Beneficial Owner Identification for Preventing Conflicts of Interest in

Indonesia Government Procurement

Ronald Hasudungan Sianturi and Ahmad Feri Tanjung

Law Faculty, Prima Indonesia University, Sekip Simpang Sikambing, Medan, Indonesia

Keywords: Beneficial Owners, Government Procurement, Conflicts of Interest, Tender.

Abstract: One of the government procurement principles is the principle of competing among tender participants, so

that job owners are required to identify conflicts of interest between bidders. Conflict identification between

bidders stipulated in Presidential Regulation Number 16 the Year 2018 is concurrent positions between

bidders, but cannot anticipate conflicts of interest through multiple beneficial owners between bidders.

Therefore, this study will describe how the implementation of the principle of the introduction of beneficial

owners in preventing conflicts of interest in the implementation of government procurement. This research is

normative juridical because it examines norms regarding beneficial ownership in government tenders. This

study used a conceptual approach, statue approach, and case approach. The data used are secondary data, such

as laws, books, court decisions, and other documents. Data analysis is carried out qualitatively to obtain

arrangements to prevent conflicts of interest between tender participants through the beneficial owner concept.

The results of the study show that the principle of competitiveness cannot be implemented if the identification

of conflicts of interest is based solely on concurrent positions between bidders. Therefore, identification of

conflicts of interest should also be carried out based on multiple stakeholders through the method of the

declaration of beneficial owners by tender participants.

1 INTRODUCTION

One mode of criminal acts of corruption in

government procurement of goods/services is the

control of several bidders to participate in

government procurement of goods/services. Control

of some of the tender participants is a conspiracy that

can involve or not to procurement workgroup/service

unit. Efforts to prevent control of some bidders from

participating in tenders are through the ethics of

government procurement of goods / services where

one of the ethics of procurement is to avoid and

prevent conflicting interests of related parties

resulting in unfair business competition where one

form of conflict of interest is several business entities

participate in the same Tender / Selection, is

controlled directly or indirectly by the same party,

and / or its share ownership of more than 50% (fifty

percent) is controlled by the same shareholder. In this

case, the procurement workgroup/service unit has the

duty and authority to evaluate conflicts of interest

between bidders through administrative evaluations,

namely evaluations based on data submitted by

bidders such as (a) the contents of company

qualifications such as company name, position,

company organs and ( b) company documents such as

bidders' articles of association. The data that must be

submitted by bidders can anticipate conflicts of

interest between bidders that occur due to direct

control of the company, but the data cannot anticipate

conflicts of interest due to indirect control of the

company.

Control of the company is indirectly carried out

through a chain of beneficial ownership where the

controlling party is not a formal corporate capital

owner (legal owner), but the actual beneficial owner

of the transaction carried out by the corporation

(beneficially owner). One example of a bidder control

case by a beneficial owner is KPPU Decision No. 03

/ KPPU-L / 2018 on the tender for the Road

Reconstruction Preservation and Routine

Maintenance Package Sei Asam - Takaras Simpang

Bridge - Tumbling Talaken at the Work Unit of the

Public Works Office of Central Kalimantan Province

for the 2017 Budget Year. In that case, there were

control of 3 (three) bidders namely PT Mellindo

Bhakti Persadatama (Reported Party II), PT Jaya

Wijaya Cooperation (Reported Party III) and PT

158

Sianturi, R. and Tanjung, A.

Beneﬁcial Owner Identiﬁcation for Preventing Conﬂicts of Interest in Indonesia Government Procurement.

DOI: 10.5220/0009401501580166

In Proceedings of the 1st International Conference on Anti-Corruption and Integrity (ICOACI 2019), pages 158-166

ISBN: 978-989-758-461-9

Margo Umega (Reported Party IV). The control was

carried out by the same person, namely Vino

Oktaviano as the Director of PT Jaya Wijaya

Cooperation (Reported Party III) to arrange Reported

Party II as the winner of the tender while Reported

Party III and Reported IV as companion companies.

