘routinely falsif[y] birth dates, including for children, in order to apply for passports and migrant worker documents’.Footnote 4 The US government also criticizes the fact that these agents keep female recruits in holding centres, sometimes for periods of many months, during which they are not free to leave. Agents allow women to finance migration through wage deductions after they have been deployed, a practice which, the report argues, creates situations of debt bondage and forced labour in the countries where they work. Not all of these practices contravene Indonesian law; indeed, post-deployment payment of recruitment fees and the use of holding centres are permitted. However, it is clearly criminal to refuse recruits the right to leave agents’ facilities, and to falsify their personal data.Footnote 5 Yet, public officials responsible for monitoring the programme seldom refer evidence of illegality to law enforcement officers, choosing instead to ignore it.
Scholarly studies on corporate crime in Indonesia have shown concern for a wide range of crimes, including corruption,Footnote 6 environmental destruction,Footnote 7 gambling,Footnote 8 labour and employment abuse,Footnote 9 and tax evasion.Footnote 10 Running through the studies is unease about the deleterious implications that corporate crime has on Indonesian society more generally. The government claims that such consequences are a primary motivation for it to amend both the Criminal Code and its legal procedures.Footnote 11 But legislators should be reminded that criminal sanctions are just one way to punish corporate wrongdoing, and are not necessarily the best strategies to punish corporate crime, as discussed in the next section. Other sanctions include corporate civil liability, such as payment of restitution to victims; individual liability of employees (both criminal and civil); third-party liability; and administrative sanctions such as temporary suspension of business activities.Footnote 12 This wide range of options begs the question: What combination of liability strategies is necessary in Indonesia to punish and hopefully prevent human trafficking by corporations?
With few exceptions, Indonesian law enforcers rely on individual liability to punish corporate crime.Footnote 13 This article examines the range of liability strategies that Indonesian law enforcers pursued and applied in the country's only successful prosecution of a corporation for human trafficking. My motivation to examine this issue arose in response to complaints by law enforcers that they experienced practical difficulties in seeking to punish corporations for their roles in trafficking of migrant workers. Between March 2015 and April 2016, these complaints were noted during meetings with investigators, prosecutors, and judges from over 70 law enforcement units in six provinces for a research report on how human trafficking cases progress through Indonesia's legal system.Footnote 14 Prosecutors from the Attorney General's Anti-terrorism and Transnational Crime Taskforce attended the meetings and provided follow-up perspectives on the challenges and opportunities in prosecuting corporations for human trafficking. The Taskforce also provided a copy of the investigation report and the judgment, which was necessary as not even the case details are publicly available. The successful prosecution of PT Mahkota Ulfa Sejahtera was a landmark case, and the sequence of events that led to the conviction and sentencing offer important details for understanding the government's logic for punishing corporate crime.
This article proceeds as follows: Part I considers the development and purpose of corporate liability as a legal concept to foreground Part II, which outlines the legal and policy framework for pursuing corporations that commit crime in Indonesia. Part II also offers a detailed discussion about how individuals have been proceeded against in human trafficking cases that involve corporations, and explains the challenge of establishing intent in corporate trafficking, which is so critical in order to successfully prosecute the crime. Part III shows that there is no single national understanding of human trafficking, before going on to present a case study of the legal proceedings against PT Mahkota Ulfa Sejahtera to highlight the sequence of events that made the successful prosecution of a corporation for the crime possible. Finally, the discussion in Part IV identifies the motivations for doing so, and makes empirical conclusions about the purpose of prosecuting corporations for human trafficking through the Indonesian legal system. Part V concludes by arguing that the institutional drive to punish corporate involvement in economic crime has created the necessary systems to seek the punishment of a wider range of other corporate crimes, including human trafficking.
I. CORPORATE RESPONSIBILITY AND INDIVIDUAL ACCOUNTABILITY
Punishment of corporate crime is a contested issue globally, and Indonesia is no exception. Indonesian law enforcers are divided on how to improve corporate responsibility. While some legal systems tend to imprison and fine individuals employed in crime-committing corporations, others only punish the corporations themselves. This latter approach has created the perception that there is ‘tolerance or even affirmance for [certain individuals’ criminal] conduct’,Footnote 15 as corporations effectively shield individuals from punishment. But when individuals are made liable for their roles in corporate crime, punishments do not always prevent future criminal behaviour. Instead, individual employees are also known to act defensively by setting up structures that only limit personal liability for corporate crime.Footnote 16 In part, the United Kingdom's Bribery Act 2010 and Criminal Finances Act 2017 seek to address such outcomes by making it an offence for senior management to fail to prevent corporate crime. Those senior individuals are not punished for their role in corporate crimes per se. They are held accountable for management failures that enable corporate crime to occur. Such examples of ‘forward-looking’ responsibility for corporate crime encourage individuals to thwart criminal behaviour before it happens.Footnote 17
Many countries have improved corporate criminal liability through what are known as Deferred Prosecution Agreements (DPAs). These deals help resolve corporate criminal cases by imposing criminal sanctions without seeking to convict corporations. In these, corporations agree to meet certain requirements, including paying fines, implementing corporate reforms, and fully cooperating with investigations, in exchange for not having to face trial. Effectively, DPAs help close the ‘responsibility gap’ for corporate crime, in which criminal law struggles to act as a deterrent or to mete out retribution.Footnote 18 However, these agreements have been criticized because they also effectively enable government officials to impose fines and require structrural reform even though accused corporations have not ‘been found guilty at trial’.Footnote 19 By side-stepping a trial, corporations avoid reputational damage, which can and does negatively impact their capacity to generate future revenue.Footnote 20 As such, although it is clear that DPAs increase the likelihood of corporate criminal liability, the potential societal benefit is unclear. One way to determine how they serve the public interest is to clarify the objective of punishment: to censure corporations or to modify their behaviour.Footnote 21
An argument against corporate criminal sanctions, though, is that they also punish the least culpable individuals, including the people who provide labour (to operate the corporation) and capital (to keep it solvent). Corporate fines are the most common form of criminal sanction, but scholarly analysis shows that they generally fail to achieve forward-looking penological objectives, including deterrence, retribution, and promoting respect for the law.Footnote 22 However, ‘backward-looking’ criminal sanctions like fines can also be seen as a pricing system for criminal behaviour. If the price is too high, then ‘corporations have only to obey the law to avoid them’. Footnote 23 As a consequence of criminal sanctions that negatively impact the corporation's bottomline, less money is then available to pay wages to employees, or to pay profits to investors and owners. The cost of corporate fines is often much more than the actual punishment, with some estimates predicting that owners lose ‘more than $5 of wealth for each dollar of sanctions’.Footnote 24 Corporate sanctions therefore can and do effectively shift the burden of liability for crime from the actual wrongdoers to other persons, who might not even have known that the corporation's employees used criminal methods in the course of carrying out their work.
