Nunun Nurbaetie’s conviction on Wednesday for bribing legislators in the selection of a central bank official marks
a milestone in the epic case, but it still leaves the most pressing questions unanswered.
Who put up the money, and how did it benefit them to have Miranda Goeltom as senior deputy
governor of Bank Indonesia?
High-profile graft defendant, Nunun Nurbaeti, was sentenced to two-and-a-half years in prison on Wednesday for
bribing dozens of lawmakers to vote for Miranda S. Goeltom as the central bank’s senior deputy governor in 2004.
Presiding judge Sudjatmiko of the Jakarta Corruption Court said in the verdict that the businesswoman was proven
guilty as charged for violating Article 5 (1) b of the 2001 Corruption Law on bribing public officials.
“The defendant is proven guilty as charged,” Sudjatmiko said as quoted by kompas.com.
Aside from her prison sentence, the wife of former deputy National Police chief and politician Adang Daradjatun
must also pay Rp 150 million in fines, or serve an additional three months in prison.
Prosecutors from the Corruption Eradication Commission (KPK) had sought a four-year prison term for the businesswoman,
along with Rp 200 million in fines, or an additional four months in prison. (asa)
Socialite Nunun Nurbaeti is in hospital after being sentenced to two-and-a-half-years in prison for bribery on
Wednesday, her lawyer confirmed.
Ina Rahman, one of the lawyers who represent the businesswoman, told reporters at the Jakarta Corruption Court
that her client was rushed to Abdi Waluyo Hospital after suffering “shock” over the judges’ verdict against her.
“She was distressed by the verdict,” Ina said, as quoted by tribunnews.com.
A former fugitive, Nunun was rushed to hospital several times during questioning by investigators and throughout
previous court hearings, claiming “shock and physical exhaustion” as the reasons.
She expected to be acquitted, her lawyers previously said.
But Nunun was found guilty as charged for violating Article 5(1)b of the 2001 Corruption Law on bribing public
officials.
She was sentenced to two years and six months in jail on for
bribing dozens of lawmakers to swing the vote for Miranda S. Goeltom as the central bank’s senior
deputy governor in 2004.
The wife of former deputy National Police chief and politician Adang Daradjatun must also pay Rp 150 million in
fines or serve an additional three months in prison.
Prosecutors from the Corruption Eradication Commission (KPK) had sought a four-year prison term for the businesswoman,
along with Rp 200 million in fines, or an additional four months in prison. (asa)
Anas Urbaningrum
Democratic Party Chairman
Andi Mallarangeng
Sports and Youth Minister Andi Mallarangeng
Corruption Eradication Commission (KPK) leaders are split over a plan to arrest Democratic Party chairman Anas
Urbaningrum and Sports and Youth Minister Andi Mallarangeng, an internal source at the party says.
KPK chief Abraham Samad has reportedly issued a warrant to arrest Anas and Andi because both have been named suspects
in the SEA Games graft scandal.
However, KPK deputies Bambang Widjojanto and Busyro Muqoddas refused to sign the warrant.
“Bambang and Busyro suggested that the KPK delay the arrest and refused to sign the warrant,” the source, who declined
to be named, said Thursday.
The source said that a meeting in Cikeas, West Java, on Tuesday, of party elite members of the Democratic Party
including its chief patron President Susilo Bambang Yudhoyono, was aimed to discuss the antigraft body’s plan to
arrest the two politicians.
Abraham said that this was false, and that the KPK leaders remained undivided.
“We are still united,” he said.
Abraham also dismissed as false a rumor that the commission was waiting for a nod from the State Palace to arrest
both of the ruling party’s senior officials.
“The arrest has nothing to do with the palace’s approval. The KPK is an independent body that needs [at least]
two kinds of proper evidence before naming someone a suspect,” Abraham said, adding that the KPK was still studying
the case.
Several Democratic Party elite members, including party deputy secretary-general Angelina Sondakh and former party
treasurer Muhammad Nazaruddin, are implicated in the prolonged graft case, after sports and youth ministry secretary
Wafid Muharram was caught red-handed last year by the KPK while accepting bribes from businessman Muhammad El Idris
and middleman Mindo Rosalina in exchange for their awarding a certain company a contract to build the SEA Games
athlete’s dormitory in Palembang, South Sumatra. (swd/mtq)
Graft suspect Angelina Sondakh, a suspended lawmaker from
the ruling Democratic Party, testifies as a witness during the trial
of Mohammed Nazaruddin, the former treasurer of Indonesian President Susilo Bambang Yudhoyono's party,
at an anti-corruption court in Jakarta on Wednesday.