In that case, Vino Oktaviano is not the legal owner of

the three companies but the beneficial owner of the

transaction in the tender activities of the three

companies. Cases of controlling bidders by other

beneficial owners are corruption cases in several

procurement packages involving the Permai Group

where Anas Urbaningrum and Nazaruddin are not

formal legal owners but are beneficial owners of

activities carried out by the Group Permai (KPK,

2019).

Regulation regarding the prevention of conspiracy

by participants of government goods/services

conducted by the beneficial owner has not been

regulated in Presidential Regulation No. 16 of 2018

concerning Government Procurement of Goods /

Services. Therefore, the development of laws and

regulations concerning the government procurement

of goods/services is needed. One way to develop laws

and regulations is through legal transplants. Legal

transplant in the form of legal structure from one

country to another has become a trend in the

development of law in various parts of the world. It

has carried out legal transplants from various foreign

legal systems or other countries in the formation of

various laws and regulations. The development of

civilization and international relations has the

consequence that Indonesia must adjust national

legislation to comply with international such as

intellectual property rights are transplanted from

various laws and regulations regarding the protection

of intellectual property rights in accordance with

global standards as a consequence of Indonesia's

participation in the World Trade Organization (WTO)

and the World International Property Organization

(WIPO), legislation concerning anti-money

laundering and terrorist financing in accordance with

the global standards of the anti-money laundering and

terrorism financing regime as a consequence of

Indonesia's membership in The Financial Action Task

Force (FATF).

In addition to transplanting international law into

national law, legal transplants are also carried out

between certain legal regimes in a national legal

system. A concept in a certain outdated legal regime

requires a transplant by adopting a concept from

another legal regime so that the legal objectives can

be achieved. Law Number 12 of 2011 concerning

Formation of Laws and Regulations in Appendix II,

there is the principle of "duidelijke terminologien"

which means that for something that has the same

meaning and meaning, use the same term, whereas for

something that has a different meaning use a different

term. In connection with this study, there are

differences in terms of corporate controllers and

beneficial corporate owners. The corporate controller

is a formal owner of corporate capital (legal owner)

so that it can control the corporation without the

mediation of other parties. In its development,

corporate control can also be carried out by parties

other than the legal owner of the corporation (the

owner of the corporate benefits that controls the

corporation through a beneficial owner chain).

Beneficially owner as company controller is

regulated in Presidential Regulation No. 13 of 2018

concerning the Application of the Principle of

Recognizing the Beneficiary Owner of Corporations

in the Prevention and Eradication of Money

Laundering and Terrorism Funding Criminal Acts

and is not known in Presidential Regulation No. 16 of

2018 concerning Procurement of Goods / Services of

the Government which only recognizes company

controllers carried out by legal owners. Therefore, the

regulation regarding owner beneficially in

Presidential Regulation No. 13 of 2018 concerning

the Application of the Principle of Recognizing

Beneficial Owners of Corporations in the Context of

Prevention and Eradication of Money Laundering and

Terrorism Funding Criminal Acts must be

transplanted into the provisions of government

procurement. The company participating in the tender

by a beneficial owner can be prevented as the

controller of the company participating in the tender

by the legal owner.

Regulations for the prevention of corporate

control have been indirectly regulated through the

beneficial ownership principle, for example, a single

present policy in the banking industry (single present

policy) as stipulated in OJK Regulation Number 39 /

POJK.03 / 2017 concerning Single Ownership of

Indonesian Banking which states that each party can

only be a controlling shareholder in 1 (one) bank. In

this case, the controlling party is the beneficial owner

(not the shareholder) so that the party who is the

beneficial owner of a bank is prohibited from owning

shares/interests in other banks.

The beneficial owner principle is not yet known

in Presidential Regulation No. 16 of 2018 concerning

Procurement of Government Goods / Services.

