Exploration of nexus between legal liability and corporate fraud: where do business laws and criminology converge?

Rachmadi Usman

Study Program of Law, Universitas Lambung Mangkurat, Banjarmasin, Indonesia.

Abstract:

Corporate fraud has emerged as one of the main issues in today's corporate world, which largely impact the performance and credibility of the associated companies. It has been observed that many stakeholders, shareholders and investors often face serious financial and social damages due to different fraudulent activities such as deception of financial transactions and statements. Corporate fraud is not only observed in developed countries, but many developing countries suffer from persistently increasing numbers of fraudulent activities in their corporate sector. Similarly, corporate fraud is persistently increasing; therefore, this study has focused on determining the association between legal liability and corporate fraud in Indonesia. Thus, qualitative legal research was conducted to determine the legal framework of corporate fraud in Indonesia. For this purpose, the data was collected from different primary and secondary sources, including laws, regulations, legal documents, books, articles, and other related material. The results obtained from this study showed that no effective legal framework in Indonesia specifically focuses on corporate fraud. However, individual fraud has been highlighted under the "Panel Code" (KUHP). Therefore, a few other regulations by the "Indonesian Financial Services Authority," also known as "Otoritas Jasa Keuangan" (OJK), expanded to corporate fraud. Other laws which have been developed in Indonesia within the context of corporate criminal liability include "Anti-money laundering Law," "Anti-corruption law," "Law No. 31 the Year 1999 regarding the Eradication of the Criminal Act of Corruption" and others. Thus, this study has also effectively provided different recommendations to improve the legal liability of corporate fraud in Indonesia. This study also provides different theoretical and practical implications within the context of the legal liability of corporate fraud.

Keyword:

Corporate Fraud; Indonesia; Legal Liability; Business Laws; Criminology