Even so, corporations can and should be held vicariously responsible for corporate crime. But determining the extent of corporate responsibility and individual accountabily is a very difficult task. As a first step, law enforcers seek to establish that the crime was committed by ‘(a) the corporation's officers, employees, or agents; (b) within the scope of their employment; and (c) at least in part for the benefit of the corporation’.Footnote 25 While this helps to address corporate responsibility for crime, questions of individual accountability for the criminal outcome remain unanswered. It creates what observers refer to as an ‘accountability gap’, in which senior management avoids punishment even though it is often the most blameworthy for recklessness and negligence in the pursuit of benefits for the corporation.Footnote 26 In addition to some degree of punishment for their criminal activities, having ‘intentionally violated a known legal prohibition’,Footnote 27 senior management ought to bear responsibility for the destruction caused by the corporate crime. In the case of multi-billion dollar damages, which are often the result of corporate financial crime, most senior-level managers do not have the means to pay, but this reality does not justify derogation. Rather, it offers law enforcers an opportunity to apportion civil liability to both the corporation and the most blameworthy individuals associated with it.
Both the responsibility and accountability gaps discussed here mean that legal systems struggle to punish the right wrongdoers involved in corporate crime. There is certainly a strong societal desire to improve liability for corporate crime, and the way forward requires that legal systems have recourse to liability regimes tailored for the task. Of course, any such regime needs to involve a combination of civil and criminal liabilities targeted at both individuals and the corporations. Liability regimes differ between countries, and the following sections examine the liability regime for punishing corporate crime as it evolved in Indonesia where, as discussed in the introduction, there is societal concern over how to punish and prevent corporate crime that causes social and economic harm at home. The discussion reveals context-specific challenges and opportunities for applying liability strategies to corporations and individuals involved in corporate crime generally, before going on to examine laws used to punish human trafficking.
II. PUNISHING CORPORATE CRIME IN INDONESIA
Liability for corporations has existed in Indonesia since at least 1951, when President Sukarno enacted an emergency law to regulate the storage and supply of goods within the country.Footnote 28 Companies that broke the law risked being temporarily closed for up to one year or having to pay a fine of up to Rp 100,000 (USD 12,100 in 1951), or both.Footnote 29 The emergency law also outlined the legal procedure for prosecuting corporations, which were to be represented by a senior employee.Footnote 30 This development marked the beginning of a time when the Indonesian government started to punish employees and owners instead of corporations. Since then, the Indonesian government has passed numerous laws that identify corporations as entities that are liable for civil and criminal matters. The authoritarian New Order regime (1967–1998) enacted some laws, but the number of corporate liability offences began to proliferate almost as soon as the government transitioned to a more democratic regime from 1998 onwards. In 1999, lawmakers legislated corporate liabilities regarding consumer protection and corruption eradication, and in less than 20 years since then, Indonesia has extended corporate liabilities to around 70 offences, which criminalize corporations for their role in crimes ranging from money-laundering to illegal fishing and human trafficking.Footnote 31
Only a handful of corporations have been successfully prosecuted for their roles in crime. A justification for this lacklustre performance is that existing legal procedure is unclear about how to proceed against corporations.Footnote 32 Indonesian legal procedure recognizes natural persons as legal subjects, and prosecutors are required to refer cases to the courts for adjudication with an indictment that includes the defendant's name, place of birth, age or date of birth, sex, nationality, residential address, religion, and profession.Footnote 33 Legal procedure is clear that indictments that do not meet these requirements are defective, and so courts can refuse to accept the referrals for prosecution.Footnote 34 This technical explanation for the low number of successful prosecutions is popular amongst officials in the Attorney General's Office because it attributes institutional blame to another law enforcement agency, the judiciary.Footnote 35 They also argue that the judiciary's refusal to facilitate legal proceedings against corporations has caused them to be generally reluctant to indict corporations, and that in turn investigators learn to turn a blind eye to the involvement of corporations in crime.
