Indonesia: Corruption Liability For Higher Education Institutions Operating In Indonesia

Last Updated: 17 May 2019
Article by Nico Mooduto
Most Read Contributor in Indonesia, September 2019

The laws on corruption do not recognize boundaries. The Foreign Corrupt Practices Act (FCPA) of the United States is one example where a domestic law seeks to punish the commission of corruption act outside the territory of the United States or within the US by a foreign entity. Essentially, the FCPA punishes the crime of bribing foreign officials for the purpose of obtaining or securing a business. (The FCPA also requires the maintenance of transparent accounting records, which if violated is an offence under the FCPA.) 

The FCPA applies to the extent the perpetrators qualify as any of the following: issuer, domestic concern, or persons other than any of the above who act in the territory of the United States. 

In recent years, more US higher education institutions have started opening foreign campuses in places considered as high-risk regions for corruption. These institutions are generally considered to be bound by the FCPA. As these institutions need to obtain their operating license or permit and possibly other approvals, certifications and registrations from local government in which they seek to operate, they face FCPA risks where certain payments to local government officials are forthcoming, whether unauthorized or otherwise.

Facilitating Payments

When discussing FCPA risks, it must be noted that the FCPA contains several provisions where payment to government officials may be exempted. One of those provisions allows facilitating payments for a routine government action, which is known as the "grease payment" exception. It has been noted that this facilitating payment exception has been applied very narrowly and it does not necessarily provide the sort of comfort to foreign institutions that face situations where they would have to make a decision whether to make payments to foreign officials of a country where they operate.  Another provision in the FCPA permits payments to foreign government officials if those payments are permitted under local law.        

As noted above, the FCPA recognizes certain exemptions from anti-bribery provisions.  Familiarizing oneself with local law requirements is key to understanding whether the FCPA exemptions may be invoked. Doing research on local law requirements undoubtedly places a high burden on US education institutions seeking to operate in foreign land. However, given the possible risks, this may be a helpful, if not necessary, exercise.

Anti-Corruption Law in Indonesia

In Indonesia, the country's anti-corruption regime is primarily based on Law No. 31 of 1999 regarding Eradication of Criminal Acts of Corruption, as amended by Law No. 20 of 2001 (Anti-Corruption Law). (There is another body of law that punishes bribery offenses in Indonesia, but this article only discusses the Anti-Corruption Law.) The Anti-Corruption Law recognizes a number of distinct corruption crimes involving state finance and/or government officials. (The terms government official, state organizer and public official are used interchangeably in this article.) Among the noteworthy distinct crimes are those causing state losses and the bribery of government officials.

In contrast to the FCPA, facilitating payments are not recognised under Indonesian law.  Generally, there is no provision under the Anti-Corruption Law or in Indonesian law that expressly permits facilitating payments or exempts such payments from the general prohibitions of the Anti-Corruption Law. It is generally understood that a facilitating payment provided for the purpose of expediting or securing the performance of a routine governmental action by an official would constitute a gift and gratification within the meaning of the Anti-Corruption Law. In this regard, the Anti-Corruption Law expressly provides that gifts or gratifications given to government officials or state organisers shall be considered a bribe if they are related to their position and are contrary to their official duties or obligations. 

That said, it is arguable whether certain contributions, either in monetary form or otherwise, can be made to government officials if such contributions do not relate to their official position as a government official or violate their official duty. For example, one may argue that making a small payment to a public official to request that the official expedite the issuance of a permit when all of the requirements have been rightfully fulfilled does not fall under the above prohibition of the Anti-Corruption Law. However, such payments, irrespective of the amount or purposes, are still very risky.   

Corporate Liability for Corruption

Another important point in the Anti-Corruption Law deals with corporations as the perpetrator of a corruption act. The Anti-Corruption Law, or a loose English translation of the law, defines a corporation as an organized group of persons and/or assets, either as a legal or non-legal entity.

The Indonesian Attorney General's Office and the Supreme Court have issued regulations - Attorney General Regulation No. PER-028/A/JA/10/2014 dated October 1, 2014 regarding Guidelines in Handling Criminal Cases with Corporate Legal Subjects and Supreme Court Regulation No. 13 of 2016 regarding Procedures to Handle Criminal Acts Committed by Corporations, respectively - to further implement the prosecution or adjudication of corruption charges involving corporations.

Education Institutions and Corruption Acts

No education institution in Indonesia, as far as we are aware, has been declared a suspect in a corruption act under the Anti-Corruption Law or any of the regulations cited above, as well as in practice.

At first blush, an education institution cannot be a corruption suspect as this type of entity is not expressly cited in the Anti-Corruption Law. Further, it is also arguable whether an education institution fits the definition of a corporation under the Anti-Corruption Law, given that it is generally understood that the idea of an education institution runs counter to that of a corporation, which is established to generate profits. 

That notwithstanding, there are many instances of corruption adjudicated by Indonesian courts involving public education institutions where certain individuals within the institution were punished under the Anti-Corruption Law. Indonesian public education institutions receive their budget, either mostly or in part, from the central government or regional government budget, and the heads of these public institutions are regarded as  state organizers, meaning they are subject to the Anti-Corruption Law. The corruption cases involving public education institutions have mostly concerned the misuse of funds, which may be deemed a corruption crime if it causes state losses.

Foreign education institutions that seek to operate in Indonesia must be cognizant of the limits on their activities when interacting with Indonesian public officials. Otherwise, these institutions could face certain repercussions under the Anti-Corruption Law if they do not act prudently. It can be a painstaking and potentially costly exercise to understand foreign law concepts, but given the possible ramifications it may be an exercise worth undertaking.   

This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user's own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
SSEK Indonesian Legal Consultants
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
SSEK Indonesian Legal Consultants
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions