Final Exam

MM5008 Business Ethics, Law, and Sustainability

Business Leadership Executive MBA,
School of Business and Management (SBM), ITB.
Syndicate 8:
• Richiditya Hindami - 29323426
• Rizkyta Cahya Maghfira - 29323405
• Robby Hertanto - 29323392
• Rosiana Irta Purnomo - 29323390
• Rudi Prasetio - 29323391
• Satria Budi Harsono - 29323387
• Satrio Adhipranoyo - 29323413
• Shinta Siti Hajar - 29323420
 Question 1:
Good Corporate Governance
a. What does “Good Corporate Governance” mean to you?

b. If you had the chance to improve the good corporate governance and/or anti corruption measures in your
current/former company/workplace, what measures would you take?

c. Please state the current condition and how you would alter them (choose any company of any of your
group member).?
In Our Opinion…
implementation of good corporate governance (GCG) in a
company is a system that promotes transparency, accountability,
and ethical behavior. We strongly believe that these values can be
achieved by balancing each of the company's stakeholder, key
components that govern the GCG including but not limited to: (1) While, based on..
shareholders; (2) board of management; (3) government; (4)
Rr. Shanti Adrina Rahayu, International Journal of Economics,
financiers; and (5) community. These actions will lead to the
Business and Accounting Research (IJEBAR):
sustainable business process and strengthening the business value “Good corporate governance is an arrangement of performance event that
in the long run. enables company to run and control the company. The Indonesian Institute for
Corporate Governance (IICG) defines "that corporate governance is an

As such, corporate governance encompasses practically every
sphere of management, from action plans and internal controls to
performance measurement and corporate disclosure.
organizational structure that will be applied to run a company, which aims to be
able to improve the company's performance and the value of share ownership or
investors in the long term using permanent attention to the interests of investors
using other trustee.”
In Healthcare Industry,
it is a common practice to have several referral
laboratory to give the utmost service to the patients;
however, several referral laboratory tried to win the
samples by giving monetary compensation to the
referring institution. This commission is supposedly
treated as an extra cashback to the institution, but in
practice is often given to the individual laboratory
technician in the laboratory.
In order to prevent this, the institution added a specific
clause in the legal agreement and tiered approval for
choosing the referral laboratory but we think we can
further improve by:
1. Establish a system to promote impartiality in the company.
We suggest that the top level management to create a commitment and establish a code of
conduct regarding ethical practice in business. This code of conduct should be socialized
frequently, agreed by all person working in the business shown by a written
documentation, and accompanied by establishment of a safe and confidential
whistleblowing system.
2. Establish a vendor appraisal system and transparently socialize the
criteria to the third party to encourage the adoption of a similar
ethical standard.
The third party vendors should be compared and appointed by the management. This
appointment should be reviewed in a set timeframe and in a transparent manner.
 Question 2: Study Case
● You are the President Director of a limited liability company in Indonesia.
● Your company is in the middle of a major property development project, where you have sold 60% of the property before any
construction even begins.
● The General Meeting of Shareholders passed a resolution that the company should adhere to strict anti corruption guidelines,
following the anti-corruption laws of Indonesia.
● Your shareholders also expect profit to rise. The problems are:

a. The project has been delayed because of problems in land
acquisition. The land officer will not conduct their measurements
despite all the documents you have given to fulfill the terms for a
measurement. Your deadline to finish land acquisition is nearing or
otherwise the project will be late. You heard from your notary that the
usual practice is to pay for extra, non-regulated expenses for the land
officers to get the measurements done and expedite the process. What
will you do? If you have any alternative actions, please explain.
b. If you decide to pay the extra-expenses on
the company's budget, does the shareholder
have any recourse against you personally
(civilly and criminally)? Consider the
articles of Company Law No. 40/2007.
There are 3 alternatives, and we choose option 2
We choose to use 3rd party agency or services to settle the land issue.
Based on the risk level rank:
To strengthen our opinion to BoD, we provide data regarding the cost of
(Lowest Risk) Although actions with officials may given the lowest
using 3rd party agency or service compared to the cost of losing money
Official - Surveyor risk, it would take a longer time to settle the land
due to time extension of the project.
acquisition.
In the process of tender or choosing whoever agency we are going to use
3rd Party However pay extra charge directly to officers would
later, we need to do a comparison in between, before making any
risk to non-adherence to anti corruption law.
Pay Directly decision.
(Highest Risk) We should choose the most profitable vendor, in terms of both cost of
service and work outputs.
This figure shows how our choices compare to
regular action. Maybe we will see that the costs
incurred will be greater, but in time we get certainty
so we can avoid losses due to fines with uncertain
settlement times if we use regular/official methods.

