Predictive Policing and Corporate Governance-Reframing Business Judgment Rule as a Preventive Framework for Corruption in Indonesian State-Owned Enterprises

Adhary Mahaputra, Muhammad Mustofa, Elvia Shauki, Zulkarnein Koto

Indonesian National Police College, University of Indonesia

The criminalization of business decisions in Indonesian state-owned enterprises (SOEs) remains a critical challenge in public corporate governance. Enforcement practices dominated by retrospective evaluation frequently blur the boundary between legitimate business risk and corrupt conduct, relegating the Business Judgment Rule (BJR) to an ex post defensive doctrine rather than an effective mechanism for protecting managerial discretion. This condition not only undermines legal certainty but also fosters excessive risk aversion and strategic decision avoidance among SOE directors. This article seeks to reposition the Business Judgment Rule from a defensive liability doctrine to a preventive framework grounded in predictive policing within SOE governance. Employing a qualitative design that combines normative legal analysis with SOE case studies and cross-stakeholder interviews, including SOE management, law enforcement officials, legal scholars, and business actors the study applies thematic analysis to examine relationships between business logic, investigative logic, and corruption prevention mechanisms. The findings yield three principal insights. First, BJR is currently ineffective because it relies on post-event assessment and fails to function as a boundary-setting mechanism between business risk and abuse of discretion. Second, a persistent rationality conflict exists between business logics emphasizing efficiency and innovation and investigative logics oriented toward formal compliance and prosecution. Third, risk-analytics–based early warning systems enable objective verification of directors’ good faith and duty of care prior to execution of strategic decisions. The article contributes by advancing the model of Predictive Business Judgment Governance, which integrates BJR principles with predictive policing capacities as an institutional corruption prevention architecture. This model positions policing institutions as preventive governance actors and offers a policy reform pathway for strengthening accountability while preserving SOE effectiveness and innovation.

Article link https://www.asianinstituteofresearch.org/JSParchives/predictive-policing-and-corporate-governance-reframing-business-judgment-rule-as-a-preventive-framework-for-corruption-in-indonesian-state-owned-enterprises