Provisions related to the beneficially ownership

principle are competitive principles as stipulated in

(a) Article 6 of Presidential Regulation No. 16 of

2018 concerning Government Procurement of Goods

Beneﬁcial Owner Identiﬁcation for Preventing Conﬂicts of Interest in Indonesia Government Procurement

159

/ Services which states that the procurement of

goods/services must be done through fair competition

among as many providers of goods/services that are

equal and meet the requirements, so that

goods/services can be offered competitively and there

are no interventions interfere with the creation of

market mechanisms in the procurement of

goods/services; (b) prevention prevents conflicting

interests of related parties, both directly and

indirectly, resulting in unfair business competition in

the procurement of goods / services as regulated in

Article 7 of Presidential Regulation No. 16 of 2018

concerning Procurement of Government Goods /

Services. The principles of competing and preventing

conflicts of interest in tender activities are regulated

in Presidential Regulation No. 16 of 2018 concerning

Procurement of Goods / Services The government

still considers that the principle of competition and

prevention of conflict of interest between bidders

occurs because the directors, board of commissioners,

or core personnel in a business entity, concurrently as

directors, board of commissioners, or core personnel

in other business entities participating in the same

tender/selection. This is not in line with the principle

of introducing a beneficial owner (beneficially

ownership principle) where the beneficial owner of a

corporation is not limited to the organ or core

personnel of the corporation but the party that

controls and / or the actual beneficial owner of a

corporation. Therefore, so that the principle of

competition can be carried out in tendering activities,

the prevention of conflict of interest between bidders

is not limited to the organ or core personnel who are

concurrently acting as organs or core personnel of

other business entities that participate in the same

tender, but the owner of interests in more than one

bidders participating in the same tender.

The concept of preventing conflicts of interest

between bidders must be changed from a dual

position (either as a business organ or core personnel)

between bidders to become a dual owner of interests

between bidders so that bidders can compete.

Therefore, this study will elaborate on how the

principle of beneficial owners in preventing conflict

of interest in the implementation of tenders.

2 RESEARCH METHODS

This type of research is a normative juridical study

because it examines norms regarding beneficial

ownership in government goods/services tenders. The

approach used in this research is the conceptual

approach, the statutory approach (statue approach),

and the case approach. The conceptual approach is

used to analyze the concept of conflict of interest and

control of bidders by the beneficial owner. The

regulatory approach is used to review the laws and

regulations relating to the control of companies that

are bidders by the legal owner and the beneficial

owner. The case approach is used to analyze the

tender participant control cases by the beneficial

owner.

The data used in this study are secondary data in

the form of laws, books, court decisions, and other

documents. Data collection is carried out through a

literature study and document study. Data analysis

was carried out qualitatively to obtain arrangements

for preventing conflicts of interest between bidders

through the concept of a beneficial owner. Analyze

data through the regulatory approach by comparing

regulations regarding procurement, conflicting

interests, and beneficial owners. Through this

analysis, conclusions can be drawn about how the

principle of beneficial owners prevents conflicts of

interest in procurement.

3 DISCUSSION

3.1 Scope of Beneficiary Owners in

Indonesia

White-collar crime continues to evolve following the

development of human civilization. One of them is

the use of corporations by criminal offenders to hide

and disguise the identity of perpetrators and the

results of criminal acts. The 2014 Financial Action

Task Force (FATF) research on the regulation and

application of beneficial owner information

transparency states that the lack of adequate, accurate

or guaranteed beneficial owner information, and can

be accessed quickly, is utilized by criminal offenders

to conceal (1) identity of the perpetrators of the crime;

(2) the real purpose of opening an account in the name

of a corporation that is used as a "vehicle or media"

for money laundering; and (3) the source or purpose

of using assets from corporations that are allegedly

originating from criminal acts (Kiagus Ahmad

Badaruddin, 2018). There are still many countries that

do not yet have regulations and implement policies on

beneficial owner information transparency, including

Indonesia. The results of the 2015 PPATK research

on the risk of money laundering crimes committed by

corporations are higher than money laundering

crimes committed by individuals with a threat value

of 7.1 compared to 6.74. This shows that Indonesia

needs to immediately strengthen the regulation and

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application of transparency of beneficial owner

information from the corporation. As a follow-up to

the research, the PPATK initiated the preparation of

regulations on beneficial owners until finally

stipulated Presidential Regulation No. 13 of 2018

concerning the Application of the Principle of

Recognizing Benefit Owners for Corporations in the

Prevention and Eradication of Money Laundering and

Terrorism Funding Acts (Kiagus Ahmad Badaruddin,

2018).