The Tender Process

Provide Calculation Create a Tender Final
Create a tender with a minimum Select the most cost effective
Appoint someone or Calculate the estimated direct and
vendor, negotiate, and document the
indirect cost possibly incurred by the of three third party vendors with
team in-charge project delay. the budget threshold of the process acknowledged by
possible lost. management stakeholders
If we decide to pay, does the shareholder have any recourse against you personally (civilly and criminally)?

Ironically, yes.
The shareholder by Law may bring charges against the Director if qualified or deemed to commit in terms of civilly committed against the
Code of Civil Law (art. 1365) and in terms of criminally committed deemed to commit against the Criminal Code; for example: embezzle
the Company's fund (art. 372), fraud (art. 378).

Based on Company Law / UUPT no. 40 /2007:

Article 97
(6) “Atas nama Perseroan, pemegang saham yang mewakili paling sedikit 1/10 (satu persepuluh) bagian dari jumlah seluruh saham
dengan hak suara dapat mengajukan gugatan melalui pengadilan negeri terhadap anggota Direksi yang karena kesalahan atau
kelalaiannya menimbulkan kerugian pada Perseroan. “

However, based on Article 97 verse 5

(5) Anggota Direksi tidak dapat dipertanggungjawabkan atas kerugian sebagaimana dimaksud
pada ayat (3) apabila dapat membuktikan:
a. kerugian tersebut bukan karena kesalahan atau kelalaiannya;
b. telah melakukan pengurusan dengan itikad baik dan kehati-hatian untuk kepentingan dan sesuai dengan maksud dan
tujuan Perseroan;
c. tidak mempunyai benturan kepentingan baik langsung maupun tidak langsung atas tindakan pengurusan yang
mengakibatkan kerugian; dan
d. telah mengambil tindakan untuk mencegah timbul atau berlanjutnya kerugian tersebut

Yang dimaksud dengan “mengambil tindakan untuk mencegah timbul atau berlanjutnya kerugian” termasuk juga langkah-langkah untuk memperoleh
informasi mengenai tindakan pengurusan yang dapat mengakibatkan kerugian, antara lain melalui forum rapat Direksi.
 Question 3: Study Case
Strange Bedfellows
Please answer the questions provided in the Strange Bedfellows slides as discussed during class. The
questions are:
a. What were the risks the Craigslist founders identified in the eBay share purchase?

b. What was the legal tools used by Craigslist Founders and E-Bay to manage their
risks in entering into a relationships?
c. In the end, was there any breach of fiduciary duty and/or business judgement tule
from the Board of Directors of Craiglist
The risks the Craigslist founders identified in the eBay
share purchase are:
➔ eBay hostile takeover
➔ Possible leakage on Non Public Information
➔ Shareholder rights of voting
➔ External share buyers
➔ eBay could gaining a controlling stake
The used Legal Tools
Risk(s)
1. eBay hostile takeover
2. Force eBay to honor the
agreement
3. Leakage Non Public
Information
Shareholder right of voting
External buyers (pre-emptive right)
Prevent gaining a controlling stake
Legal Tool(s) How the tool manage the risk
Shareholder Agreement through 5 points of that make sure eBay and Craigslist has balanced power.
This agreement outlined the rights and responsibilities of each party, providing a legal
framework for their relationship.
Shareholder Purchase Regulate voting accumulations for shareholders
Agreement
Right of First Refusal As an “inducement” to persuade eBay to enter into a new “right of first refusal”
Agreement agreement, Craigslist’s founders authorized the issuance of one “reorganization share” in
Craigslist for every five shares owned by a shareholder who agrees to the “right of first
refusal” agreement
Poison Pill Provision Poison Pill Provision: Craigslist tried to adopt a poison pill provision to fend off a move
by eBay1. This is a defensive strategy used by corporations to prevent or discourage
hostile takeovers
In the end,
Was there any breach of fiduciary duty and or
business rule from the board of directors of
Craigslist?