Sondakh and Nazaruddin are both implicated in the high profile bribery case involving the construction of the Southeast
Asian Games athlete's village. (AFP Photo)
In a sign of more strained ties between lawmakers and antigraft investigators, Corruption Eradication Commission
chairman Abraham Samad said he would not attend hearings with the commission overseeing legal affairs if graft
suspect Angelina Sondakh was present.
The ruling Democratic Party controversially moved Angelina to House of Representatives Commission III on Tuesday
in what Jafar Hafsah, the head of the Democratic faction at the House, called a “normal rotation.”
The antigraft organization known as the KPK last week named Angelina, the deputy secretary general of President
Susilo Bambang Yudhoyono’s Democratic Party, a suspect in the graft case involving former party treasurer Muhammad
Nazaruddin.
Despite Angelina’s status, the party did not remove her from the House or suspend her from the party’s post. The
KPK has also not detained the former Indonesian beauty queen.
“Make no mistake, I won’t come to any hearing [with Commission III] if Angelina is there,” Abraham said.
He said he did not understand why the Democrats would move her to the commission, which works closely with the
KPK.
“I just don’t know what they are thinking,” Abraham said.
Other factions in the House criticized the Democrats’ move and lauded Abraham for condemning it.
“Abraham’s stance has reaffirmed the KPK’s professionalism and neutrality,” said Ahmad Basarah, deputy secretary
general of the Indonesian Democratic Party of Struggle (PDI-P).
Commission III member Nasir Jamil of the Prosperous Justice Party (PKS) said he felt ashamed that the graft suspect
was included in the commission.
“It will give a false image that the commission is full of those who have problems with the law,” he said.
Responding to the uproar, Democrat Sutan Bathoegana proposed that Angelina be placed at Commission VIII, which
oversees social and religious affairs instead.
But anticorruption activists slammed that as well, saying the Democrats were ignorant of the public’s sense of
justice, saying that Angelina was not fit to sit on any commission and should be removed from the House.
Angelina has been accused by Nazaruddin of asking for money in connection to the construction of the athletes’
village in Palembang for last year’s Southeast Asian Games.
Another key witness, Mindo Rosalina Manulang, who used to work in one of Nazaruddin’s companies, testified in court
that Angelina had requested that money be given to members of the House Budget Committee.
Rosalina said Angelina had accepted a Rp 2 billion ($224,000) “fee” linked to the project.
Angelina is expected to be charged under at least three articles of the 1999 Law on Corruption Eradication.
President Susilo Bambang Yudhoyono presides over one of the world's fastest-growing economies, but corruption threatens
Indonesia’s chance at catching its neighbors
By Ted C. Fishman
February 02, 2012
SBY, receiving a warm welcome at Harvard University in 2009
Photograph by Steven Senne/AP Photo
A lot of politicians in Indonesia sing the same old songs. Singing is one of the informal prerequisites for
an Indonesian public official, the way that, say, owning a dog is in the U.S. Old songs, though, do not suit Indonesia’s
current President, Susilo Bambang Yudhoyono. “SBY” writes his own material, and last fall he released his fourth
album of original tunes, called Harmoni, a musical plea for the environment. The burly 63-year-old President, who
stands nearly six feet tall, hardly fits the boy-band archetype popular in Indonesia, but he plays guitar and has
a voice that recalls John Denver. He makes music videos, as do his fans (and satirists) on YouTube. SBY’s songs
often entreat Indonesians to lift up their country and the world, and they reveal the President’s sentimental side.
A devout Muslim, he often beseeches God for peace and guidance. During last year’s nationally televised Independence
Day Celebration, a schoolboy and a 128-person choir belted out an SBY composition called From Jakarta to Oslo for
Our World. It begins
Far away from the edge of the world
I come to bring hope
Together, allied, the servants of God
We must unite to save
The purity of our world.