These institutional practices are also motivated by the fact that legal procedure is not uniform on responsibility for corporate liability. The Criminal Procedure Code, which is the main reference for legal procedure, is silent on the matter, so lawmakers have progressively added different procedures for handling ‘new’ crimes.Footnote 36 These more specialist laws ought to replace the more general offences and procedures, but in practice the introduction of new offences has also led to institutional confusion about how law enforcement agencies should proceed against corporations. For example, Law No. 3 of 1982 on Mandatory Registration for Companies stipulates that corporations may be a defendant, but that senior-most management ought to take individual responsibility for the liability.Footnote 37 This approach contrasts with a wide number of other laws that make corporations themselves take responsibility for any criminal and/or civil liability, such as the laws on corruption, human trafficking, and money laundering.Footnote 38 Law enforcers may point to this inconsistency to justify inaction, but it is also clear that over time, lawmakers have shown a clear preference for corporate responsibility rather than only the individual accountability of senior management.
As a result, the criminal justice agencies tend to proceed against employees of corporations, who are ultimately held responsible for criminal and civil liability resulting from corporate crime. In corruption cases, the Attorney General's Office and the Corruption Eradication Commission have successfully prosecuted employees, who were imprisoned and/or required to pay fines. But prosecutors have been less successful with their demands for corporate liability.Footnote 39 Judges would sometimes order corporations to take partial responsibility for the civil liability, but would also refuse demands arguing that corporations ought to be proceeded against separately. Higher court judges have been known to revise sentences issued by their lower court colleagues, thereby completely removing corporate liability from the legal decisions.Footnote 40 This happened in 2013, when judges in the Jakarta High Court held that the convicted employee should not pay compensation for losses that directly benefited the corporation, but only for losses that indirectly benefited him.Footnote 41 Such jurisprudence indicates that the civil liability of employees ought to be limited to the extent to which they personally benefited from the corporate crime.
In 2011, the Attorney General's Office successfully prosecuted the first corporation in a separate criminal proceeding. The Attorney General's Office proceeded against PT Giri Jaladhi Wana after convictions of individuals had been reviewed and upheld by the courts of appeal.Footnote 42 The South Kalimantan High Prosecution Office accused the corporation of corruption, and demanded that it pay a Rp 1.3 billion (USD 94,000) fine, which amounted to the balance of the civil liability after the individuals paid damages, besides ordering the temporary closure of the company.Footnote 43 The Banjarmasin District Court convicted the corporation and applied the recommended punishment.Footnote 44 PT Giri Jaladhi Wana appealed the sentence to the Banjarmasin High Court, where the lower court decision was upheld.Footnote 45 The company did not appeal to the Supreme Court, which was a procedural right, so the penalty became due and payable. The Banjarmasin Prosecution Office began executing the punishments, including writing to the Ministry of Law and Human Rights to secure a six-month closure of the company.Footnote 46 In line with institutional practice,Footnote 47 the Prosecution Office required the company to declare whether they had the financial capacity to pay the fine. PT Giri Jaladhi Wana offered to settle the debt, but had not done so seventeen months after being ordered to pay.Footnote 48
In part, the prosecution was successful because the Attorney General had issued a written policy on how to proceed against corporations in corruption cases. The policy was a response to gaps in the general legal procedure that specifies how to treat corporations as suspects for the purposes of investigation, or defendants in prosecutions.Footnote 49 To close the gaps, the Attorney General instructed prosecutors to use legal procedures outlined in the lex specialis law on corruption.Footnote 50 These procedures provide prosecutors with guidance on how to (1) define a corporation; (2) identify it in investigation and prosecution documents; (3) proceed against corporations separately from individual wrongdoers; (4) have corporations represented in all criminal proceedings; and (5) sentence them. This policy was addressed to all High Prosecution Offices, and carbon copies were sent to the Supreme Court, Indonesian National Police, Corruption Eradication Commission, and the Ministries of Finance, Law and Human Rights, and State-Owned Enterprises. It was this guidance that provided the investigators, prosecutors, and judges in Banjarmasin with a sufficient set of procedures to secure the first conviction of a corporation for corruption.
In 2014, the Attorney General's Office issued another regulation on how prosecutors should handle legal proceedings against corporations for all corporate crimes.Footnote 51 The Attorney General's Office reported that the motivation to do so was in response to the success they had in recovering significant sums of money from senior employees involved in corporate corruption. The Attorney General's Office developed the regulation in cooperation with the President's Delivery Unit for Development Monitoring and Oversight (December 2009–February 2015),Footnote 52 introducing a standard operating procedure for detecting, investigating, and prosecuting corporate crime.Footnote 53 It also contained a section on how to execute sentences, whereby if the corporation fails to pay fines or to comply with civil liability orders, the Attorney General's Office can enforce them by confiscating assets. This regulatory development motivated prosecutors to pursue corporations as well as individuals for liability.Footnote 54 But the technical guidance on how to interpret and apply Indonesian legal procedure did not result in greater numbers of proceedings against corporations. Even regarding corporate corruption, it would take a little over two and a half years for the the Corruption Eradication Commission to prosecute a corporation,Footnote 55 despite having had evidence to prove corporate responsibility for at least five years.
