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Eduvest �
Journal of Universal Studies Volume 4 Number 06, June, 2024 p- ISSN 2775-3735- e-ISSN 2775-3727 |
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Juridicial Review of the Appointment of An Ex-Convict of
Corruption to Be A Commissioner of Bumn and Subsidiary Company of Bumn and
Its Implication for Good Corporate Governance (Gcg) |
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Kinanti Rizkika 1Fakultas Hukum, Universitas Indonesia,
Indonesia Email:
[email protected]. |
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ABSTRACT |
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This research aims to analize the appointment of an ex-convict of
corruption to be a Commissioner of BUMN and the subsidiary company of BUMN
from a legal perspective and its implication for Good Corporate Governance
Practices. The result showed that the appointment of an ex-convict of
corruption to be a Commissioner of BUMN and the subsidiary company of BUMN is
considered as a violation of law because it doesn�t fulfill the Integrity
aspect. The violation of integrity showed that Good Corporate Governance is
not fully materialized in a corporate practice, especially BUMN and the
subsidiary company of BUMN. |
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KEYWORDS |
BUMN, commissioner, ex-convict, Integrity, Good Corporate
Governance. |
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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International |
INTRODUCTION
State-Owned
Enterprises (SOEs) as stipulated in Law Number 19 of 2003 concerning
State-Owned Enterprises are business entities in which all or most of the
capital is owned by the state through direct participation from separated state
assets. SOEs are divided into two, namely Persero and Perum (Riant Nugroho, 2005).
Furthermore, Article 13 of the BUMN Law stipulates that the organs in a BUMN
company consist of the General Meeting of Shareholders, Board of Directors and
Commissioners. Commissioners are an important organ in SOEs because they
function as internal supervisors. Article 108 paragraph (5) of Law No. 40 of
2007 concerning Limited Liability Companies requires companies whose business
activities are related to collecting and / or managing public funds, companies
that issue debt recognition letters to the public, or public companies to have
at least two commissioners (Harun, 2019).
Indonesia's 2023 Corruption Perception Index (CPI) score
of 34/100 has stagnated or is the same as last year's score, in 2020, which was
34/100. The stagnation of the CPI score in 2023 indicates that the response to
corruption is still slow and likely to worsen due to a lack of substantive
support from stakeholders. In developing countries, a major corporate
governance concern in public companies is the takeover of controlling
shareholders, where controlling shareholders pursue their personal interests at
the expense of company performance and the interests of minority shareholders (Chen,
2011).
In February 2020,
the convicted corruptor in the corruption case of the Tarahan PLTU project,
Lampung, Izedrik Emir Moeis, was appointed as one of the Commissioners at PT
Pupuk Indonesia's subsidiary, PT Pupuk Iskandar Muda (PIM). This appointment is
considered a form of the government's lack of commitment to the eradication of
corruption and a form of failure to provide a deterrent effect to corruptors.
Regulations
regarding the appointment of SOE Commissioners are contained in the Regulation
of the Minister of State-Owned Enterprises Number PER-03/MBU/03/2023 concerning
Organs and Human Resources of State-Owned Enterprises. The regulation
stipulates that there are 3 (three) requirements to be appointed as
commissioners, namely formal requirements, material requirements, and other
requirements. Article 16 stipulates that one of the requirements for the
appointment of prospective Commissioners of SOEs is that they have not
committed a criminal offense that is detrimental to state finances within the
five years prior to nomination. Although the appointment of Emir Moeis fulfills
the formal requirements, it is considered that it does not fulfill the material
requirement, namely "integrity".
The SOE Law
requires the creation of a management and supervision system based on the
principles of efficiency and productivity in order to improve the performance
and value of SOEs and prevent SOEs from exploiting actions that deviate from
the principles of good corporate governance. GCG aims to ensure good corporate
governance so that fraud can be minimized. As mentioned by Alberto Redondo in
his journal entitled "The Substance
of Good Corporate Governance", that the approach to the behavior of
executives in the company is a new paradigm in corporate governance (Alberto,
2018). So, the Commissioner's behavior is one of the important aspects
in the creation of Good Corporate
Governance. However, the existence of a "loophole" in the
legislation, which provides an opportunity for former corruption convicts to
hold positions in government in both state-owned companies and state-owned
subsidiaries, shows bad practices in SOE governance, and also raises doubts
about whether the Commissioners are able to do their job properly in
supervising and becoming an anti-corruption role model for society in
general.
