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Jiwasraya: Understanding Indonesia's largest financial scandal
In 2008, three Jiwasraya executives manipulated the state insurer’s asset portfolio to polish its bleak financial report that year. Ten years later, it ended as one of the largest corruption cases in the country's history.
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Defendants wear face shields and masks as they sit in chairs configured to comply with physical distancing rules on Wednesday, during a hearing of the corruption case in state insurer PT Jiwasraya at the Jakarta Corruption Court in Central Jakarta. (JP/Dhoni Setiawan)
T
he corruption scandal surrounding state-owned insurer PT Jiwasraya, which has caused the largest state losses in the country’s history, has shown that Indonesia’s capital market is still not a safe place for local and international investors.
The company’s three executives, former president director Hendrisman Rahim, former financial director Hary Prasetyo and former finance and investment division head Syahmirwan, have been sentenced to life in prison for embezzling insurance premium revenue, resulting in Rp 16.8 trillion (US$1.15 billion) in state losses.
They had traded and invested the fund in multiple low quality assets over the course of 10 years, allegedly with the help of asset management companies, businessmen and fund managers that had allegedly manipulated the fund for their own personal gain.
The three executives were found guilty of violating Article 2 of the 2001 Corruption Law and Article 55 of the Criminal Code, and received the maximum sentence for the crime, which is rarely used for corruption convicts.
Their illegal property will also be confiscated by the country to recover the state losses, as stated in Article 18 of the 2001 law.
It started with company ‘window dressing’
During a trial session at the Jakarta Corruption Court in September, prosecutors revealed how the three executives had planned and executed the crimes in a meticulous manner, which they had conducted from 2008 until 2018.