In fact, the Corruption Eradication Commission's renewed drive was not motivated by the Attorney General's new rules, but by a more recent Supreme Court policy. In December 2016, the Supreme Court provided a missing piece of the jigsaw puzzle for the legal system to successfully prosecute corporate crime. Footnote 56 It detailed how the court system ought to handle the trial and sentencing of corporations. In preparation, the Supreme Court gathered input from other government stakeholders, such as the Indonesian National Police, Attorney General's Office, Corruption Eradication Commission, and the Financial Services Authority, about how to design a workable standard operating procedure.Footnote 57 This choice of government organizations indicates determination to punish the practice whereby individuals used corporations to hide proceeds from crime. In all probability, then, this legal development was intended to help crack down on economic and financial crimes such as money laundering, rather than simply to enable the legal system to punish a much wider variety of corporate crimes. The following section examines the punishment of corporations for one of these crimes, namely human trafficking.
B. How Human Trafficking by Corporations is Punished
Law No. 21 of 2007 on the Eradication of the Crime of Trafficking in Persons stipulates a range of punishments and specific legal procedures for criminal proceedings. The statutory range for sentences is between three to fifteen years’ imprisonment and a fine of Rp 120–600 million (USD 8,600–43,200).Footnote 58 Victims also have the right to claim restitution from the traffickers, who risk another year in prison if they do not pay awards.Footnote 59 If investigators and prosecutors decide to proceed against corporations, they should direct correspondence to the senior-most managers at the address where the corporation's employees work, where the corporation operates, or where the managers live.Footnote 60 In addition to punishing the individual wrongdoers separately with imprisonment and fines for their role in human trafficking, law enforcement agencies can also punish corporations with a fine three times the amount permitted for individuals.Footnote 61 In addition, prosecutors can also seek permanent closure, cancellation of business licences, and confiscation of proceeds from the crime.Footnote 62 In addition, judges can order the firing of the corporation's senior-most managers and then ban them from establishing corporations in the same area of business.Footnote 63
However, in line with institutional practice, only the senior-most employees are punished for their individual roles in corporate crime. A 2013 criminal proceeding helps illustrate how this preference is implemented. Wily, the main director of PT Karlwei Multi Global, was convicted for repeatedly trafficking Indonesian citizens for labour exploitation in sea-based employment outside the country.Footnote 64 He was sentenced to one year in prison and required to pay a fine of Rp 40 million (USD 2,800) for the trafficking-related offence of forging identity documents for the migrant workers. There is also a general offence of forgery,Footnote 65 but if the forgery was committed in a human trafficking case, the more severe offence in the anti-trafficking law ought to apply.Footnote 66 But the punishment for trafficking-related forgery is still less severe than the sentence for the crime of human trafficking, and it is likely that the prosecutor in Wily's case decided to pursue the less severe but related offence. Wily agreed to pay restitution of Rp 1.2 billion (USD 86,000), or Rp 20 million (USD 1,400) to each of the fifty-six trafficking victims who claimed unpaid wages, commissions, and damages. The money was held in the Attorney General's Office in anticipation of a non-appealed guilty verdict, even though the sum should have been formally deposited in a government bank account for safekeeping. In this case, the senior-most employee in the corporation (Wily) avoided the most severe punishments that were possible for trafficking, but he was also held individually accountable for what was essentially a corporate crime.
In 2015, individuals were sentenced for roles that they played in the human trafficking of migrant workers. The main director of PT Graha Indrawahana Perkasa Semarang, Sutadie Lie, and her sub-office manager in Kupang, Budiyanto Pa, were convicted of trafficking children from East Nusa Tenggara for labour exploitation as domestic workers in Malaysia.Footnote 67 They were sentenced to three years in prison and ordered to pay a Rp 120 million (USD 8,600) fine each. By contrast, their field operators in Central and West Sumbawa Districts were convicted of illegal recruitment for overseas employment, in large part because they had recruited at least six children.Footnote 68 They were sentenced to two years in prison and ordered to pay Rp 1 billion (USD 72,000) in fines. For both groups of perpetrators, the prosecution had recommended more severe punishments of six years in prison and Rp 200 million (USD 14,400) in fines, and that they pay Rp 3.2 million (USD 230) restitution to each victim. Ultimately, however, the judges dismissed the demand for restitution because the perpetrators had reached an undisclosed private settlement regarding compensation with the victims. The prosecutor appealed the decisions, but the judges in the Semarang High Court and the Supreme Court upheld the sentences, deeming the sentences proportionate and sufficiently severe.Footnote 69
The Attorney General's Office also delayed plans to prosecute PT Graha Indrawahana Perkasa Semarang for its role in the crime until after the appeal processes had finished.Footnote 70 At the time, the practice was to handle criminal proceedings against individuals first, and then proceed against the corporations.Footnote 71 The final appeal in the director's case would not be decided until early June 2016,Footnote 72 which ruled out using PT Graha Indrawahana to test the Attorney General's 2014 regulations on how to proceed against corporations, because the policy at the time was to wait until all cases against individuals had exhausted their appeals before seeking to prosecute the corporation. The choice of cases for prosecutors in the Attorney General's Anti-terrorism and Transnational Crime Taskforce to ‘experiment’ with the new rules was also limited by the fact that they would not apply the guidance retroactively to companies like PT Karlwei Multi Global (discussed above), whose crime was committed in 2012.Footnote 73 This perceived limitation is due to the belief that new procedures should not be used retrospectively to prosecute an act, even if that act was already a crime when it was committed. Instead, the Attorney General's Office commenced criminal proceedings against PT Mahkota Ulfa Sejahtera, as the conviction and sentences for the corporation's employees became legally binding shortly after the new regulation was issued. As part of these legal proceedings, the Attorney General's Office promoted its own understanding of the crime, which is not unusual. As the next section shows, there is no single perception of what constitutes human trafficking within the Indonesian state.