In our opinion, The Poisonous Pill in Craigslist and ebay

yes. case are...
Because of their “Poisonous Pill” plan. - the Staggered Board Amendments,
- the Rights Plan, and
Poisonous Pill is… - the ROFR/Dilutive Issuance
… a shareholder rights plan. It is a type of
defensive tactic used by a corporation's board of
directors against a takeover.
In addition, the Poisonous Pill that have been done by Craiglists
are:
1. Shareholder can buy share in target company at discounted price after activation of “triggers”,
2. Implementing a staggered board that made it impossible for eBay to unilaterally elect a director to the craigslist
board,
3. To devalue investment in target company to become expensive and dissuade the acquiring company going
forward with acquisition,
4. Seeking to obtain a right of first refusal in craigslist's favor over the craigslist shares eBay owns by offering to
issue one new share of craigslist stock in exchange for every five shares over which any craigslist stockholder
granted a right of first refusal in craigslist's favor,
5. Which will Restricted eBay from purchasing additional craigslist shares and hampered eBay's ability to freely
sell the craigslist shares it owned to third parties.
 Question 4:
Antitrust Law
Observe and Identify an example of practice by one or more companies
that you think might violate Antitrust Law in Indonesia

Brief Summary:
There have been public complaints over parking
payments at Lippo’s public facilities, such as Lippo
Malls and Siloam Hospitals, where visitors [are
permitted] to use only the OVO app to pay parking fees.
OVO as a digital payment product of PT Visionet
International, the Lippo Group digital financial services
subsidiary. This act was done by PT. Sky Parking
Indonesia, which also subsidiary of the Lippo Group.
OVO and Lippo Group
Analysis:
● The use of a single digital wallet in parking payments is deemed as a practice of monopoly and unfair
business competition according to Law Number 5 of 1999 concerning the Prohibition of Monopolistic
Practices and Unfair Business Competition.
● The law prohibited to control the production or marketing of goods or services that may result in
monopolistic practices and unfair business competition, as outlined in Law Number 5 of 1999 Article 17
paragraph (2) letter b.
● This can lead to other business entities being unable to enter into competition for the same goods or
services.
 Literary Preview
Farida, I., Zubaedah, R., & Apriani, R. (2020). DINAMIKA PRAKTIK PEMBAYARAN PARKIR MENGGUNAKAN SATU DOMPET DIGITAL. Singaperbangsa Law
Review (SILREV), 1(1), 127-143.

Lubis, A. F., Anggraini, A. M. T., Toha, K., Kagramanto, L. B., Hawin, M., Sirait, N. N., Prananingtyas, P., Sukarmi, Maarif, S., & Silalahi, U. (2017). Buku Teks Hukum
Persaingan Usaha Edisi Kedua. Komisi Pengawas Persaingan Usaha.

Rahayu, S. A. (2021). The Effect Of Good Corporate Governance On The Profitability Of Manufacturing Companies Listed On The Indonesia Stock Exchange 2016-2020.
International Journal of Economics, Business and Accounting Research (IJEBAR), 5(3), 2195-2207.

The Jakarta Post. (2019, August 28). Competition body probes OVO over alleged digital payment monopoly. Retrieved from:
https://www.thejakartapost.com/news/2019/08/28/competition-body-probes-ovo-over-alleged-digital-payment-monopoly.html

UNDANG-UNDANG REPUBLIK INDONESIA NOMOR 40 TAHUN 2007 TENTANG PERSEROAN TERBATAS

Kitab Undang-undang Hukum Perdata.

Kitab Undang-undang Hukum Pidana.