Because of the
above, it is necessary to study the appointment of former corruption convicts
as Commissioners of BUMN and BUMN subsidiaries in terms of legislation, and its
influence on the practice of Good
Corporate Governance (GCG) in the company. With a normative legal research
method, this research uses a regulatory approach to analyze the appointment of
former corruption convicts to become Commissioners of BUMN and BUMN
subsidiaries in terms of legal regulations and their implications for Good Corporate Governance (GCG).
RESEARCH METHOD
The methodology of
this article writing is juridical-normative research. Juridical research is
different from sociological research. In juridical research, there are no
phrases of data, qualitative, and quantitative. There are different objectives
between juridical research and sociological research. Juridical research has an
objective to prescribe, while sociological research has an objective to
describe. These differences make juridical research as sui generis in
types of research methods (Philipus, 2018). Because of the prescription
characteristic of juridical research, the output of this research is legal
opinion/recommendation based on elaboration of statute, legal theory, legal
principle, so that results in legal arguments regarding the research object (Muhaimin, 2020).
In this article
writing, the material of research that is used is legal material. There are
several types of legal material that I will use, namely primary and tertiary (Soetandyo,
2013). For primary material, there is analyzing of ASEAN Charter, EU Charter,
UNCITRAL Model Law on Cross-Border Insolvency, and EU 848/2015. And for
tertiary, there is analyzing of sovereign and non-interfere principle,
universalism theory, territorialism theory, and modified universalism theory.
Moreover, there
are several legal approaches that will be used in this article, such as
statutory approach and comparative approach (Marzuki, 2022). With comparative
approach, I will compare the legal personality of ASEAN and EU with comparison
between ASEAN Charter and EU Charter. With statutory approach, I will describe
and analyze the UNCTIRAL Model Law on Cross-Border Insolvency and EU Regulation
848/2015 on Insolvency Proceedings.
RESULT AND DISCUSSION
According
to Peter Fischer's theory of international organizations, regional
organizations are essentially formed with an intergovernmental nature, because
there are agreements to form them, similar backgrounds, and have
organs/structures (Fischer, 2012). However, this nature can develop into
supranational if the organization has authority over its member states,
especially in making and enforcing international agreements without requiring
consideration from its member states.
A)
Basic Concepts of GCG and the relationship between the Position of
Commissioner and Good Corporate
Governance (GCG)
Good Corporate
Governance (GCG) is a structure related to the responsibilities
of stakeholders, directors, commissioners and managers. These parties motivate
competitive performance to achieve the company's main objectives. The
Indonesian Institute for Corporate Governance (IICG) said that good corporate
governance is basically the structure, systems and processes used by corporate
organizations to provide long-term added value to the company. Furthermore, GCG
is the relationship between the company's organs consisting of Management,
Board of Directors, Board of Commissioners, Shareholders, and other
stakeholders. Each of these organs has a different important role, however,
they interact with each other to achieve company goals.
According to Monks (2003), Good Corporate Governance (GCG) is a system that regulates and
supervises companies that generate added value for all parties involved. This
concept emphasizes two things: first, that shareholders should have the right
to obtain information correctly and in a timely manner; second, that companies
should disclose all information about company performance, ownership, and
stakeholders in an accurate, timely, and transparent manner. According to Kaen
(2003) and Shaw (2003), Good Corporate
Governance consists of four main elements: fairness, transparency, accountability, and responsibility. These four components are important because good
corporate management principles have been proven to improve the quality of
financial statements and can also inhibit performance engineering, which
results in financial statements not showing the true value of the company.
There are five general principles of Good
Corporate Governance as follows:
1) Transparency, which means openness in the decision-making process and openness in
providing important information about the company.
2) Accountability, which refers to clear functions, structures, systems,
and accountability in carrying out corporate governance.