III. HOW THE STATE SEES TRAFFICKING WITHIN INDONESIA
There is no nationwide understanding of what constitutes human trafficking as a criminal offence in Indonesia, even though Law No. 21 of 2007 the Eradication of the Crime of Trafficking in Persons provides a legal definition.Footnote 74 As a result, not all parts of the state share the same interpretation of what factors make someone a victim of trafficking. Such fragmentation is characteristic of Indonesia, and is also true of states in the developing world more generally – a reality that shows how any attempt to project ‘unity in the state’ is no more than an ‘ideological image’ promoted by the state itself.Footnote 75 In the case of trafficking, the plurality of understandings is due in part to the fact that many state institutions have tailored trafficking terminology so that it more easily applies to particular situations and practices that already fall under their mandate. This section highlights such instances, drawing attention to how individual state bodies define human trafficking in their work.
The Ministry of Women's Empowerment and the Protection of Children, which collaborated with the International Organization for Migration to draft Indonesia's first law on human trafficking, focuses on the exploitation of victims. In large part, this focus is the product of a core institutional principle, which identifies all women as highly susceptible to abuse.Footnote 76 In the Ministry's view, women face a higher risk of falling into abusive situations because they occupy weak positions in society. Ministry-supported research on women migrating for work through state-sanctioned channels establishes that the system does not take into account the precarious position of women that can cause them to acquiesce to exploitation overseas.Footnote 77 In part, exploitation occurs because migrant women are permitted to pay for the cost of recruitment through wage deductions. However, it is also prevalent because they are generally engaged in the informal sector, which is not covered by labour legislation in many destination countries.Footnote 78 These claims feed into a more general position within the Ministry, namely that women are made vulnerable by the failure of states to guard them against practices that make it hard to resist economic, psychological, or physical abuse. On this basis, the Ministry immediately classifies women who slip into exploitative work arrangements as a result of the migration process as victims of trafficking.Footnote 79
In the view of the Ministry of Law and Human Rights, the state itself can contribute to trafficking – a possibility recognized by the UN agency mandated to monitor implementation of the UN Anti-Trafficking Protocol, but not included in the anti-trafficking bill.Footnote 80 In a special hearing, the Director-General for Immigration, whose division sits within the Ministry of Law and Human Rights, argued that any anti-trafficking law should include sanctions for officials who facilitate the crime, pointing to the prevalence of state documents that misstate the names and dates of birth of bearers as incontrovertible evidence of state involvement in trafficking.Footnote 81 Observers claim that corruption is responsible for this practice, but the Director-General also blames the magnitude of the problem on the inability of Indonesia's civil administration system to ensure that identity documents contain true data.Footnote 82 It is common for citizens to hold multiple national identity cards and for the documents to contain conflicting information.Footnote 83 Immigration officials have complained to the Indonesian National Police that it is difficult to reject passport applications using such documents, partly because doing so implies an accusation against colleagues in other parts of the bureaucracy.Footnote 84 Evidence indicates that in some locations this problem has resulted in violent confrontations with local administrations.Footnote 85
In contrast, the Ministry of People's Prosperity, which coordinates the interdepartmental task force that processes and repatriates citizens deported from Malaysia, sees trafficking as a set of practices that denies migrant workers access to labour rights as defined under the host country's laws. Senior officials assert that practices that result in irregular migration status are ‘almost the same as trafficking’.Footnote 86 This is so, they say, because irregular migration status exposes migrant workers to the threat of arrest and detention by host country authorities,Footnote 87 thus creating opportunities for employers to impose exploitative conditions on workers. The Ministry is particularly concerned that irregular migrants risk the punishment of caning under Malaysia's Immigration Act,Footnote 88 a punishment that Amnesty International has referred to as a form of judicially-sanctioned torture.Footnote 89 Task force reports adopt anti-trafficking language to describe activities understood to contribute to the scale of deportations, and to refer to agents who facilitate labour migration using tourist visas as traffickers, because their actions deliberately deprive Indonesian migrant workers of legal rights that they might otherwise have enjoyed overseas, putting them at risk of corporal punishment.Footnote 90
The Ministry of Manpower and related state agencies also use the anti-trafficking discourse to frame illegal methods of recruiting and deploying migrant workers. It deems any facilitated labour migration that takes place without fulfilling the requirements of Law No. 39 of 2004 on the Placement and Protection of Migrant Workers Overseas as illegal. Licensed agents can be fined and imprisoned for misusing recruitment permission, or for deploying migrant workers who fall short of age and education requirements or who do not hold all the necessary documents, including competence certificates, insurance policies, and employment contracts. Government officials in the Ministry use the terms ‘non-procedural’ and ‘trafficking’ interchangeably to describe these practices. Moreover, the National Agency for the Placement and Protection of Overseas Indonesian Workers (BNP2TKI), an institution which should coordinate with the Ministry when deciding policy, warns that non-procedural recruitment practices resemble trafficking and that non-compliers could face sanctions under the anti-trafficking law.Footnote 91 This approach to migration ‘situates trafficking within the broader phenomenon of irregular migration’,Footnote 92 and is a common starting point in Indonesia for discussion on the development of measures to prevent human trafficking.
