BPK Prepares a New Regulation to Recover State Losses

Since its establishment in 2006, the Audit Board of the Republic of Indonesia (Badan Pemeriksa Keuangan or “BPK“) has been regularly auditing state-owned enterprises (“BUMN“) and regional government-owned enterprises (“BUMD“) for indications of corruption. As part of this auditing authority, Article 12 of Law No. 15 of 2006 on the Audit Board of the Republic of Indonesia (“BPK Law“) also mandates the BPK to regulate further the exercise of its authority to evaluate and determine state losses that result from the actions of the following parties: (i) a treasurer; (ii) a member of the management of a BUMN and BUMD; and (iii) any other related company or institution that manages the state’s finance.

This ability to further regulate also encompasses the authority to recover state losses by requiring the abovementioned parties to compensate the state losses.

However, to date, BPK has yet to issue a regulation to address and accommodate the above mandate specifically relating to the persons listed in points (ii) and (iii), despite already enacting BPK Regulation No. 3 of 2007 on Settlement of State Losses against Treasurers. As a result, there is no clear mechanism on how recovery efforts can be carried out against a member of the management of a BUMN or BUMD and related companies or institutions. In fact, there are different practices on how the state (including via the relevant BUMN, BUMD, or related company and institution) can carry out settlement or recovery efforts. From the information that we have gathered, BPK is currently drafting a regulation to accommodate the mandate under the BPK Law.

For more information, click here to read the full Legal Update.

CONTACTS

Senior Partner
+62 21 2555 7883
Indonesia,

Country

EXPERTISE

SECTORS

Share

Rajah & Tann Asia is a network of legal practices based in Asia.

Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client.

This website is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this website.

© 2024 Rajah & Tann Asia. All Rights Reserved. All trademarks are property of their respective owners.