3) Responsibility, which means compliance in the management of the company
with sound corporate principles and applicable regulations.
4) Independency is when the company is managed professionally without being influenced
or affected by management. This is not in accordance with applicable laws and
regulations and sound corporate principles.
5) Fairness, (equality and fairness) is the fair and equal treatment of rights.
The essence of the concept of Good Corporate Governance aims to improve company performance
through supervision and monitoring of management performance and management
accountability to other stakeholders within the applicable legal framework.
In Indonesia, the implementation of Good
Corporate Governance aims:
1) Maximizing the value of SOEs by improving the principles of openness,
accountability, trustworthiness, responsibility, and fairness so that the
company has strong competitiveness, both nationally and internationally;
2) Encourage the management of SOEs in a professional, transparent and
efficient manner, and aim to strengthen and improve their functions;
3) Encouraging Organs to make decisions and carry out their actions based on
high moral values and pay attention to compliance with applicable laws and
regulations, as well as awareness of the social responsibility of BUMN to stakeholders and environmental
sustainability around BUMN;
4) Increase the contribution of SOEs in the national economy
5) Improving the national investment climate; and
6) Make the privatization program a success.
The initial purpose and objective of the Company's GCG
implementation roadmap is to strengthen management's commitment to GCG
implementation and continue to strive for improvement and consistent
implementation. The Company has set an overview of the stages of the Company's
GCG implementation with the aim of becoming an ethical and responsible company,
by making good governance practices a culture in managing the company as
follows:
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An Ethical and Responsible Company |
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Infrastructure & Soft
Structure |
Continuous Improvement |
Target |
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- Company Organs - Supporting Organ of the Board of Commissioners - GCG Guidelines - Code of Conduct Guidelines - Board of Commissioners & Directors Manual (Manual Board
Charter) - IT Governance - Guidelines for Whistleblowing (White Blowing Policy) - System & Procedure |
- Application - Review - Assessment - Audit |
GCG becomes a culture in managing the Company |
Good Corporate
Governance (GCG) is closely related to the function of
commissioners in a company. Commissioners have an important role in
implementing GCG principles and ensuring that companies under their supervision
and management operate in a transparent, ethical and responsible manner. The
role of the commissioner in a company is very strategic in implementing GCG
principles, and good cooperation between commissioners and executive management
can provide a strong foundation for good corporate governance.
This relationship can be closely related to the two
main theories of GCG, namely stewardship
theory and agency theory. Stewardship theory is built on the
philosophy of human nature, namely that humans are inherently trustworthy, able
to act responsibly, have integrity and honesty towards other parties (Thomas,
2006). Furthermore, stewardship theory views
that management is an entity that can be trusted to be able to act in the best
interests of the public and stakeholders.
In stewardship theory, managers will behave in the context of mutual
interests. When the interests of the steward and the owner are not the
same, the steward will try to cooperate and oppose it, because the steward
feels the common interest and behaves in accordance with the owner's
behavior is important because the steward looks more at efforts to achieve
organizational goals. Stewardship theory assumes a close relationship between
organizational success and owner satisfaction. Stewards will protect and
maximize the wealth of the organization with the Company's performance, so that
the utility function will be maximized (Raharjo, 2007).
Meanwhile, agency
theory is a theory that studies the relationship between the principal (owner
or giver of power) and the agent (executor
or recipient of power) in an organization or company. This theory tries to
explain how conflicts of interest between owners and agents can arise and how
control mechanisms can be used to resolve these conflicts. Agency theory proposed by Michael Johnson views that company
management is an agent for shareholders, will act with full awareness of its
own interests, not as a wise and prudent party and fair to shareholders. Furthermore,
agency theorists reduce corporate governance to a cost and benefit calculation, which only describes what companies
and shareholders do to add value without considering moral values (Jonathan,
2013).
Agency theory assumes that
contracts will be effective if the goals of the principal and agent are
aligned. In reality, of course, these goals are often different (Raeesah, 2023).