Thoughtfulness and empathy are part of SBY’s persona: He occasionally tears up when speaking about issues his
government faces, such as the poverty of farmers. SBY came to office in Indonesia’s first direct Presidential election
in 2004. In 2009 he was reelected for a second five-year term, garnering 74 million votes, or 60 percent of ballots
cast. In a part of the world that has seen its share of strongmen, the former general has avoided the temptation
to play autocrat. The country’s 13-year-old constitution, as interpreted by SBY, gives the President surprisingly
little power. (He is term-limited from running again.) He must appeal to the country’s instincts for justice, national
cohesion, pluralism, and prosperity. That’s a big job in the world’s largest archipelago (17,500 islands), with
one of the biggest, most diverse populations on the planet.
To a large degree, he’s succeeding. Economically, Indonesia is doing better than at any point since democracy took
hold. Last year the economy grew 6.5 percent, and it is expected to match that in 2012. The world’s fourth most
populous country at 240 million, Indonesia has a middle class that is expanding rapidly and now tops 50 million.
Global investors pour record sums into the country. Last month, Moody’s returned Indonesia to investment grade
for the first time since the 1998 Asian financial crisis, following a Fitch Ratings upgrade in December. At its
current rate of progress, Indonesia has the potential to become Asia’s next great engine of economic growth.
For some time, U.S. officials have pointed to Indonesia as a Muslim-majority country that the emerging democracies
of the Middle East can learn from. During SBY’s first term, his coalition government succeeded in maintaining social
order. Where political parties driven by Islamic agendas once looked poised for power, SBY has wrapped just enough
of their agendas into his platform to keep the peace and preserve Indonesia’s reputation for tolerance. And since
SBY took office, the inter-religious cycles of violence that plagued several parts of the country have been—mostly—tamped
down.
Yet for all of Indonesia’s success, SBY is a leader under siege. His approval ratings have fallen from 70 percent
two years ago to 50 percent. His political coalition partners constantly try to outmaneuver him. Political rivals,
the most powerful of whom own the country’s top media outlets, complain that SBY is too reflective, too democratic,
and too conflict-averse to govern effectively. While democracy and commerce flourish in Indonesia, they point out,
so does corruption that drains away a huge chunk of public resources and eats at gross domestic product. If Indonesia
squanders this moment, say SBY’s friends and critics alike, the nation will likely never catch its more prosperous
Asian neighbors. Reflecting on the country’s ability to compete with China and India, Minister of Trade Gita Wirjawan
says: “We have lots of experience with disappointment: disasters, corruption, and bureaucracy. … Corruption [in
particular] puts us at a disadvantage. The trajectory is good, but Indonesia can’t be complaisant.”
In August, SBY sought to bring his agenda to Indonesians during an annual whistle stop tour called the Ramadan
Safari. The one-week trip, with Cabinet ministers in tow, took the President through Maryland-size West Java, home
to 36 million of Java’s 150 million people. During the journey, he sat down for an exclusive series of long interviews.
In these conversations, he provided a glimpse at the challenge of running a rapidly changing, resource-rich, strategically
central country. He reflected on a national future that always seems to hang in the balance, but which he insists
will prove optimists right.
“I grew up under authoritarian rule with a controlling, stable leadership that used force to avoid conflict,” SBY
said during the first morning conversation, held outside the hot-springs bathhouse of the Cipanas Palace, a sprawling
mountainside retreat on the Ramadan Safari route. “I have tried to understand how to govern in the new way. I have
to persuade more, use an indirect approach, respect the constitution, and find the middle way.”
SBY is a unique public figure in Indonesia: not a man of action, a nationalist firebrand, or an heir to a great
dynasty, but a deliberator. He is a friendly, calm presence who makes frequent eye contact as he leans in to listen.
He was a bookish child, and during the reign of Suharto, the dictator who ran the country for 32 years ending in
1998, SBY became a military officer with an intellectual bent. He served under each of the country’s flawed leaders
from Suharto on, either in the military or as a high-level executive. And he survived every scandal-prone administration
free of taint. The former general studied at U.S. Army Command and General Staff College at Fort Leavenworth, Kan.,
earned an MBA at Webster University Kansas City, and finished work for a PhD in agricultural economics in 2004,
the year he became President.
During SBY’s first term, his government earned high marks at home and abroad for negotiating an end to the decades-long
civil war in Aceh. Within his multiparty coalition, SBY ceded important powers to his erstwhile political foes,
such as his capable first-term vice-president, Jusuf Kalla, then head of the powerful Golkar Party. The vice-president
was central in the first stages of the massive rehabilitation of Aceh, in northern Sumatra, following the 2004
tsunami that wiped out cities and killed 230,000 people. SBY acknowledges, however, that by delegating big jobs
to rivals, he lost the opportunity to establish his leadership bona fides. “I involve myself behind the scenes,”
he says, lamenting that his style leaves him vulnerable to being seen, and misunderstood, as ineffectual, and prone
to compromise that makes him look weak.
