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Constitutional Court Secretary General M. Guntur Hamzah speaking at a virtual event organized by the Hasanuddin Law Study Centre (HLSC) of the Law Faculty of Hasanuddin University (Unhas), Friday (21/8) from the Constitutional Court. Photo by Humas MK/Gani.

JAKARTA, Public Relations of the Constitutional Court—Assets of state-owned enterprises (BUMN) are always in the center of debates. Some view them as separated assets, while they are state assets.

“It is a dilemma. Directors and commissioners also have a hand in decision-making in a state-owned enterprise. Moreover, when its status is a limited liability company, it leads to more dilemma,” Secretary General M. Guntur Hamzah spoke at a virtual event entitled "SOE: Business Judgment Rule or State Loss?" organized by the Hasanuddin Law Study Centre (HLSC) of the Law Faculty of Hasanuddin University (Unhas) on Friday, August 21, 2020. He talked about “SOE Assets in Constitutional Court Decisions.”

Guntur says Law No. 19 of 2003 on State-Owned Enterprises (BUMN) and Law No. 17 of 2003 on State Finances have created a different perspective of SOE assets. The BUMN Law states that SOE assets are separated assets. Meanwhile, the State Finance Law emphasizes that SOE assets are part of state assets.

Article 1 paragraph (1) of the BUMN Law reads, "State-Owned Enterprises, hereinafter referred to as BUMN, are business entities whose all or most capital is owned by the state through direct sharing from separated state assets." However, the State Finance Law stipulates that state capital that comes from tax and natural resources are state assets. Article 2 of the State Finance Law which states, “State Finances as referred to in Article 1 paragraph 1, include: (g) state/regional assets managed on its own or by other parties in the form of cash, sovereign bonds, receivables, goods, and other rights that can be valued in money, including assets separated in state enterprises/local companies.”

Article 6 paragraph (1) of Law No. 15 of 2006 on the Audit Board (BPK Law) stipulates that the BPK is tasked with examining the management and accountability of state finances carried by the central government, regional governments, other state institutions, Bank Indonesia, BUMN (SOEs), public service agencies, BUMD (regional government-owned enterprises), and other institutions or agencies that manage state finances. However, Guntur added, there are consequences of the differing interpretations of the BPK Law. Article 10 paragraph (1) of the BPK Law states that the BPK assesses and/or determines the amount of state losses caused by illegal acts or negligence by BUMN/BUMD treasurers and managers, and other institutions that manage state finances. Meanwhile, Article 10 paragraph (2) of the BPK Law states that the assessment of state financial losses and/or the determination of the party obliged to pay compensation as referred to in paragraph (1) shall be determined by a BPK decision. 

The BPK has the authority to review state budget in BUMN or BUMD. What is the Constitutional Court’s stance on this issue?

Constitutional Court Decisions on State Assets

Guntur said the Court has issued two decisions on state assets, which academics and practitioners can refer to. They are the Decisions No. 48/PUU-XI/2013 and No. 62/PUU-XI/2013. The Decision No. 48/PUU-XI/2013 states that the definition of state finance in Article 1 number 1 of the State Finance Law is broad and comprehensive to safeguard state assets, which come from the people in the form of tax, retribution, and non-tax revenues.

“According to the Constitutional Court, the provision of Article 2 letters g and i of Law No. 17 of 2003 is intended so that the state can monitor state finance that is managed openly and responsibly for the greatest benefit of the people pursuant to the mandate of Article 23 of the 1945 Constitution. As a consequence, BUMN in the form of limited liability companies or other corporations that use state facilities or state assets must be monitored as a consequence of good and accountable management of state finance,” Guntur said.

Meanwhile, The Decision No. 62/PUU-XI/2013 states that BUMN, BUMD, or other enterprises whose stocks, either partially or entirely, are owned by the state are the extension of the central or regional government. The entire or partial capital or stocks of these enterprises come from separated state assets.

“As the extension of the state, BUMN or BUMD are subject to provisions in Section XIV on National Economy and Social Welfare, especially Article 33 of the 1945 Constitution,” Guntur said. He also talked about production sectors that are vital to the state and that affect the livelihood of a considerable part of the population, those that are vital but do not affect the livelihood of a considerable part of the population, and those that do but aren’t vital.

The Constitutional Court decisions are expected to be a constitutional solution acknowledged and implemented by all parties. They are final and binding. "Therefore, there is no way except to follow what has been decided by the Constitutional Court as the final interpreter of the Constitution. Experts and academics can convey their arguments and views, but the views that we have to implement and follow up are the views that have been decided by the Constitutional Court," he said before experts, academics, and the public who attended the event.

Guntur also talked about punishments on officials of BUMN whose management of state finances result in state losses, which include civil, administrative, and criminal sanctions. “Can criminal sanctions be imposed on officials of BUMN whose assets come from separated state assets? In relation to this, the Constitutional Court Decision Number 32/PUU-XVII/2009 states that if the [word] \\'everyone\\' in the [Corruption Law] excludes BUMN officials or employees, this will create uncertainty. This means BUMN and BUMD officials are like other officials who have strategic functions,” he said.

This implies that the Constitutional Court believe that causing loss to the state cannot simply be used as a basis for convicting people, both individuals and corporations, as long as it cannot be proven that they did so in bad faith. The judicial process will culminate in a verdict by the constitutional justices, who will judge the actor’s intention, he added.

The Constitutional Court emphasized that BUMN assets are state assets, but it also stated that state financial supervision in BUMN must be based on business judgment rules (BJR), not only on state financial supervision in government administration or government judgment rules (GJR). The Constitutional Court leaves it to legislators to determine these types of oversight. The BJR, which is mandated in the Constitutional Court’s decisions, acts as an assessment standard. BJR principles are used for assessing the responsibility of the board of directors, both in investigations and in court examinations. Meanwhile, GJR in BUMN must also be applied with transparency, accountability, responsibility, independence, and fairness. 

Penulis: Nano Tresna Arfana
Editor: Nur R.
Translator: Yuniar Widiastuti (NL)

Translation uploaded on 8/26/2020 04:40 WIB

Disclaimer: The original version of the news is in Indonesian. In case where any differences occur between the English and the Indonesian version, the Indonesian version will prevail.

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