The main problem in the relationship between principal and agent is
opportunistic behavior. When the goals in the principal-agent relationship
are different, it can lead to information hiding behavior. This is known as information
asymmetry. Agency theory states that information asymmetry encourages
opportunistic behavior. For example, agents do not actually perform the
Efforts that the principal thinks they have performed, and the principal does
not have complete knowledge of the agent's behavior. Because the agent
pursues its own interests by providing information asymmetry, it
harms the principal. This is referred to as moral hazard. Therefore,
this agency theory advocates the use of control and incentive mechanisms to
ensure that principals and agents work towards the same outcome.
The two theories are two approaches in dealing with
the dynamics between the relationship between shareholders and company
management. From the explanation of the stewardship agency and agency
theory above, the relationship between GCG and the function of the
Commissioner as company management can be explained as follows:
1) Oversight and Decision Making
GCG emphasizes the need for effective oversight of
company policies and operations to ensure adherence to ethical and legal
principles. Commissioners have an oversight role over executive management and
strategic decision-making. They must ensure that decisions are in the long-term
interests of the company and its shareholders.
2) Transparency and Accountability
GCG emphasizes the importance of transparency and accountability in
financial reporting and decision-making and the Commissioner is responsible for
ensuring that the company's financial statements are accurate, transparent and
provide a clear picture of financial performance.
3) Relationship with Shareholders
GCG underscores the need for fair treatment of all stakeholders, especially
shareholders, and Commissioners must ensure that shareholders' interests are
recognized and considered in corporate decision-making. They also have a
responsibility to ensure that minority shareholders are properly engaged.
4) Risk Management
GCG includes effective risk management as part of good corporate governance.
Commissioners are involved in assessing and ensuring that enterprise risk
management is integrated into the decision-making process and business
strategy.
5) Leadership and Corporate Culture
GCG emphasizes the importance of ethical leadership
and a corporate culture that supports the values of good corporate governance.
Commissioners are involved in assessing the effectiveness of leadership and
overseeing the culture of the organization, as well as ensuring that these
values are in line with GCG principles.
B)
Legal arrangements for the appointment of former corruption convicts as
Commissioners of SOEs and SOE Subsidiaries
Based on the definition in article 1 of the Law of the
Republic of Indonesia, State-Owned Enterprises, hereinafter referred to as
SOEs, are business entities in which all or most of the capital is owned by the
state through direct participation from separated state assets. It is also
stated that the organs of BUMN companies are the General Meeting of
Shareholders, the Board of Directors, and the Board of Commissioners.
Policies regarding the appointment of SOE
commissioners refer to at least 3 laws and regulations, namely Law Number 40 of
2007 concerning Limited Liability Companies (hereinafter referred to as the PT
Law), Law Number 19 of 2003 concerning State-Owned Enterprises (hereinafter
referred to as the SOE Law), and Regulation of the Minister of SOEs Number
PER-03/MBU/03/2023 concerning Organs and Human Resources of State-Owned
Enterprises. In PER-03/MBU/03/2023 Part Two regarding the Requirements for
Members of the Board of Commissioners / Supervisory Board of State-Owned
Enterprises and Members of the Board of Commissioners of Subsidiaries, it is
stipulated that to be appointed as a member of the Board of Commissioners /
Supervisory Board of BUMN or a member of the Board of Commissioners of a
Subsidiary, a person must meet the material requirements and format
requirements. The formal requirements are regulated in article 15, namely: 1) Integrity;
2) Dedication; 3) Understand corporate management issues related to one of the
management functions; 4) Have sufficient knowledge in the business field in
which he/she is nominated; and 5) Can provide sufficient time to carry out
their duties.
Meanwhile, the
formal requirements are regulated in Article 16, namely: 1) Natural person; 2) Capable of performing legal acts; 3) Never declared bankrupt within 5 (five) years prior to
appointment; �4) Never been a member of the Board of Directors or a member of the Board
of Commissioners / Supervisory Board who was found guilty of causing a BUMN,
Subsidiary and / or other business entity to be declared bankrupt within 5
(five) years before appointment; and 5) Never been convicted of a criminal offense
that is detrimental to the finances of the State, BUMN, Subsidiaries, other
business entities and/or those related to the financial sector within 5 (five)
years prior to appointment.