Presidential Regulation Number 13 of 2018

concerning Application of the Principle of

Recognizing Beneficiaries from Corporations in the

Context of Prevention and Eradication of Criminal

Acts of Money Laundering and Criminal Funding of

Terrorism is a consequence of Indonesia's

membership in The Asia / Pacific Group on Money

Laundering (APG) which aims to ensure the

adoption, implementation and enforcement of

internationally accepted anti-money laundering and

anti-terrorism funding standards as recommended by

The Financial Action Task Force (FATF).

Beneficiary recommendations from the Financial

Action Task Force (FATF) were transplanted in

Indonesian laws and regulations, particularly in

Presidential Regulation No. 13 of 2018 concerning

the Application of the Principle of Recognizing

Beneficial Owners of Corporations in the Context of

Prevention and Eradication of Criminal Acts of

Money Laundering and Criminal Acts of Funding

Terrorism the definition and scope of the beneficial

owner.

The Financial Action Task Force (FATF)

provides a definition of the Benefit Owner namely

"Beneficial owner refers to the natural person (s) who

ultimately owns or controls a customer and / or the

natural person on whose behalf a transaction is being

conducted. It also includes those who exercise

ultimate control over a legal person or arrangement.

"(The Financial Action Task Force, 2014) FATF

believes that the Beneficiary Owner refers to the party

who actually owns or controls a corporation. The

beneficial owner or controller actually refers to a

situation where ownership/control is carried out

through the ownership chain or through controls other

than direct control. The definition of the beneficial

owner is reflected in Article 1 point 2 of Presidential

Regulation No. 13 of 2018 concerning the

Application of the Principle of Recognizing the

Beneficiary Owner of the Corporation for the

Prevention and Eradication of the Crime of Money

Laundering and the Criminal Act of Funding

Terrorism, namely individuals who can appoint or

terminate directors, councils commissioners,

management, coaches, or supervisors in the

corporation, have the ability to control the

corporation, are entitled to and / or receive benefits

from the corporation directly or indirectly, are the

actual owners of the funds or shares of the corporation

and / or fulfill the criteria referred to the Presidential

Regulation.

The definition of the beneficial owner is the result

of a transplant from TAFT which has the concept that

(a) the beneficial owner is not only limited to formal

ownership of corporate capital in the articles of

association of the corporation, but the actual owner of

the corporation owns and controls the corporation; (b)

the actual beneficial owner of the corporation is an

individual and not a legal entity. Presidential

Regulation No. 13 of 2018 regulates the owners of

corporate benefits, namely a collection of people and

/ or organized wealth, both legal entities and non-

legal entities. The corporation may take the form of a

limited liability company, foundation, association,

cooperative, limited partnership, firm alliance and

other corporate forms.

The beneficial owner of a corporation can be

categorized into 2 (two) types, namely (a) Benefit

Owner who is the owner of Corporate Direct Capital;

or (b) a Benefit Owner who is not a Direct Capital

Owner of a Corporation but has an ownership chain.

The parties which can be categorized as the beneficial

owners for each corporation are as follows:

 Limited Liability Company. The beneficial

owner as legal owners are those who have

shares, voting rights and profits of more than

25% according to the articles of association; or

have the authority to appoint, dismiss and

replace directors and boards of commissioners.

The Beneficiary Owner as a beneficial owner is

the party who has the authority to control the

Limited Liability Company without the

authorization of another party, the actual

beneficiary of the Limited Liability Company

or the actual owner of the shares of Limited

Liability Company.

