Purpose: This study examines why labor inspection has failed to detect and deter occupational safety compliance fraud, the practice of maintaining safety documentation for audit purposes without genuine implementation, among manufacturing firms in Batam's Special Economic Zone, and identifies the legal and structural barriers behind this gap.

Research Methodology: The research adopts a socio-legal approach combining statutory, conceptual, and sociological methods. Data were collected through document analysis of labor legislation and inspection reports, supplemented by field interviews with labor inspectors, workers, and company representatives. Data were analyzed qualitatively using a descriptive-analytical technique.

Results: Enforcement of occupational safety norms remains largely symbolic. Limited inspectorate staffing, weak coordination with criminal justice authorities, and a persistent employer perception that violations are purely administrative allow compliance fraud, cosmetic documentation produced solely for audits, to persist unchecked. Preventive and repressive inspection functions are underused, and criminal sanctions for fatal violations are rarely pursued.

Conclusions: A reconstructed enforcement model combining strict corporate liability, an expanded investigator mandate for inspectors, and digitized reporting can convert cosmetic compliance into substantive protection.

Limitations: The study is confined to Batam's industrial sector and relies on a limited informant pool.

Contributions: The research contributes a synchronization framework linking labor law, criminal liability, and inspection practice, relevant to other special economic zones facing similar compliance fraud dynamics.