Then in article 28 of Law No.19 of 2003 concerning
State-Owned Enterprises, it is regulated as follows: 1) Commissioner members
are appointed based on considerations of integrity, dedication, understanding
of company management issues related to one of the management functions, having
sufficient knowledge in the Persero's business field, and being able to provide
sufficient time to carry out their duties. 2) The composition of the Board of
Commissioners should be determined in such a way as to enable decision-making
to be carried out effectively, appropriately and quickly, and to act
independently. 3) The term of office of a Commissioner
is set at 5 (five) years and may be reappointed for 1 (one) term. 4) In the
event that the Commissioner consists of more than one member, one of the
members of the Commissioner shall be appointed as the main commissioner. 5) The
appointment of members of the Board of Commissioners shall not coincide with
the appointment of members of the Board of Directors, except for the first appointment
at the time of incorporation.
Furthermore, Regulation of the Minister of SOEs No.
PER-3/MBU/03/2023 on Organs and Human Resources of State-Owned Enterprises
article 8 stipulates that to be appointed as a member of the Board of
Commissioners of SOEs or subsidiaries of SOEs, a person must also fulfill the
following other requirements:
(1) Not a political party manager, legislative candidate, and/or legislative
member in the House of Representatives, Regional Representative Council,
Provincial Representative Council, and Regency / City Regional Representative
Council;
(2) Not a candidate for regional head/deputy head and/or regional
head/deputy head, including acting regional head/deputy head;
(3) Not currently holding a position that has the potential to cause a
conflict of interest with the BUMN / Subsidiary concerned;
(4) Not serving as a member of the Board of Commissioners / Supervisory
Board at BUMN or the Board of Commissioners at the relevant Subsidiary for 2
(two) periods;
(5)
Not currently holding
a position that based on laws and regulations is prohibited to be concurrently
held by a member of the Board of Commissioners;
(6)
For candidates from
technical ministries or other government agencies, it must be based on a
proposal letter from the head of the agency concerned.
In 2021, Izedrik Emir Moeis was appointed as a Member of
the Board of Commissioners of PT Pupuk Iskandar Muda (PT PIM) based on Notarial
Deed Number 4 Dated February 18, 2021.[1] In addition, based on Notarial Deed Number 4 Dated February 24, 2021, Emir
Moeis was appointed as Chairman of the Audit Committee. Emir Moeis is known to
be a former convict of bribery for the construction of 6 sections of the 1000
MW Steam Power Plant in Tarahan, Lampung when he was Deputy Chairman of
Commission VIII of the Indonesian Parliament in 2000-2003. Emir Moeis was
proven to have received money amounting to USD 423,985 or around Rp6.3 billion
from the Alstom Power Inc. Consortium (Marubeni Corp, Alstom Power Inc, and
Alstom Power ESI) for helping the consortium of companies in the tender for the
construction of the Tarahan Lot 3 PLTU (Steam Generator and Auxiliaries).
There are provisions stipulating that Commissioners of
SOEs and SOE subsidiaries must meet the requirements of integrity and good
ethics. In the Regulation of the Minister of State-Owned Enterprises of the
Republic of Indonesia Number Per-3/MBU/03/2023 concerning Organs and Human
Resources of State-Owned Enterprises, integrity is one of the elements in
assessing the fulfillment of material requirements for candidates for members
of the Board of Commissioners, as stipulated in paragraph 3, Article 41 paragraph
(5) b as follows:
"Specifically to assess
integrity, it is done with a written statement from the candidate concerned as
stated in Appendix VI which is an integral part of this Ministerial Regulation.
Furthermore, article 56 paragraph (3) a regulates the
weighting of the assessment of the material requirements of the Candidate for
the Board of Commissioners of a Subsidiary as follows:
(1) Integrity is given an assessment weight of 40% (forty percent) with
details as follows:
(a) has never been involved in engineering and deviant practices at the
place where the person concerned worked before the nomination (acting
dishonestly), given a weight of 15% (fifteen percent);
(b) has never been involved in a breach of promise that can be categorized
as not fulfilling the commitments agreed upon at the place where the person
concerned worked before the nomination (misbehaving), given a weight of 5%
(five percent);
(c) has never been involved in an act that is categorized as being able to
provide unlawful benefits to the person concerned and / or other parties before
the nomination (bad behavior), given a weight of 10% (ten percent); and
(d) has never been involved in an act that can be categorized as a violation
of the provisions relating to the principles of good corporate governance (bad
behavior), given a weight of 10% (ten percent).