The Indonesian National Police have shown sympathy for the approach adopted by the Ministry of Manpower. A former chief of the Indonesian National Police, Bambang Hendarso Danuri, explained in a question and answer session with lawmakers in the lead-up to his appointment that non-procedural recruitment practices are often the first step into exploitative circumstances overseas.Footnote 93 He argued that more law enforcement in this area should help prevent trafficking, probably based on his experience serving as head of the provincial police in North Sumatra, which is a popular transit site for Indonesian migrants intending to work in West Malaysia. In 2007, the Indonesian National Police signed a memorandum of cooperation with the Ministry of Manpower, in which they agreed to lend law enforcement tools to thwart non-procedural recruitment.Footnote 94 Under this arrangement, the police should coordinate with the Ministry in order to determine whether the law on migrant workers or anti-trafficking applies best.Footnote 95 Recruiters who bypass the ‘procedural’ system, particularly those without licences from the Ministry of Manpower, are generally charged under the anti-trafficking law. The following case study examines how and why another law enforcement institution, the Attorney General's Anti-terrorism and Transnational Crime Taskforce, successfully prosecuted a licensed recruitment agency for human trafficking.
IV. PT MAHKOTA ULFA SEJAHTERA
On 23 December 2013, a team of eight police officers raided a recruitment agency in response to a report that children and women below the minimum age of 21 had been recruited for jobs as domestic workers in Hong Kong, Malaysia, and Singapore.Footnote 96 Nine months later, the Bekasi District Court convicted the main director of the recuitment agency, Riansyah, and the operations director, Jamilah, for attempting to traffic children for labour exploitation outside the country. The judges sentenced Riansyah to five years in prison, imposed a Rp 120 million (USD 8,700) fine, and ordered him to pay Rp 2.5 million (USD 180) restitution to each of the ten children. Jamilah received the same fine and order of restitution, but was given a more lenient prison sentence of three years and four months because the judges decided that Riansyah was more responsible for the crime.Footnote 97 Normally, criminal punishment for human trafficking is limited to recruitment agency employees like Riansyah and Jamilah. But in this case, the Attorney General's Office commenced subsequent legal proceedings against the recruitment agency itself, which was ultimately convicted and thus became the first corporation known to be punished for human trafficking in Indonesia.
The investigator, prosecutor, and judge were particularly motivated to seek punishment of the recruitment agency because there was a paper trail, so it would be easier to prove criminal liability for corporate trafficking. A finance officer provided receipts showing that the recruitment agency paid Rp 13 million (USD 910) for the cost of meeting procedural requirements for recruitment, such as medical check-ups. Receipts for passports of underage recruits were used to prove that the agency procured identity documents containing fake birth dates as a matter of routine. The receipts also showed that the agency and its freelance recruiters paid financial inducements to recruits in return for signing up to migrate for overseas employment. This payment is the rule rather than the exception for the recruitment of migrant domestic workers, and is considered a debt by the recruitment agencies.Footnote 98 To protect that and other investments, including the provision of accommodation, food, and skills training, PT Mahkota Ulfa Sejahtera required recruits to pay Rp 20 million (USD 1,450) if they withdrew from the recruitment process, during which time they were not free to leave the boarding house without first paying a bond of the same amount.
In part, the successful prosecution was due to the fact that the investigation report and prosecution dossier were prepared in specialist law enforcement units. The Anti-trafficking Unit at Indonesian National Police Headquarters compiled the investigation report and coordinated with the Attorney General's Anti-terrorism and Transnational Crime Taskforce to ensure that adequate evidence was included for successful prosecution.Footnote 99 The detailed report included 130 sets of documents, one victim's testimony, as well as eight other witness statements and two expert statements. This impressive set of evidence was collected because of the relatively strong institutional relationship between these law enforcement units. In other locations, police investigators and prosecutors are known to avoid coordinating with one another because investigation is seen as the police's domain, whereas prosecution is handled by the Attorney General's Office.Footnote 100 There is an understanding that officials do not meddle in the other law enforcement unit's affairs, which among other things helps to prevent illegal or otherwise unethical practices from being revealed.Footnote 101 Alternatively, officials in these units also have a reputation for working together, for example, to solicit bribes from defendants and even victims of crime.Footnote 102 By contrast, the national-level anti-trafficking law enforcement units have come to work well together, partly because their work is closely monitored by internal and external stakeholders including a national task force, foreign governments, and international organizations.