Seven years into his rule, critics say, SBY is so accustomed to measuring issues from every direction that he becomes
paralyzed. His explanation is that the nature of Indonesian democracy precludes quick action and requires long,
patient negotiation. Sometimes it pays off. This past December, the nation’s combative legislature pushed through
epochal land reform that will kick-start infrastructure projects and lay the groundwork for manufacturers to set
up shop in Indonesia. For the first time in the democratic era, the new law sets up a system to adjudicate land
disputes and thus removes perhaps the biggest impediment to national development. Still, these job-creation and
public-works projects projected for the future have not restored his approval ratings in the present.
SBY’s advisers regarded the Ramadan Safari as a way to improve his public image. The first stop, a dilapidated
village primary school, was a surprise, kept secret even from the Cabinet members along for the trip. The President
wanted to ensure that no one scrubbed it up before his convoy arrived. SBY walked slowly under the school’s caving
roof, past broken chairs and bookless shelves. He shook his head and glowered. “I am not going to blame anyone
in particular,” he said, “but this school is a crying shame, and everyone can do better.” A recent report, the
President said, cited 20 percent of Indonesia’s schoolhouses as similarly appalling.
Left unsaid were the causes of the school system’s ruin: embezzlement, bribes, and absentee staff. Money the government
allocates for schools often gets stolen by administrators, teachers, and local officials. And SBY’s own Minister
of Education and Culture, Mohammad Nuh, along for the trip, had been facing pressure from the press and Parliament
for sloppy control over the education budget. The minister, head bowed, hurried to show the President proposals
for new, improved schools. SBY took a cursory look and turned away. “The President is really pissed off,” another
minister nearby whispered in English. To the crowd and the press gathered, SBY announced $2.76 billion in new money
for education, 40 percent more than the previous year and the biggest budget ever. When asked on the bus if corruption
was the root of the schools’ problems, the minister said no, lack of money was. Later he publicly acknowledged
that corruption is indeed dire.
In keeping with his conciliatory style, SBY, instead of firing the minister, hoped the public shaming would spur
him to act, and he didn’t dismiss him even when reshuffling his Cabinet in October. In the following months, stern
reforms were delivered, but SBY and his administration remain hampered by a weak legal system and limited powers
of enforcement. “New democracies,” he said after the school visit, “need time to clean up corruption.”
SBY says Indonesia needs at least 15 years before it can achieve a government as clean as Hong Kong’s or Singapore’s,
but those years will cost the country. Indonesia’s culture of corruption retards its growth, creating what amounts
to a de facto tax on economic activity—estimates on what it costs range from 3 percent to 20 percent of GDP. In
Transparency International’s latest Corruption Perceptions Index, Indonesia ranks 100th out of 182 countries, one
notch better than Egypt. (The U.S. is 24th.)
Corruption pervades all rungs of society. It ranges from the voters, who expect envelopes
from party operatives during elections, to the crooked nexus linking cops, prosecutors, fixers, and judges—which
the government has labeled “the judicial Mafia”—that puts price tags on everything in the legal system. Indonesia’s
Parliament is a cesspit of corruption that extends to SBY’s coalition partners. In a case that reaches deep into
SBY’s Partai Demokrat, former party treasurer Muhammad Nazaruddin is said to have designed a system in which bidders
for government contracts kicked back millions of dollars to party coffers.
Nazaruddin, who fled Indonesia last May, offered sensational interviews to Indonesian
newspapers from abroad. He was nabbed in Bogotá in August, then extradited back to Indonesia, where he offered
court testimony that linked bribery schemes to a former Miss Indonesia and high party officials. Nazaruddin denies
he acted illegally; the others claim innocence, too. If Nazaruddin’s worst accusations prove true, it could mean
that the war chest of the President’s party was filled with tens of millions of dollars skimmed from public works.
Some of the money, Nazaruddin charges, was used by the current party chairman—not SBY—to buy his post. SBY says
if there were misdeeds, his party officers acted autonomously. So far no paper trail has led to him.