Furthermore, Article 56 paragraph (5) stipulates that
the assessment of integrity requirements is given with the calculation that if
the person concerned is involved in the actions in question, the value given is
getting smaller according to the level of involvement concerned.
Then, in Per-3/MBU/03/2023 concerning Organs and Human
Resources of State-Owned Enterprises, honesty and good behavior are points of
assessment for Candidates for Members of the Board of Directors as stipulated
in article 56 points (2) e and f, but the two points on the material
requirements as stated in article 3 do not become material requirements for
candidates for Members of the Board of Commissioners as stipulated in article
15. However, as stipulated in paragraph 3, Article 41 paragraph (5) b, that Candidates
for the Board of Commissioners must fill out a written integrity statement
which at assessment point no.2 there is a statement that must be filled in
"YES" or "NO" as follows:
"I have
committed ethical violations that apply to the organization where I
previously/currently work".
Thus, the appointment of former corruption convicts as
Commissioners of SOEs and SOE subsidiaries violates the material requirements
of the Regulation of the Minister of SOEs Number Per-3 / MBU / 03/2023
concerning Organs and Human Resources of State-Owned Enterprises, namely the
Integrity aspect, which requires that prospective Commissioners have never been
involved in acts that are categorized as providing unlawful benefits to the
person concerned and / or other parties before nomination, and have never been
involved in acts that can be categorized as violations of provisions relating
to the principles of good corporate governance (bad behavior).
In addition, in Per-3/MBU/03/2023 there are
differences in the material requirements to be appointed as a member of the
Board of Commissioners / Supervisory Board of BUMN or a member of the Board of
Commissioners of a Subsidiary and the material requirements required for
members of the Board of Directors of BUMN or members of the Board of Directors.
The material requirements to be appointed as a member of the Board of
Commissioners / Supervisory Board of BUMN or a member of the Board of
Commissioners of a Subsidiary as stipulated in article 15 are as follows: 1) Integrity;
2) Dedication; 3) Understand corporate management issues related to one of the
management functions; 4) Have sufficient knowledge in the business field in
which he/she is nominated; and 5) can provide sufficient time to carry out
their duties.
Meanwhile, to be appointed as a member of the Board of
Directors of BUMN or a member of the Board of Directors of a Subsidiary, a
person must fulfill the following material requirements:
(1) Skills;
(2) integrity;
(3) leadership;
(4) Experience;
(5) honestly;
(6) good behavior; and
(7) high dedication to advancing and developing the company.
When viewed from the two material requirements
required for Commissioners and Directors respectively, the Honest and Good
Behavior aspect is not a point required in the material requirements for
Candidates for the Board of Commissioners. Of course this is a question,
whether it is then justified that to become a Commissioner
it is not necessary to have honesty and good behavior.
C)
Implications of the Appointment of Former Corruption Convicts as
Commissioners of SOEs and SOE subsidiaries on Good Corporate Governance (GCG)
GCG is important in helping reduce corporate problems,
assisting in enforcing the law. Good corporate governance is expected to be
particularly high for developing countries where developing countries tend to
have unclear economic and legal institutions, are underdeveloped or plagued by
enforcement problems (Norden, 2019). GCG mechanism refers to the control
mechanism of the company to fulfill stakeholder
expectations. The concept of Corporate
Governance aims to improve company performance through supervision and
monitoring of company management performance and to ensure company
accountability to stakeholders based on framework
rules (Purwanto, 2020). The higher the company's commitment to corporate
governance standards will result in a positive impact on the company in the
long term (Louis, 2019).
