Investor & Corporate Advisory Brief
Executive Overview
Law No. 20 of 2025 on Criminal Procedural Law (“KUHAP”) introduces a fundamental shift in Indonesia’s approach to corporate criminal liability through the formal adoption of Deferred Prosecution Agreements (“DPA”).
This mechanism allows prosecutors to defer criminal proceedings against corporate defendants subject to strict judicial oversight and compliance-based obligations.
While new to Indonesia, DPA are well-established in jurisdictions such as the United States, the United Kingdom and Singapore, where they function as enforcement tools designed to balance accountability, restitution and business continuity. Under the KUHAP, Indonesia adopts a hybrid model, combining prosecutorial discretion with meaningful judicial review.
This second part of the ILD series examines the legal architecture of DPA under the KUHAP, contrasts it with plea bargaining, and draws practical lessons from comparative and international practice.
I. DPA and Plea Bargaining under the New KUHAP Framework
A. Deferred Prosecution Agreements under the KUHAP
The KUHAP expressly limits the application of DPA to corporate criminal offenses, positioning them as an alternative case-resolution mechanism aimed at:
⮕ Promoting corporate compliance and governance reform
⮕ Facilitating restitution and recovery of losses
⮕ Enhancing procedural efficiency and judicial economy
Procedural features
⮕ DPA applications may be submitted by suspects, defendants or their legal counsel before transfer of the case to court
⮕ Prosecutorial discretion is exercised subject to judicial examination hearings
⮕ Judges assess legality, proportionality, feasibility and public interest considerations
⮕ Approved DPA are formalized through court orders and monitored throughout their duration
Consequences
⮕ Full compliance → case termination without conviction
⮕ Breach → immediate resumption of prosecution without further judicial approval
Permissible DPA obligations include
⮕ Compensation or restitution to victims
⮕ Mandatory compliance and governance reforms
⮕ Ongoing reporting and cooperation duties
⮕ Other corrective measures deemed necessary by prosecutors
This framework embeds judicial oversight more deeply than in many common-law jurisdictions, signaling Indonesia’s intent to balance enforcement power with procedural safeguards.
B. Plea Bargaining under the KUHAP
In parallel, the KUHAP introduces plea bargaining, applicable to both individuals and corporations. Under this mechanism:
➤ Defendants admit guilt and cooperate with prosecutors
➤ Sentencing reductions of up to two-thirds of the statutory maximum may be granted
➤ The process culminates in a criminal conviction, unlike DPA
Key distinction
➤ DPA → case termination without conviction (corporations only)
➤ Plea bargaining → conviction with mitigated penalty
Understanding this distinction is critical for corporate defendants assessing exposure, reputational risk and long-term operational implications.
II. Comparative International Practice
United States
US DPA are governed by prosecutorial guidelines under the US Attorneys’ Manual and emphasize broad discretion with limited judicial intervention. Prosecutors assess factors such as:
- Seriousness and pervasiveness of misconduct
- Cooperation and voluntary disclosure
- Compliance programs and remedial actions
- Collateral consequences for innocent stakeholders
Indonesia’s KUHAP mirrors many of these substantive considerations but diverges by assigning judges a more active gatekeeping role.
United Kingdom
Under the Crime and Courts Act 2013, UK DPA require:
- Judicial confirmation that agreements are in the interests of justice
- Open-court approval and public disclosure
- Clear expiry dates and detailed factual statements
Indonesia’s KUHAP aligns closely with this model, particularly in its emphasis on judicial validation and proportionality.
Singapore
Singapore’s Criminal Justice Reform Act 2018 adopts a court-approved DPA regime limited to corporate entities, with the notable addition of independent compliance monitors.
While Indonesia does not formally mandate monitors, the KUHAP allows prosecutors to impose functionally similar compliance and reporting obligations.
III. Case Studies and Practical Lessons
Rolls-Royce (UK, 2017)
A landmark DPA addressing decades-long, multi-jurisdictional corruption. Despite the gravity of offenses, the court approved the DPA due to:
- Exceptional cooperation
- Extensive compliance reform
- Severe collateral consequences of conviction
Key lesson: proactive remediation and transparency can materially alter enforcement outcomes.
Standard Chartered Bank (US, 2012–2019)
Repeated DPA amendments underscore how compliance failures and weak controls can prolong prosecutorial oversight and escalate financial exposure.
Key lesson: DPA are not “one-time exits” but living enforcement instruments tied directly to ongoing compliance performance.
Conclusion
Indonesia’s adoption of DPA under the KUHAP represents a structural evolution in corporate criminal enforcement. For corporations, this framework creates both opportunity and risk:
- Opportunity to resolve serious criminal exposure without conviction
- Risk of heightened scrutiny, judicial oversight and ongoing compliance obligations
International experience demonstrates that DPA function most effectively when supported by robust governance, early legal strategy and credible compliance reform. As enforcement practice matures, DPA are likely to become a central feature of Indonesia’s corporate criminal justice landscape.
How Seven Stones Indonesia Can Assist
Seven Stones Indonesia supports corporate clients navigating the new KUHAP framework through:
🗹 Early-stage exposure assessment for corporate criminal liability
🗹 Strategic evaluation of DPA vs. plea-bargaining pathways
🗹 Pre-DPA compliance diagnostics and remediation planning
🗹 Coordination with legal counsel, auditors, and compliance advisors
🗹 Governance restructuring and documentation support aligned with prosecutorial and judicial expectations
Our role is to help clients reduce criminal exposure, preserve operational continuity and strengthen long-term compliance credibility in an evolving enforcement environment.