Although he has been criticized for not acting more forcefully to remove party officials suspected of wrongdoing,
SBY insists he has taken steps to stem corruption. “In the past, government officials were not prosecuted,” he
says. “During my Presidency, 165 high officials have been prosecuted, and so have thousands of smaller officeholders.”
He does not mention that the most powerful agencies in Indonesia’s official anti-corruption apparatus, such as
the squeaky-clean Corruption Eradication Commission, act largely independently of the Presidency or legislature.
There is a consensus, even among some in SBY’s inner circle, that his lack of firmness feeds greater corruption
across Indonesia. SBY himself acknowledges the growing public nostalgia for a Suharto-like strongman who can bully
the whole country. Constitutional reform also granted outsize power to 550 county leaders now known as “the little
kings.”
In mid-December, a Jakarta university student set himself on fire in front of the Presidential Palace to express
outrage over corruption and to urge SBY to resign. Days later, thousands of students took to the streets. For SBY,
keeping the huge, diverse nation together has been a higher priority than keeping it honest.
Whatever the general discontent, SBY has kept Indonesia stable enough for the economy to flourish. In a country
long plagued by capital flight and political uncertainty, consumer confidence is at an all-time high. Two-thirds
of Indonesia’s GDP is generated by its own consumers, and Roy Morgan Research reports that nearly every category
of consumer goods is selling briskly compared with years past. Jakarta’s nearly 600 malls are jam-packed. The city’s
notorious traffic jams, which ease around 7 p.m., after the post-work rush hour, materialize again when the malls’
gargantuan parking lots empty out between 10 and 11.
Now that labor-intensive industries are hunting for alternatives to China, a competitive Indonesia could entice
more manufacturers to invest there—but that depends on the outcome of SBY’s $440 billion infrastructure plan and
his government’s ability to make a dent in corruption.
“We really need to upgrade the capacity of local governments to absorb capital investment,” SBY says. “Every time
I meet with governors and local officials, I tell them to lay out the red carpet for investors.”
One of Indonesia’s strengths is its vast collection of small businesses. Recently, SBY moved his longtime Minister
of Trade, Mari Pangestu, to the role of Minister of Tourism and Creative Economy to help develop more markets for
the country’s boutique skilled-craft workshops. The idea is to mimic the Italian and German economies, where smaller
factories make big contributions to GDP.
On the Ramadan Safari, the President visited small factories and industrial co-ops. At a small showroom for 88
local workshops that make stained glass lamps, he stood amid a crush of local sellers and urged them to support
his project. “Improve your quality, pay attention to customer service, and the government will help you with loans
and a new showroom,” he said to the craftsmen. When given the opportunity to address the President, one seller
asserted his new rights to free speech with a rant. “We’ve been promised much by the government time and time again,
Mr. President, but frankly I will believe your help when I see it,” he said. Again, SBY glowered. He told the man
that he was exhibiting bad behavior to those who came to help. Out of earshot, a minister whispered that this is
the new Indonesian democracy: If the seller had addressed Suharto like that, the man would have been quietly removed
and … well, a finger across the neck finished his sentence.
SBY had another answer to the man’s complaint. He made an example of himself for small businesses. A day later,
at the dinner stop at a West Java resort, the supper breaking the Ramadan fast featured steam tables with an innovative,
savory dish that mixed rice and grated cassava. It was the product of a small business venture called Rassa Indonesia,
based on the President’s recipes. “I developed the dish myself,” he explained, when asked about its beginnings.
“I was in the army and had to make my own food. I mixed cassava and rice and thought it was delicious. I have made
it ever since. You might not think they go together, but they do very nicely.” Harmoni. The President then produced
two large tin cans of the mixture, and agreed with pleasure to sign the labels.
Chairs imported from Germany worth Rp23 million each?
are one budget line item among many that
have riled critics recently as lawmakers have made
purchases of questionable public value.
Antara Photo/Andika Wahyu
Two images that emerged over the past few weeks help explain the depth of public outrage directed at the government
over its perceived excessive and misdirected spending.
On one hand, there were the photos of the dilapidated suspension bridge in Lebak, Banten, being used by elementary
school students. Only after it caught international attention did the local government allocate Rp 1 billion ($112,000)
to build a new one.
On the other hand, there was the meeting room of the House of Representatives Budget Committee — now at the center
of several graft allegations — renovated for a staggering Rp 20 billion.