 Foundation. The beneficial owner as a legal

owner is a party who (a) has an initial wealth of

more than 25% of the capital or (b) Has the

authority to appoint or dismiss the foundation's

management, builder or supervisor. A Benefit

Owner as a beneficial owner is a party who has

(a) authority to control the foundation without

authorization from other parties; (b) The true

beneficiary of the foundation; or (c) The actual

owner of the foundation's capital.;

 Association. The beneficial owner as the legal

owner of the association is the party that has the

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funding source and receives the results of

business activities of more than 25% or has the

authority to appoint or the board and supervisor

of the association. The Beneficiary Owner as

the beneficial owner of the Society is the party

that has the authority to control the association

without the authorization of another party, the

actual beneficiary of the association or the

actual owner of the association's capital.;

 Cooperative (koperasi). The beneficial owner

as the legal owner of the cooperative is the

party that receives the remaining business

proceeds of more than 25% or has the authority

to appoint or dismiss cooperative management

and supervisors. The beneficial owner as of the

cooperative beneficially owner is the party who

has the authority to control the cooperative

without the authorization of another party, the

actual beneficiary of the cooperative or the

actual owner of cooperative capital;

 Limited Partnership. The beneficial owner as a

limited partnership legal owner is a party that

has a paid-in capital and a profit of more than

25%. The beneficial owner as of the

cooperative beneficially owner is the party who

has the authority to control the recommended

alliance without the authorization of another

party, the actual beneficiary of the

recommended alliance, or the actual owner of

the capital of the recommended alliance;

 Firm. The beneficial owner as the firm's legal

owner is the party that has a paid-in capital and

a profit of more than 25%. The beneficial

owner as the beneficial owner of the firm is the

party who has the authority to control the

recommended alliance without the

authorization of the other party, the actual

beneficiary of the recommended alliance or the

true owner of the capital of the recommended

alliance.

 Other corporate forms. The beneficial owner as

the legal owner of other corporate forms is the

party that has a paid-up capital and a profit of

more than 25%. The beneficial owner as a

beneficial owner of other corporate forms is the

party that has the authority to control the

corporation without the authorization of

another party, the actual beneficiary of the

corporation or the actual owner of corporate

capital.

Beneficiaries in Presidential Regulation No. 13 of

2018 concerning the Application of the Principle of

Recognizing Beneficiaries from Corporations in the

Context of Prevention and Eradication of Criminal

Acts of Money Laundering and Criminal Funding of

Terrorism are different from the controllers of

companies that have been regulated in sectoral

regulations, particularly in the financial industry

sector such as:

 The company's controller in the insurance

sector is regulated in Law No. 40 of 2014

concerning Insurance wherein said controller is

a person who directly or indirectly has the

ability to determine the directors, the board of

commissioners, or the equivalent of the

directors or board of commissioners in a legal

entity in the form of a cooperative or joint

venture and / or influence the actions of the

directors, the board of commissioners , or the

equivalent of a director or board of

commissioners in a legal entity in the form of a

cooperative or joint venture.

 Controlling companies in the banking sector,

namely (a) those who own shares of at least

25% or (b) have shared below 25% but can be

proven to have controlled the company. Each

party can only control one bank as regulated in

Article 1 point (2) of the Financial Services

Authority Regulation Number 39 / POJK.03 /

2017 concerning Single Ownership of

Indonesian Banking.

 Controlling companies in the capital market

sector are known as controlling shareholders,

namely (1) parties who own shares of at least

20% of all shares that have a vote; or (b) parties

who own shares below 20% of all shares that

have a voice but can control the company in the

capital market. This is regulated in Article 1

point 7 of OJK Regulation Number 57 /

POJK.04 / 2017 Regarding the Implementation

of Governance of Securities Companies

Conducting Business Activities as

Underwriters and Brokers.

The company controller in the insurance, banking

and capital market sectors is a party that can formally

control the corporation due to capital ownership

factors so that the corporate controller can be a legal

entity or an individual person. This is different from

the stakeholder because the owner is an individual as

the true owner of a corporation through the ownership

chain and can control the corporation even though

formally it is not the owner of the corporation's capital

directly.

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3.2 Principles of Recognition of

Beneficiary Owners in Preventing

Conflicts of Interest in the

Implementation of Government

Tenders

One of the procurement principles set out in

Presidential Regulation No. 16 of 2018 is the

principle of competition which means the

procurement of goods/services must be done through

fair competition among as many providers of

goods/services that are equal and meet the

requirements, so that goods/services can be offered

competitively and offered no intervention interferes

with the creation of market mechanisms in the

procurement of goods/services. The principle of

competition is implemented through procurement

ethics, namely (a) not affecting each other directly or

indirectly, which results in unfair business

competition. And (b) avoid and prevent conflicting

interests of related parties, both directly and

indirectly, resulting in unfair business competition in

the procurement of goods/services. One form of

conflict of interest that results in unfair business

competition in the process of a tender is that there are

several business entities that participate in the same

Tender / Selection, controlled either directly or

indirectly by the same party.

