When 'Just Doing Business' Becomes a Criminal Defense

Indonesia’s tech sector continues to be dogged by corruption cases that some have labeled questionable, with the Tanihub affair now moving into its defense phase. ^[1] Several former executives of a state-owned venture capital firm have delivered their defense pleas in the case, ^[2] and at the center of those pleas sits a phrase more familiar to corporate boardrooms than criminal courtrooms: the business judgment rule. ^[3]

The business judgment rule, for the uninitiated, is the legal doctrine that says directors and officers who make decisions in good faith, on an informed basis, and in the best interests of the company should not be second-guessed by courts. It is, in other words, the legal equivalent of “I was just doing my job.”

Which raises the question that has tugged at this fake tech journalist since the first hearing: what happens when doing business lands you in jail? ^[4]

I have attended six of these hearings. Six. Over two months. ^[5] That is six more court sessions than any reasonable person should have to sit through on a sector that, until recently, was mostly associated with pitch decks and down rounds. The proceedings have been, by all accounts, an education in how a state-backed investment vehicle can become a courtroom exhibit.

The defense’s invocation of the business judgment rule is notable because it implies that the decisions in question were, in fact, business decisions — made by people whose job was to make business decisions — and that the criminal law should therefore step back and let corporate law handle it. Whether the court agrees is, of course, the entire trial.

But the broader question is what this case is doing to the ecosystem. An investor interviewed about the proceedings warned that the one thing investors fear most is uncertainty. ^[6] Not bad deals. Not down rounds. Not even the occasional fraud. Uncertainty.

And a corruption trial against former state-owned VC executives, in which the defense is “we were just doing business,” is, by any measure, a great deal of uncertainty.

The investor’s broader point was that Indonesia’s tech sector is “just finishing its first cycle,” and that the outcome of this case will shape the next one. ^[7] That is a generous framing. The sector is not finishing a cycle so much as it is watching a state-backed experiment in venture capital get audited in public, in real time, by a court that has no particular expertise in venture capital and a defense team that has decided the best available argument is “trust us, we knew what we were doing.”

To which the appropriate response is: that is precisely what the trial is trying to determine.

The business judgment rule works well in Delaware. It works less well in jurisdictions where the “business” in question involved state money, state mandates, and state-appointed executives. The rule presumes good faith. Corruption cases, by definition, allege the absence of good faith. The two doctrines are not, as the defense seems to suggest, complementary. They are in tension.

And yet here we are. Six hearings in. A sector on trial alongside its former backers. ^[8] An investor warning that uncertainty will chill the next fundraise. A defense team arguing that the decisions were just business. And a fake tech journalist — me — wondering, with each passing hearing, what exactly we are all doing here.

The answer, for now, is watching. Watching a state-owned venture capital experiment get cross-examined. Watching the business judgment rule get tested in a forum that has no particular patience for boardroom abstractions. Watching a sector that was supposed to be the future of Indonesian innovation get treated, in court, as a crime scene.

Make of that what you will.