Back in 2020, BRI Ventures CEO Nicko Widjaja approved a US$5 million investment in Indonesian agritech startup TaniHub Group, following a multi-stage due diligence process that received written sign-off from BRI’s board-level director and BRI Ventures’ board of commissioners.
Fast forward to the present day, after the collapse of TaniHub, Widjaja is being prosecuted for causing state financial loss. With a verdict scheduled for June 10, the prosecutors are seeking 11 years in prison for the investor.
Ahead of his defence hearing (pledoi) at the Anti-Corruption Court in Jakarta on June 3, e27 spoke to Ditho H. F. Sitompoel, Managing Partner at Hotma Sitompoel Law Firm — the legal defence team representing Widjaja. In this interview, the lawyer shares more details about the case, including the strategy the team plans to use.
The following is an edited excerpt of the conversation.
In your recent contributed post, you mentioned this inverted framework that the prosecutors are using in this case. Can we get a better understanding of why this approach is being used in this case?
The prosecutor’s approach to indicting Nicko is based on the idea that BRI Ventures is part of a state-owned enterprise (SOE), namely BRI. As part of BRI, when something happens to BRI Ventures — like a failed investment — it can be categorised as a state loss.
However, we need to understand that, as a subsidiary of an SOE such as BRI, BRI Ventures is considered a separate company. It cannot be classified as an SOE because corporate law applies to them, not SOE law.
If something happens, such as the director making a failed investment, it does not make sense to classify it as a state loss, as the law itself treats BRI Ventures as a separate entity.
Why do the prosecutors see 11 years as appropriate for this case, especially given that Nicko receives zero personal benefit from the transaction?
Because, according to our law, corruption is not only about who receives the money. It is also about the transfer of the money itself. Nicko, as part of BRI Ventures, transferred the money to TaniHub Group … that is why they classified this as a wrongdoing. Because it is not only to enrich oneself according to the law, but also to enrich other persons or companies.
During the due diligence process for the Tani Hub investment, BRI’s board-level director and BRI Ventures’ board of commissioners were involved. Does the fact that this institutional oversight exists effectively negate any claim of individual criminal liability?
Exactly. All due diligence processes were already conducted in accordance with the company’s standard operating procedures. However, the prosecutors still think that, when we were doing due diligence, we were not doing so with a fiduciary duty. According to them, we did not confirm whether the information in the company’s documents is correct.
If the documents they provided are fraudulent, we can treat it as a breach of the agreement and handle it in a civil case. It cannot be treated as a criminal case unless we can prove fraud.
What is the outcome that you expect to achieve on June 10?
We want to get Nicko free of the charges against him. Our legal arguments will first address the question of unlawful conduct … As we know, under Indonesian law, following the Constitutional Court’s 2006 ruling, an unlawful act in the corruption case must constitute a violation of a concrete right.
It is not enough to say that a decision was unwise in hindsight, and there is no rule that was actually broken here. Even the investment itself was made under the Financial Services Authority’s own regulations regarding the governing of venture capitals.
The regulation is far from prohibiting investment in loss-making startups. It actively encourages venture capital firms to fund growing companies. [This is important as] the prosecutor asked why BRI Ventures invests in a loss-making company. But of course, it is because it is a startup.
Also Read: Raising new funding round, TaniHub Group claims 600+ per cent gross revenue growth in 2020
It is confirmed by the law itself and by the Financial Services Authority. Every step followed the BRI Ventures internal investments [guide], and the decision was made collectively through an investment committee with involvement from the Board of Commissioners. So, our clients never made this decision unilaterally.
Second, on the question of enrichment. Nicko did not receive a single Rupiah. No shares, no kickback, no hidden benefit at all.
BRI Ventures itself recorded the investment, even though it was a loss. They have not sold any shares; they have not exited the company. That is why it cannot be categorised as a real loss. It is still an unrealised loss.
The third is quite critical because the prosecutor has always raised the argument of state loss. As we know, the prosecutor is working with BPKP, the government’s internal audit body. However, under our constitution and law, the authority to formally determine the state’s financial loss lies with the BPK. So it is not BPKP that has the right to make an audit.
As I mentioned earlier, the constitutional court has held that the state’s loss in this case must be certain. Not a projection, not unrealised. However, what we have here is portfolio valuations, a paper figure on investment that simply underperformed.
Our financial and criminal law experts have already testified to these exact points in court, including the business judgment rule.
The company law explicitly protects a director who acts in good faith, and I think everything Nicko does is already aligned with the business judgment rule. He acted professionally; he had no conflict of interest when he sensed trouble at TaniHub.
He did not even make another investment in the company’s Series B … even though the committee had already approved it. At the last minute, he noticed something fishy in the company.
Nicko is certainly not the first person in Indonesia to be criminalised for making a business decision that does not involve illicit enrichment. So, why does this pattern keep on showing up, and do you plan to tie this case up to similar cases in your defence?
We had experience as the defence team at the Pertamina case in 2019, and the decisions have already become jurisprudence. At that time, we defended Pertamina CFO Frederick Siahaan. The CEO back then was Karen Agustiawan, who was also on trial that time.
We also presented the argument about the business judgment rule. The District Court insisted on it being a corruption case. However, when we went to the Supreme Court, they agreed with our positions in our argument. It actually became a landmark decision on the business judgment rule.
I hope that when people read about this case, they can look past the word ‘corruption’ and ask the simpler question: Did Nicko steal from the state, or did he simply make an investment that did not work out?
The evidence already points clearly to the second. We are confident enough for this case.
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