Several business entities that participate in the

tender are directly or indirectly controlled by the

same party, as can be seen from several cases that

have been decided by the Business Competition

Supervisory Commission (KPPU) in Indonesia. As an

institution that has the task of supervising and

enforcing laws prohibiting monopolistic practices

and / or unfair business competition, KPPU can

enforce law against unfair business competition in

government goods / services tendering activities.

Government goods / services tendering activities are

the authority of KPPU based on Article 22 of Law No.

5 of 1999 concerning Prohibition of Monopolistic

Practices and Unfair Business Competition which

states that "Business actors are prohibited from

conspiring with other parties to regulate and or

determine tender winners so as to result in unfair

business competition". The conspiracy can occur

because (a) Vertical conspiracy is a collusion that

occurs between several tender participants to

determine the winner of the tender where the

conspiracy does not involve the work owner; (b)

Horizontal collusion is collusion between the work

owner through the Procurement Working Group and

one of the tender participants to determine one of the

tender participants as the winner of the tender; and (c)

Combined collusion is collusion between several

bidders and the work owner to determine one of the

bidders as the winner of the tender.

The KPPU's decision regarding the conspiracy in

determining the winning bidder can be seen in several

cases such as:

 Tender for rehabilitation / maintenance of the

East Ring Road of Prabumulih City, South

Sumatra Province, 2013 Fiscal Year, where the

reported party is the Working Group for

Government Procurement of Goods / Services,

National Road Work Unit and Gorontalo

Province SKPD for 2014 Budget Year

(Reported I), PT Kakas Karya (Reported II), PT

Nikita Raya (Reported Party III) and PT Maesa

Jaya (Reported Party IV). KPPU through

Decision Number 11 / KPPU-L / 2015 states

that the Working Group on Procurement of

Goods / Services of the Government of the

National Road Implementation Unit and

Gorontalo Province SKPD for the 2014 Budget

Year (Reported I), PT Kakas Karya (Reported

II), PT Nikita Raya (Reported III) and PT

Maesa Jaya (Reported IV) violated Article 22

of Law No. 5 of 1999 concerning Prohibition

of Monopolistic Practices and Unfair Business

Competition. The conspiracy that occurred was

a joint conspiracy because it involved several

bidders and involved the work owner. In this

case, PT Kakas Karya (Reported Party II), PT

Nikita Raya (Reported Party III) and PT Maesa

Jaya (Reported Party IV) were controlled by

parties who were not concurrent positions

between the bidders, but the stakeholders of the

three companies participating in the tender. In

the tender process, the Working Group found

no conflicts of interest between bidders

because there were no concurrent positions

between bidders.

 Tender for BTS. Riau-Merlung-Sp. Niam

APBN Fiscal Year 2016 where the parties to be

reported are PT Karya Dharma Jambi Persada

(Reported I), PT Hanro (Reported II), PT Bina

Uli (Reported III) and Working Group for

Procurement of Goods / Services Working Unit

for the Implementation of National Road

Region I Jambi Province Year 2016 Budget

(Reported Party IV). KPPU through Decision

Number 18 / KPPU-I / 2016 states that PT

Karya Dharma Jambi Persada (Reported I), PT

Hanro (Reported II), PT Bina Uli (Reported III)

proved to violate Article 22 of Law No. 5 of

1999 concerning the Prohibition of

Monopolistic Practices and Unfair Business

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163

Competition, but the Working Group on

Procurement of Goods / Services of the Work

Unit for the Implementation of the National

Road Region I of Jambi Province 2016 Fiscal

Year (Reported IV) was not proven to violate

Article 22 of Law No. 5 of 1999 concerning

Prohibition of Monopolistic Practices and

Unfair Business Competition. The conspiracy

that occurred was horizontal collusion, that is,

collusion involving several bidders and not

involving the work owner. In this case, PT

Karya Dharma Jambi Persada (Reported I), PT

Hanro (Reported II), PT Bina Uli (Reported III)

are controlled by parties who are not concurrent

positions between the bidders, but the

stakeholders of the three companies

participating in the tender. In the tender

process, the Working Group found no conflicts

of interest between bidders because there were

no concurrent positions between bidders.