This control mechanism is the duty of the Board of
Commissioners. The BOC has a very important role in achieving good corporate
governance as they have the responsibility to ensure that management has
implemented adequate internal control procedures and prepared financial
statements reliably. Therefore, the presence of a Board of Commissioners that
performs its supervisory function effectively can improve the quality of the
company's financial statements (Intan, 2017).
In the context of Good
Corporate Governance, GCG has a framework designed to reduce the problems
caused by agency theory, and supports the importance of the role of
management in carrying out its duties as described in the stewardship theory.
In agency theory, by implementing GCG principles, the Company seeks to
improve transparency, accountability, fairness and sustainability in its
decision-making and operations. GCG principles help reduce agency conflicts by
regulating the relationship between shareholders, directors, management and
other related parties.
GCG and stewardship theory complement each other
in an effort to ensure that management acts responsibly and considers the
long-term interests of the company and all stakeholders. In the stewardship
agency, GCG reinforces management's duty to be accountable to all of the
company's stakeholders, including shareholders, employees, customers, and
society, places an important role on the board of directors in ensuring the
adoption of good practices and compliance with ethical and legal standards,
encourages practices that support corporate sustainability, such as
sustainability reporting, risk management, and fulfillment of corporate social
responsibility, encourages companies to adopt practices that increase
transparency and ensure management accountability for their actions.
Both stewardship
theory and agency theory can be
used as a basis for developing structures and processes that can ensure
transparency, accountability, and protection of shareholders' interests in the
company, and that companies need to consider frameworks that can promote
integrity and minimize conflicts of interest between parties, thus creating an
environment that is in accordance with GCG principles. Integrity plays a key
role in ensuring effective GCG practices, not only including compliance with
regulations and procedures, but also involving moral and ethical aspects in the
management of the company.
So Integrity is an important aspect that is required to
be owned by Candidates for BUMN Commissioners and Candidates for BUMN
Subsidiary Commissioners, as regulated in several regulations, including Per-3
/ MBU / 03/2023 concerning Organs and Human Resources of State-Owned
Enterprises requires integrity requirements to be a material requirement, then
POJK No.55 / POJK.03 / 2016 concerning Implementation of Governance for
Commercial banks regulates that the Committee must have integrity, morals, and
good morals. Then in SEOJK No. 13/SEOJK.03/2017 concerning Governance for
Commercial Banks, integrity becomes one of the self-assessment criteria in point 2. Implementation of Duties and
Responsibilities of the Board of Commissioners states that all members of the
Board of Commissioners have adequate integrity, competence and financial
reputation. Good Corporate Governance is implemented to
encourage the creation of conditions that are efficient, transparent, and
consistent with laws and regulations. Good
Corporate Governance is key to the development of SOEs. Transparency, data
disclosure/completeness, independence, accountability, are the four basic
principles that must be put in place in SOE activities before running a
business and pursuing profit. Without GCG, SOEs will not be able to become the
driving force of the country's economy.
Article 6 paragraph (3) of Law Number 19 of 2003
concerning State-Owned Enterprises stipulates that in carrying out their
duties, commissioners comply with the principle of fiduciary duty by complying with the articles of association of
BUMN and the provisions of laws and regulations and are required to implement
the principles of professionalism, efficiency, transparency, independence,
accountability, responsibility, and fairness. Commissioner members are also
prohibited from providing benefits directly or indirectly from BUMN activities
other than legal income. The personal gain referred to here is abusing his
authority as a commissioner for the benefit of himself, group, and group. In
carrying out their supervisory duties, commissioners are prohibited from giving
or receiving, directly or indirectly, anything of value to or from a customer
or as a government official to influence or in return for what they have done
and other actions in accordance with statutory provisions. If they violate
these provisions, commissioners can be charged with Law Number 31 of 1999
concerning Eradication of Corruption as amended by Law Number 20 of 2001 for
harming state finances or criminal sanctions in other laws and regulations.
There are professionalism constraints within the Board
of Commissioners that have prevented GCG practices in SOEs from running
smoothly. This is related to the competence of the Board of
Commissioners, as they are the ones who run and oversee the implementation of
GCG. There are 3 (three) conditions needed by SOEs to run the company well,
including professionalism, depoliticization, and debureaucratization.