The witness statements were used as the primary resource for establishing whether the corporation had previously been involved in human trafficking cases. Witnesses gave this information at the investigation stage and in the trial. However, the investigators, prosecutors, and judges did not document the previous involvement of PT Mahkota Ulfa Sejahtera in other legal proceedings, as they relied solely on evidence provided in the prosecution dossier and during cross-examination in court. An online search of the Supreme Court's Decision Directory turned up at least two convictions where the recruitment agency and its staff had played a role in the closely related crime of illegal recruitment of migrant workers.Footnote 103 Lukki, the staff member involved, had offered to use the recruitment agency's facilities to transport illegally-recruited migrant workers by boat from Tanjung Priok in Jakarta to West Kalimantan, where the migrants would board a bus for overland travel to the international border crossing at Entikong and then enter Sarawak in East Malaysia for employment. The record did not establish PT Mahkota Ulfa Sejahtera's criminal liability in the later conviction, because the cases were separate and distinct counts of human trafficking. But it did establish that the corporation and its employees had a long-standing involvement in the crime generally. The fact that Indonesian law enforcement officials neglected to mention the involvement in any of their documents is yet more evidence that they tend not to consult even publicly-available case law,Footnote 104 and thus do not end up prosecuting crime based on the fullest range of relevant and available information or developments.
The Attorney General's Taskforce approved PT Mahkota Ulfa Sejahtera's case for prosecution, and transferred the legal proceeding to the Bekasi Prosecution Office, which had also previously prosecuted Riansyah and Jamilah. The legal proceeding identified Riansyah as the defendant because he was the senior-most employee of the recruitment agency when the crime was detected. The Attorney General's Office asked for the recruitment agency to be punished with a Rp 350 million (USD 24,500) fine – Rp 10 million (USD 720) less than the statutory minimum for corporations – as well as cancellation of its business licences, confiscation of proceeds from the crime, and a ban on Riansyah and Jamilah from establishing another recruitment agency. It is unusual that the Attorney-General's Office demanded a below-minimum fine because institutional policy requires prosecutors to select punishments within the statutory range for any offence. However, some judges at all levels of the judiciary are amenable to below-minimum punishments for a range of reasons, including that they resent the fact that the national legislature limits judicial discretion to determine the severity of sentences for all cimes.Footnote 105 In PT Mahkota Ulfa Sejahtera's case, the below-minimum demand for a fine was due to an institutional failure to follow the law within the Attorney-General's Office.Footnote 106
The Bekasi District Court imposed the fine sought by the prosecutors and ordered the cancellation of the agency's business licence, but it unfroze the agency's bank account holding Rp 60 million (USD 4,300) because the judges were not satisfied that the money in that account was the proceeds from this crime. The judges also refused to bar Riansyah and Jamilah from establishing another recruitment agency, deeming that their individual sentences for the crime were adequately severe. To simplify the execution process (that is, to collect the fine), the judges ordered that the amount be deducted from the agency's deposit held by the government for its recuitment licence, which needed to be refunded now that the business had been dissolved.
V. A CURIOUS SUCCESS
As with many other cross-border cases where Indonesia-based recruiters are prosecuted for human trafficking, law enforcement officials struggled to prove that the accused had the intention to exploit victims – one of the three components of the crime. In PT Mahkota Ulfa Sejahtera's case, the expert witness argued that this intent was clear from how the recruitment agency sought to deny the victims the opportunity to ‘migrate safely’, which often means meeting government requirements for labour migration. The agency had falsified the victims’ ages and did not purchase mandatory insurance policies to cover recruits for unexpected financial expenses during the pre-departure, placement, and return phases of the migration process. However, the judges held that the most important factor for establishing guilt was age, as the victims could not legally give consent for recruitment because they were children. The judges also considered that the victims were locked up and kept under guard in their boarding house, which prevented them from leaving, giving a further impression that the recruitment process was carried out without the victims’ consent.
The legal decision convicting PT Mahkota Ulfa Sejahtera of human trafficking is still not publicly available as of March 2020. Normally, the general court system records information on hearing dates, purpose of hearings, indictments, and convictions in the online Case Tracking System (Sistem Informasi Penelusuran Perkara, or SIPP) that has been progressively installed in all courts since 2012. Reportedly, however, the Bekasi District Court did not input details about this case at the time it was being prosecuted, because a prosecutor in the Attorney General's Anti-terrorism and Transnational Crime Taskforce had asked for the information to be suppressed until he completed his Master's thesis on corporate criminal liability.Footnote 107 Since then the system has not been updated to include details of the legal proceeding, and the Supreme Court's Decision Directory does not have a record of the conviction. As with other legal decisions that have not been published, freedom of information requests, media reports, and personal relationships with staff in law enforcement agencies continue to be alternative and effective methods to get access to the judges’ legal reasoning. However, in this particular instance, the result is that it is not widely known how the Indonesian government successfully prosecuted and punished the first – and probably the only – recruitment agency for human trafficking.