Many cases of violations of the principle of

competition and ethics affect each other, and

conflicting interests in tenders require alternative

methods to anticipate the beneficial owner in several

business entities that participate in government

goods/services tenders. The anticipation of conflicts

of interest between bidders is currently only based on

the statutes of the legal entity bidders where

Directors, Commissioners or core personnel in a

business entity, concurrently serving as Directors,

Board of Commissioners, or core personnel at other

business entities that participate in a Tender /

Selection the same one. This cannot reach a conflict

of interest between bidders because it is controlled by

the same party, the beneficial owner.

The beneficial owner controls a legal entity

through a multi-layered benefit ownership chain

mechanism so that it cannot be anticipated through a

prohibition of conflicting ownership of the legal

entity's organs recorded in the articles of association.

Therefore, tender participants need to declare the

beneficial owner of the legal entity as a form of

anticipation of legal entity control which results in

unfair business competition.

Obligations of bidders to make a declaration of the

beneficial owner are not regulated in Presidential

Regulation No. 16 of 2018 concerning Procurement

of Government Goods / Services. Nevertheless, the

implementation of tenders must also comply with

relevant laws and regulations as an implementation of

the principle of accountability, which must be in

accordance with the laws and regulations, including

Presidential Regulation No. 13 of 2018 concerning

the Application of the Principle of Recognizing

Beneficiaries from Corporations in the Context of

Prevention and Eradication of Money Laundering and

Criminal Acts Terrorism Funding where each

corporation must declare the beneficial owner of the

corporation. Therefore, every corporation

participating in a tender for government

goods/services has an obligation to declare the

beneficial owner where the information on the

beneficial owner can be used by WG ULP in

conducting evaluations to prevent bidder conspiracy

controlled by the beneficial owner.

Article 106 Presidential Regulation No. 54 of

2010 and its amendments have required that

government procurement of goods/services be carried

out electronically through the Electronic Procurement

System (SPSE) which has been effective since 2015.

Every company that will participate in a tender is

required to have an account by registering as a

provider. In doing the registration-required

information about company data such as name,

position, company organs (management and owner of

the company). At the time of registration to obtain the

account information was obtained regarding the

official management and owner of the company (legal

owner) so that it can be used to anticipate conflicts of

interest between bidders as stipulated in Article 7

paragraph (2) of Presidential Regulation No. 16 of

2018, namely directors, boards of commissioners, or

core personnel in a business entity, concurrently as

directors, boards of commissioners, or core personnel

in other business entities that participate in the same

Tender / Selection.

The data submitted by the bidders can formally

identify the management and owner of the company

(legal owner) but cannot identify the beneficial owner

of the tender participant (beneficial owner).

Obtaining information about the beneficial owner of

the tender participant can be done through 2 (two)

methods:

 Information Exchange Method where the

procurement workgroup/service unit as the

requesting agency is the beneficial owner of the

information to the authority. Through this

method, the data used by the procurement

workgroup/service unit is not updated.

However, this method has drawbacks such as

(a) the obligation to declare the beneficial

owner which came into force in 2018 so that

the number of corporations providing the

beneficial owner data is very low; (b) the

minimal amount of resources from the

competent authority to fulfill data requests

from all tender activities in Indonesia.

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 The method of the declaration by bidders in

SPSE where bidders are required to make a

declaration when registering as a provider or

when registering as an auction participant in a

tender package. This method has the advantage

that every corporation participating in a tender

is obliged to declare the beneficial owner so

that the corporation that does not declare the

corporation cannot enter the tender. However,

this method has a weakness if the data of the

beneficial owner of the corporation provided is

different from the data submitted by the

corporation in the Corporate Administrative

Service System.

