The Legend of Peugeot,  the SOEs Losses & Corruption Charges (Part 1)

A. Irmanputra Sidin, PhD in Constitutional Law/ Constitutional Lawyer

Jakarta, February, 21,  2025

In the journey to survive, humankind created a story that finally trusted as a social, cultural, economic agreements and beliefs. One of the stories, homo sapiens created the story of the corporations or company. In early history, humankind did business only based on individuals’ actions, when the product they produces turn to damage, the consumer will sue as a personal responsibility, and when they take debt, and are insolvent, they have to solve by giving over their private property, even giving over one or two of their family to the lender, or make them lead to imprisonment. (Yuval Noah Harari, Sapiens: A Brief History of Humankind) .

These conditions made humankind discouraged and afraid created businesses, they better choose to be a slave from the landlords or from the kingdoms. Everyone was afraid take economic risk  because their family would be badly poor because individuals take responsibility for their creation and innovation in  businesses. In the next tale, humankind collectively started to create a story, and nowadays the story is known as a corporation or company. Across the globe all humankind agree on  that story that a corporation which is recognized as a legal entity has It’s own assets, own responsibility, own profit, own losses, which is separated legally with their founder or the people who has participating in capital to the corporation. (Ibid)

In 1896 when Armand Peugeot inherited a metal working workshop from his parents, that produced springs, saws and bicycles, he decided to shift into the car business. Armand Peugeot created a corporation, and named after himself but the corporation was separate from his personal assets. If the cars made by Peugeot were damaged or broken, the buyer could sue the corporation, if the corporation take debt of millions franc, Armand Peugeot would not owe a single franc to the lender, because the debt was taken on by  the corporation, not by Armand Peugeot. Armand Peugeot died 1915, but the Corporation Peugeot still alive. (Ibid)

Peugeot SA (the corporation) is one of the oldest and biggest automobile companies in Europe. It started as a family business  in the Valentigney village near the Stadel Cave. The corporation employs approximately 200.000 across the globe. There are so many cars labelled Peugeot, but these cars not Peugeot SA. If the all the cars which labelled Peugeot were sold and discarded as scrap metal, Peugeot SA would not disappear. Peugeot SA would continue to produce new cars and  issue its financial reports. Peugeot SA owns factories, showrooms, machines, and employs people such as lawyers, accountants  or secretaries, even managers and shareholders but they are not Peugeot SA. Nevertheless, Peugeot SA is not an immortal entity, if the court  dissolved the Peugeot SA, the factories, showroom, machines, and employee such as lawyers, accountants or secretaries, even managers and shareholders would still exist and alive, but Peugeot SA would disappear instantly. (Ibid)

In my article with the title Business Judgement Rule Principle as an Immunity Right  (1) (State Owned Enterprises of Indonesia), I pointed out that  the new law concerning of State Owned Enterprises of Indonesia (SOEs) has finally been acknowledged, after the Indonesian House of Representatives (DPR) agreed to the  bill amending Law Number 19 of 2003 Concerning State Owned Enterprises (SOEs Law). In this new law, several important issues are addressed, but in this article, one issue I want to elaborate again is about the losses of SOEs financial is not the losses of state financial. The second issue is about  all the member of the Board of Directors, Board of Commissioners or Board of Oversight including all employee of the SOEs no longer as a state administrator, or the people who works for government.

Why were these issues finally written boldly into law? Because during this time criminal law regarding corruption could not protect the constitutional rights of SOEs management. The constitutional rights is stated ini Article 28D of the 1945 Constitution of the Republic of  Indonesia (UUD 1945) which declares that every person shall be entitled to recognition, guaranty, protection, and equitable legal certainty as well as equal treatment before the law. Furthermore, in Article 28 G, the constitution also declares that every person shall be entitled to protection of his/ her own person, family, honor, dignity, and property under his/her control, as well as be entitled to feel secure and be entitled to protection against threat of fear to do or omit to do something being his/her fundamental right. 

More than twenty-five years ago, in 1998, the people changed the political regime with the outrage and well known as Reformation 1998. All the nuances of the nations at that time were angry with corruption and they made several laws concerning prevention and eradication of corruption. Because of the making processes of the law in the “angry nuances” of corruption, the people by their representatives in DPR and consent by the President, made wide and extensive text to the definition corruption not only bribery and things like that . The point  is that anyone  who organizes the state with policy or actions that may harm state finances or economic of state , could be charged with corruption even there’s no bribery indication or proven, or “money kick back” ( Law of RI No. 31 of 1999 on Eradication of the Criminal Act of Corruption).

As a preventive measure, Indonesia also promulgated The Law No. 28 of 1999 on Concerning The State Administrator Who Are Clean and Free from Corruption, Collusion, And Nepotism. In this law Article 2 (7) of this law, it is stated that all members of the  Board of Directors,  the Board of Commissioners  and the structural officers of SOEs are considered state administrator. As a state administrator they are obligated to disclose all their wealth periodically to the public through the  State Official Wealth Report. 

To be continue..

Thank You..

^{*Featured photo, source : https://www.companieshistory.com*}