Arwani Thomafi, a member of the House’s Household Affairs Committee (BURT), argues that the two shouldn’t be compared
because the bridge was dilapidated not due to government neglect, but because of a natural disaster.
But he acknowledged that lawmakers had to pay more attention to the budget proposals from the House secretary general.
“We should only prioritize projects that we urgently need. We, including House speakers, have to learn to be more
selective,” he said, adding that lawmakers should also be more sensitive toward the concerns of their constituents.
Insensitive, excessive
Still, some critics say the issue is not a question of priorities. Instead, they say displayed sheer excessiveness.
Eva Kusuma Sundari, a lawmaker from the opposition Indonesian Democratic Party of Struggle (PDI-P), said she was
not surprised that her colleagues sought such lavish treatment.
“People elected celebrities and businesspeople as their representatives. Of course, you can’t expect them to pretend
to be beggars,” Eva said sarcastically.
A breakdown of the House’s 2012 budget acquired by the Jakarta Globe shows that aside from
the Rp 20.3 billion room renovation, it also allocated Rp 1.6 billion for air freshener and Rp 879.8 million for
a filing cabinet for the House secretary general.
Prominent architect Bambang Eryudhawan chuckled when he heard the numbers.
“It certainly must stink at the House of Representatives building if they need that much air freshener,” he said.
The architect also questioned the type of filing cabinet purchased, as he speculated that the allocation could
buy a fire-proof one big enough to fill a 150-square-meter room, complete with a sophisticated archiving system.
At Rp 20.3 billion, the total renovation cost for the Budget Committee meeting room comes out to about Rp 203 million
per square meter, which Bambang says is almost 20 times the cost of renovating a five-star hotel suite.
“The renovation cost for a five-star area is usually pegged at about Rp 10 million per square meter, furnishing
included,” Bambang said.
The chairs alone for the Budget Committee room were reportedly imported from Germany at Rp 23 million apiece —
they ordered 85 — almost half the cost of the US presidential chair at the White House in Washington.
“I think it’s a matter of perspective. People see lawmakers as public servants, but lawmakers see themselves as
kings,” Bambang said.
Photo Indonesia-Digest
Beyond DPR
The tendency to spend lavishly seems to be a problem not just for the national legislature.
The Jakarta City Councilhas also confirmed
that its 2012 budget includes Rp 180 billion allocated to renovate its own offices.
As much as Rp 80 billion of this is allotted to repair the outer walls and install marble surfaces on some interior
walls. The remaining Rp 100 billion will be used to build a bridge linking the building to a neighboring one.
The Indonesian Forum for Budget Transparency (Fitra) has also criticized renovation projects at the Presidential
Palace.
Uchok Sky Khadafi, the coordinator for Fitra, said that the allotment for the palace this year soared to Rp 80.5
billion, almost 10 times what it was in 2011, with funds for presidential building improvement accounting for Rp
10.7 billion.
Photo Indonesia-Digest
In addition, no less than Rp 58.6 billion was set aside for new construction or expansion of the
State Secretariat’s office, housing and other structures. This includes
Rp 349 million to repair the office complex gate and Rp 12.3 billion for the office’s parking lot. The State Secretariat,
though, denied this. The parking lot construction was not Rp 12.3 billion, said the spokesman for the office, Sugiri,
but only Rp 10.6 billion.
“This is an amount proposed by [private] consultant Cipta Karya and contractor Adhicon Persada. It already includes
the consulting service fees,” he said. He added that the amount also includes the construction of a mosque, cooperative
building, and a 3,270-square-meter park above the basement area.
“The parking lot is going to be built in the basement, that’s why it’s more expensive. It is going to have two
levels and can accommodate 1,000 vehicles,” Sugiri said, adding that the Supreme Audit Agency (BPK) was best suited
to judge the merits of the budget.
Bambang said the recent spending news was a common problem with state projects: those involved don’t consider cost
efficiencies, “as if this country will never go bankrupt,” he said.
He also pointed out that a quantity surveyor, whose job it was to check available market prices and options to
get the lowest prices, was often missing in state-funded projects.
Photo Indonesia-Digest
A waste of money?
Worsening the situation is a public perception that lawmakers — heavily criticized for a variety of other things
ranging from laziness to blatant corruption — deserve none of these nice things.
For instance, listed in the 2012 budget is Rp 544 billion for meetings and discussions.