 According to the author, a better method used

for the introduction of the beneficial owner is

the declaration method by the bidders in SPSE

with the consideration that (a) the procurement

workgroup/service unit has a very limited

duration for evaluating bids, including

evaluating the beneficial owner of each bidder,

so the data of the beneficial owner must be

immediately accessible so that the procurement

workgroup/service unit; (b) the number of

corporations that have declared benefit owners

is very low; (c) the amount of data of owners of

corporation benefits that have not been verified

and which has not been identified is still very

high; (c) the minimal amount of resources from

the competent authority to fulfill data requests

from all tender activities in Indonesia.

4 CONCLUSIONS

Based on the description above, it can be concluded

that the principle of competition in government

goods/service tendering activities can be

implemented if there is no conflict of interests

between bidders. Therefore, the work owner is

required to identify conflicts of interest between

bidders. Identification of conflicts of interest in

government procurement of goods / services tender

activities in Presidential Regulation No. 16 of 2018

concerning Government procurement of goods /

services is different from the identification of the

beneficial owner in Presidential Regulation No. 13 of

2018 concerning the Application of the Principle of

Recognizing the Beneficiary Owners of Corporations

in the Prevention and Eradication of Money

Laundering and Terrorism Funding Crimes.

Identification of conflicts of interest in government

procurement of goods/services tenders in Presidential

Regulation Number 16 of 2018 concerning

Procurement of Goods / Services The Government

focuses on dual positions between bidders so that job

owners cannot identify conflicting interests that arise

through the chain of stakeholder. Therefore,

identification of conflicts of interest in the tender for

government procurement of goods / services should

be carried out through identification of stakeholders

as regulated in Presidential Regulation No. 13 of 2018

concerning the Application of the Principle of

Recognizing Beneficiaries from Corporations in the

Context of Prevention and Eradication of Money

Laundering and Criminal Acts Terrorism Funding. In

this case, the prohibition of participating in the same

prohibition on bidding is not only carried out on

concurrent positions between bidders but also dual

owner interests between bidders. The identification of

multiple stakeholders can be made through the

method of information exchange or the declaration

method, but given the limited time of the tender and

the source of data from the competent authority and

the quality and quantity of the data of the beneficial

owner, it is better to identify the duplicate beneficial

owner using the declaration method by the tender

participant.

ACKNOWLEDGMENTS

The author would like to thank The Ministry of

Research, Technology and Higher Education of

Republic Indonesia for supporting this research grant

through The Fundamental Research Scheme in 2019.

REFERENCES

Indonesia, Law Number 5 of 1999 concerning the

Prohibition of Monopolistic Practices and Unfair

Business Competition

Indonesia, Law Number 12 of 2011 concerning Formation

of Regulations and Regulations

Indonesia, Law Number 40 of 2014 concerning Insurance.

Indonesia, Presidential Regulation Number 13 of 2018

concerning the Application of the Principle of

Recognizing Beneficiaries from Corporations in the

Context of Prevention and Eradication of Criminal Acts

of Money Laundering and Criminal Funding of

Terrorism.

Indonesia, Presidential Regulation Number 16 the Year

2018 concerning Procurement of Government Goods /

Services.

Indonesia, Financial Services Authority Regulation (OJK)

Number 39 / POJK.03 / 2017 concerning Single

Ownership of Indonesian Banking

Beneﬁcial Owner Identiﬁcation for Preventing Conﬂicts of Interest in Indonesia Government Procurement

165

Indonesia, Regulation of the Financial Services Authority

(OJK) Number 57 / POJK.04 / 2017 Regarding the

Implementation of Governance of Securities

Companies Conducting Business Activities as

Underwriters and Brokers.

The decision of the Business Competition Supervisory

Commission (KPPU) Number 11 / KPPU-L / 2015.

The decision of the Business Competition Supervisory

Commission (KPPU) Number 18 / KPPU-I / 2016.

The decision of the Business Competition Supervisory

Commission (KPPU) Number 03 / KPPU-L / 2018.

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