Economic Analysis of Law: The Optimization of Sanctions and Reformulation of Criminal Policy on Corruption Regarding State Financial Losses

Abstract

This study employs an Economic Analysis of Law (EAL) to evaluate Indonesia's criminal policy against corruption, particularly concerning state financial losses. It highlights that the current sanctioning system, as stipulated in Articles 2 and 3 of the Corruption Eradication Law, is sub-optimal due to its shift to a material delict, which increases enforcement costs and lowers the probability of punishment. This leads to a diminished deterrent effect as the expected cost of crime remains low for rational actors. The research uses normative legal methods, analyzing primary, secondary, and tertiary legal materials through statutory and conceptual approaches. Findings reveal inefficiencies in current provisions: Article 4 disincentivizes asset recovery, and Article 18's limited restitution fails to seize full illicit gains, contributing to an economically profitable perception of corruption. The paper proposes reforms, including reclassifying Articles 2 and 3 as formal delicts, treating state financial losses as civil debt, mandating full disgorgement of profits, and establishing optimal fines based on a multiplier effect. This reframes imprisonment as a secondary sanction, aiming to transform the law into an efficient tool for deterrence and asset recovery, thereby minimizing social costs and maximizing recovery of state assets.