“This is a total waste of money,” said Uchok, whose organization revealed other controversial House expenses like
the printing of about 18,000 calendars for Rp 1.3 billion.
“The budget for such meetings has swollen since these lawmakers prefer to hold their meetings outside, such as
in hotels, instead of using available meeting rooms.”
This, again, raises the question of why a House meeting room was renovated at a cost several times higher than
a five-star hotel.
“Looking at the level of productivity of the House, I think they only deserve three-star, at most,” Bambang joked.
House Speaker Marzuki Alie has said he is “concerned” about the situation.
“There has to be more conscientiousness [on the part of the government and lawmakers] in line with the president’s
directives to reduce unnecessary expenses,” he said. “We need to [focus on] building our infrastructure to accelerate
economic development.”
But as Bambang pointed out, the House still went on with its lavish spending ways despite public outcry over a
proposal for a new legislative building that was ultimately canned.
“It’s like they think that we, the public, are stupid. They really have some nerve, or they’re just absurd,” Bambang
added.
Eva said she hoped the public would learn from the recent spending spree.
“We have to start demanding an electoral system that is guaranteed to filter people with the right capability,
capacity and integrity,”
Eva said. “Voters have to be educated, to increase public pressure toward the lawmakers to work more seriously.”
Additional reporting by Arientha Primanita
Minister of Sports
Andi Mallarangeng
October 12, 2011
Interrogated by KPK (Commission for Corruption Eradication),
Nazaruddin states Sports Minister Andi Mallarangeng's
involvement in the SEA Games corruption case.
The Minister has denied the accusation.
He also mentioned the names of the ruling Partai Demokrat leadership,
Anas Urbaningrum, Jafar Hafsah, Angelina Sondakh dan Mirwan Amir.
Partai Demokrat Chairman
Anas Urbaningrum
Jafar Hafsah
Angelina Sondakh
Mirwan Amir
Ex Ambassador for Colombia
Michael Mananfandu
During interrogations he accused then Indonesian Ambassador for Colombia,
Michael Manafandu of having been paid a bribery of Rupiahs One Trillion
(approx US$ 111,100) to remove evidence from his bag, flash discs and CD's
At the time of his arrest in Colombia, Nazaruddin's bag was seized by officials and surrendered to Manufandu. However,
when the KPK obtained the bag Nazaruddin said several items containing important evidence were missing.
Nazaruddin said four cellular were also missing from the bag.
The phones contained records of conversations with top officials concerning the
SEA Games construction project graft case, he stated.
The Corruption Eradication Commission (KPK) confirmed on Wednesday that it had received a report regarding indications
of graft among civil servants and said that it would soon investigate the cases.
“The PPATK (Financial Transaction Reports and Analysis Centre) has reported it to us. We will act upon it and take
legal steps,” KPK chief Busyro Muqoddas said as quoted by tempo.co.
The PPATK recently found suspiciously large bank accounts belonging to thousands of third-class civil servants
aged 28-30. Ten individuals, in particular, possessed personal bank accounts containing hundreds of billions of
rupiah.
The analysis center said that it suspected the money had been gained from corruption through methods such as transferring
state budget funds to personal bank accounts, creating fictitious projects and accepting gratuities and bribes.
In the highlands of Mimika district in Papua, where temperatures can easily drop to a chilly 10 degrees Celsius,
thousands of Freeport workers hold fast to their demands against the owner of one of the world’s largest open gold
and copper mines.
Above the estimated 8,000 striking workers, some of whom wear nothing more than a traditional penis gourd and feather-covered
head gear, Indonesia’s national flag is always waving.
It is a rare sight in this part of Indonesia, which has seen rising pro-independence sentiment among the indigenous
people. But workers say the display of nationalism is deliberate — a way to convince security that their demonstration
is a peaceful labor protest and not a separatist movement
“We want to show that we love NKRI [the United Republic of Indonesia]. We don’t want to be seen as separatists,”
said Virgo Solosa, an official from the All Indonesian Workers Union (SPSI).
“This is a labor issue. Our right to strike is guaranteed under Indonesian labor law.”
Their worry stems in part from the relationship between security forces, which have been trying to stamp out a
low-level insurgency in the province for decades, and Freeport Indonesia, which has provided $79.1 million to Indonesian
police and military forces during the last 10 years.
“We do provide voluntary support for the security forces to secure our workplace. We have been doing it for years,”
Freeport Indonesia spokesman Ramdani Sirait said in response to the National Police’s admission last week of the
payments it called “lunch money.”