The conviction of PT Mahkota Ulfa Sejahtera and its employees for human trafficking is an isolated case of law enforcement officials pursuing a combination of individual and corporate liability for the crime in Indonesia. The senior-most management of the recruitment agency, who also profited or otherwise benefited the most from the company's criminal activities, were sentenced to prison terms, and required to pay fines and restitution to the victims of trafficking. These punishments focused on individual liability. The Attorney General's Office recommended imposing a combination of individual and corporate liability in the sentence for PT Mahkota Ulfa Sejahtera. The judges could have further punished Riansyah and Jamilah by ordering the individuals’ dismissal and then barring them from establishing another business in the same sector. But the judges ultimately opted for corporate liability only. This decision may seem to treat the individual wrongdoers lightly by not banning them from setting up another recruitment agency. However, the government's applicable licensing regulations prevents them from doing so anyway, as future applicants cannot have been convicted for any such crimes related to the business.Footnote 108
This combination of individual and corporate liability shows that Indonesian government organizations prefer to use individual liability to punish human trafficking as part of their strategy to influence the behaviour of recruitment agencies. Indeed, it is easy to continue to do business in Indonesia even without government permission, albeit at an additional cost, as some unlicensed recruiters of migrant workers, for example, operate under licensed operators’ names in exchange for a fee. This practice is known as pinjam bendera (literally, ‘flag borrowing’), and is prohibited by law but is common nonetheless.Footnote 109 However, the fact that the judges did not forbid Riansyah and Jamilah to establish another company in the recruitment industry sent a clear message that there are limits to individual liability for corporate crime. The organizational culture in PT Mahkota Ulfa Sejahtera may have encouraged these individuals to commit human trafficking, and so they should not be denied the opportunity to run another company in the same industry. The judges’ view reaffirmed the belief that corporations are not only separate legal entities, but also that even the individuals most culpable for corporate crime should not always be punished as if they were solely responsible.
However, the fact that the judges dissolved the company introduced competition into the Indonesian government system. The Ministry of Manpower has administrative authority to issue, suspend, and cancel business licences to recruit and contract migrant labour in Indonesia. It retained this authority even after the national legislature required the government to transfer many other operational roles to a purpose-specific government organization, the BNP2TKI, in 2004. The legislature did so largely in recognition of the popular view that the Ministry of Manpower made too many exceptions for errant recruiters. This belief was confirmed during the intense period of intra-state conflict that followed the transfer, as the Ministry of Manpower sought to protect errant recruiters from law enforcement by the BNP2TKI.Footnote 110 In the case of PT Mahkota Ulfa Sejahtera, the Ministry of Manpower had already suspended the corporation's business licence as the most severe punishment,Footnote 111 so the Bekasi District Court ordered the Ministry of Law and Human Rights to go one step further by dissolving the company so that the business would no longer be eligible for a licence from the Ministry of Manpower. This sequence of events draws attention to the complex way in which different parts of the state, which may not share the same interests and approaches, can and do exercise influence over actors and their activity in Indonesia.
Neither the prosecutors nor the judges in this case used the opportunity to consider the amount of restitution awarded to the victims of trafficking. In theory, restitution should compensate victims for loss of wealth or income, pain and suffering, cost of medical treatment, and other losses. Unfortunately, prosecutors do not always actively claim restitution, and those who do often table claims based on crude assessments, usually limited to something easily measurable like the amount of income that victims should have received during the period of the crime.Footnote 112 As a result, restitution demands tend to be low. In the case of PT Mahkota Ulfa Sejahtera, prosecutors only demanded the income that the victims could have earned if they had not been trafficked. The judges may have refrained from reassessing the sentence for the simple reason that a restitution claim was made. Frequently, no claim is tabled at all. The fact that the judges did not even mention it in the reasoning for the sentence also suggests that they may see restitution awards already settled by individuals as being no longer the corporation's responsibility.
The conviction of PT Mahkota Ulfa Sejahtera is remarkable because it has not been replicated, even though the investigation and prosecution processes were relatively easy. Aside from imposing a meagre fine, the sentence did not aim to do anything that had not already been achieved. The business was no longer operational, as the Ministry of Manpower had imposed a moratorium on the agency's recruitment activities. It had not been legally operating for almost a year. Furthermore, the most culpable individuals had already been punished (imprisoned and required to pay fines and restitution). Rather, the successful prosecution appears to have been little more than an effort to shore up the Attorney General's Office's counter-trafficking credentials in the eyes of external observers, including the International Organization for Migration and the US Department of State, which are concerned with the prevention and prosecution of human trafficking as well as the provision of adequate protection to victims of the crime. The success is also useful for the Ministry of Foreign Affairs, which desires the Indonesian government to rank well in the Trafficking in Persons Reports. High rankings befit the Ministry's role as co-chair of the Bali Process, an international forum for sharing information about human trafficking and other related transnational crimes.Footnote 113
In large part, the successful prosecution was made possible by changes in institutional policy to punish corporations involved in economic crimes like corruption and money laundering. But the investigators, prosecutors, and judges missed the opportunity to go beyond proving criminal liability for human trafficking in order to punish the corporation and its most culpable individuals for profiting or otherwise benefiting from the crime. No attempt was made to estimate the value of this instance of trafficking in any of the three related legal proceedings. Doing so would have provided observers and other stakeholders with a scientifically-calculated figure for future corporate fines which, in Indonesia, can be up to Rp 1.8 billion (USD 125,000). By contrast, law enforcers do calculate values for other crimes like corruption, and judges have used a combination of individual and corporate liability strategies to recover them. Such calculations are then used in legal proceedings against corporations for the closely related crime of money laundering, whereby corporations convert proceeds from crime into ostensibly legitimate assets and wealth. The trafficking-money laundering nexus has not been adequately explored in Indonesia, as is clearly demonstrated in the punishment of PT Mahkota Ulfa Sejahtera. Such approaches might uncover more wealth that could be used to pay hitherto inadequate restitution awards to victims of the crime.