Professionalism means that the entire management team, from the Board of
Directors to the Board of Commissioners, is competent in their positions. The
Board of Commissioners is responsible for overseeing all steps taken by the
Board of Directors in accordance with Good
Corporate Governance (GCG). Therefore, it needs people who know about the
business itself, GCG, and have the discipline to keep the steps of the Board of
Directors in accordance with GCG practices. Depoliticization and debureaucracy
means that good corporate governance can only be implemented if SOEs are not
intervened by political forces and power holders in government.
So, a strict selection process is indispensable
considering that the quality of commissioners is one of the main illustrations
of the implementation of Good Corporate
Governance (GCG). Meanwhile, corruption is closely related to integrity.
Based on the 5 (five) basic principles of Good
Corporate Governance, namely Transparency,
Accountability, Responsibility, Independency,
and Fairness, in essence, Good corporate governance (GCG) is
definitively a system that regulates and controls companies that create value added for all stakeholders (Monks,
2003). If one of these principles is violated, there are risks that arise,
especially reputational risks that can affect stakeholder trust.
Based on the explanation above, the aspects of
integrity, morals and ethics cannot be separated from the concept of GCG
itself. Thus, the opinion that the appointment of former corruption convicts to
government positions, in this case Commissioners of BUMN and BUMN subsidiaries,
does not violate the laws and regulations, cannot be justified, because in
principle the moral and ethical aspects are part of the integrity that is one
of the material requirements for Candidates for the Board of Commissioners. In other
words, the appointment of former corruption convicts as Commissioners of BUMN
and BUMN subsidiaries does not fulfill the legal aspects and aspects of Good Corporate Governance (GCG). In
addition, the appointment of former corruption convicts as Commissioners raises
doubts that the Commissioners are able to provide value added to the company and stakeholders.
It also raises doubts that the Commissioner is able to perform his duties
properly in supervising and also becoming an anti-corruption role model for all
employees in the company.
CONCLUSION
In the context of the two
main theories of GCG, namely stewardship theory and agency theory, the position
of the Commissioner plays an important role. In the context of stewardship
theory, commissioners are considered as representatives of company owners who
are tasked with overseeing and providing direction to management. Meanwhile, in
agency theory, the Commissioner acts as a supervisory mechanism to reduce
conflict. The appointment of former corruption convicts as Commissioners of
SOEs and subsidiaries has implications for defective Good Corporate Governance
(GCG) practices. In other words, the process of appointing Commissioners does
not take into account GCG principles, especially the principle of integrity,
where aspects of integrity, moral and ethical aspects cannot be separated from
the concept of GCG, thus raising doubts that the Commissioners are able to
perform their duties and roles properly in supervising for the long-term
sustainability and health of the company and fulfilling the interests of shareholders
and other stakeholders.
The appointment of former
corruption convicts as Commissioners of SOEs and SOE Subsidiaries violates
integrity, as stipulated in the Regulation of the Minister of State-Owned
Enterprises of the Republic of Indonesia Number Per-3/MBU/03/2023 concerning Organs
and Human Resources of State-Owned Enterprises where "integrity" is
one of the material requirements for the appointment of commissioners of SOEs
and SOE subsidiaries, and violates the Law of the Republic of Indonesia Number
19 of 2003 concerning State-Owned Enterprises which stipulates that
Commissioners are appointed based on considerations of "integrity".
In addition, the Regulation of the Minister of State-Owned Enterprises of the
Republic of Indonesia Number Per-3/MBU/03/2023 concerning Organs and Human
Resources of State-Owned Enterprises does not require the aspects of
"honesty" and "good behavior" in the material requirements
of a person to be appointed as a member of the Board of Commissioners of BUMN
and Subsidiaries and does not regulate the obligation to conduct a track record
in the assessment of prospective Commissioners, as the aspects of
"honesty" and "good behavior" have become material
requirements for a person to be appointed as a member of the Board of Directors
of BUMN or a member of the Board of Directors of Subsidiaries, and have become
an obligation to conduct a track record in the assessment of prospective
Directors of BUMN and Subsidiaries.
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