Jakarta. The Corruption Eradication Commission (KPK) has rejected a proposal to remove state financial losses from the legal definition of corruption, arguing that the provision remains essential to tackling increasingly sophisticated graft schemes.

KPK Chairman Setyo Budiyanto said on Wednesday that the state-loss provision should be retained in Indonesia’s revised Criminal Code and restored as a specific legal element under the country’s anti-corruption law.

“The phrase ‘state losses’ in the new Criminal Code must be retained, in line with the KPK’s recommendations and Constitutional Court rulings,” Setyo told reporters on Wednesday.

“This legal specificity is absolutely necessary in Indonesia to address increasingly complex and sophisticated methods of corruption.”

His comments came a day after National Economic Council (DEN) Chairman Luhut Binsar Pandjaitan proposed reviewing Indonesia’s definition of corruption, arguing that the concept of state financial losses should not itself constitute a criminal offense.

Luhut said President Prabowo Subianto had agreed to a study on the proposal during a meeting between the president and DEN members at the Merdeka Palace in Jakarta on Tuesday.

The proposal draws on the United Nations Convention Against Corruption (UNCAC), which Indonesia ratified through Law No. 7/2006. Luhut argued that the convention focuses on offenses such as bribery rather than making state financial losses a defining element of corruption.

He said Indonesia was the only country to treat state losses in this way, adding that the provision could complicate business decisions at state-owned enterprises and the state investment agency Danantara, where commercial activities inevitably involve risks.

Setyo, however, argued that Indonesia should prioritize incorporating additional offenses covered by UNCAC into its anti-corruption legislation rather than removing the state-loss provision.

He identified four offenses that he said urgently needed to be criminalized under Indonesia’s anti-corruption law: foreign bribery, trading in influence, bribery in the private sector and illicit enrichment.

“These areas are far more important to regulate promptly,” Setyo said, referring to offenses covered by the convention that he said were not yet criminalized under the existing law.

The disagreement highlights a broader debate over how Indonesia should balance efforts to strengthen corruption enforcement with the need to provide greater legal certainty for commercial activities, particularly those involving state-owned companies.

Luhut’s proposal centers on the argument that business decisions resulting in financial losses should not automatically be treated as corruption, given the risks inherent in commercial operations. Setyo, meanwhile, maintains that retaining the state-loss element is necessary to address corruption in Indonesia’s specific legal and institutional context.

The government has yet to announce any formal legislative changes arising from the proposed review.

Add as a preferred source on Google +