Freeport admitted as long ago as 2003 that it had been paying security forces since the 1970s and had established
a formal arrangement in 1996.
Freeport spent $14 million to support government-provided security in 2010, according to Eric Kinneberg, spokesman
for Freeport-McMoRan, the parent company of Freeport Indonesia.
The company detailed the disbursements in its annual “Working Toward Sustainable Development” report, which in
past years showed expenditures of $10 million on government-provided security in 2009 and $8 million in 2008.
Added security
National Police spokesman Sr. Comr. Boy Rafly Amar has cited the insurgency issue to justify the need to provide
added security.
“[Freeport] will never be able to defend themselves against these [armed rebel] threats just relying on their internal
security team,” he said on Thursday.
“But at the same time, police cannot allocate such huge funds.”
Indeed, many workers feel anything but safe.
“We don’t feel secure to work at Freeport or to travel between the mine and our homes,” said Juli Parorrongan,
a spokesman for SPSI, which organized the strike. “Too many people have been killed, but we don’t know who’s shooting
at us. We need policemen to guarantee our safety.”
A former employee of Freeport, who asked not to be identified, said that the 200,000-hectare mining area required
at least 2,000 personnel, jointly provided by police, military and Freeport’s own security team.
“We operate in some of the most hostile environments in the world, not only in terms of remoteness but also security,”
he said.
“Cars have been ambushed and shot at. Some of my friends have been killed. All officials are required to travel
with armed police officers guarding.”
The attacks have been blamed on the separatist Free Papua Organization (OPM). The group has never admitted to attacking
Freeport, though it claims shootings against the police and military.
The former employee also said police were ill-equipped to cope with the harsh environment.
“Their vehicles often broke down,” he said. “Freeport ended up providing them with four-wheel drive vehicles.”
Justified payments?
The National Police, Boy said, have an annual budget of Rp 4.2 trillion ($470 million) to support nationwide operations
and pay the salaries of 400,000 officers.
“We cannot fully equip our members [assigned to guard Freeport] or provide patrol cars. But Freeport said they
could and didn’t mind,” he said.
Former President Suharto’s administration did not fully fund the army’s budget, so soldiers were expected to set
up their own local business ventures. But as they searched for ways to supplement their incomes, some exploited
the local population and caused negative social, economic and environmental ripple effects.
“Such military activities would adversely impact [Freeport] employees and the surrounding community,” said Prakash
Sethi, head of the New York-based International Center for Corporate Accountability, which led an audit of Freeport’s
Indonesia mining operations between 2002 and 2007.
During the audit, Sethi visited the mine and spoke with workers, community members and management about Freeport’s
performance in the areas of human rights, hiring, community development and other labor issues as well as the security
payments.
“It is my interpretation that ... because the military did not have adequate facilities at the mine site, Freeport
agreed to provide the military with ‘largely’ in-kind support in terms of housing and eating facilities,” Sethi
wrote in an e-mail, adding that his audit did not examine how the military used those funds. “At the same time,
some funding was provided for ‘miscellaneous expenses.’ ”
Freeport-McMoRan spokesman Kinneberg said 80 percent of the $14 million in security spending in 2010 was non-cash,
in-kind support for meals, health care, facilities, housing, transportation and other support necessitated by the
remote posting.
Questions arise
An April 19, 2011, letter sent by Papua Police chief of operations Sr. Comr. Rudolf A Rodja to the Commission for
Missing Persons and Victims of Violence (Kontras), obtained by the Globe, states that security allowances were
more than “incidental and administrative.”
“[Freeport’s] monthly contribution to the security task force members of the National Police and TNI amounts to
Rp 1.25 million per person, directly provided to members of the security force by Freeport management,” Rudolf
wrote.
The police spokesman defended the allowance.
“That’s only Rp 40,000 a day. Even if they want to spend it, the nearest shop is two and a half hours down the
mountain,” Boy said.
Maj. Gen. Erfi Triasunu, chief of the Cendrawasih Military Command, which oversees operations in Papua, said military
officers received the same amount in meals and snacks.
Those direct cash disbursements have left Freeport open to intense scrutiny by rights activists and the workers,
who have been striking to request higher salaries, currently set at $1.50 to $3 per hour.
The workers are demanding a wage of $7.50 an hour, down from an initial demand for $30 to $200 per hour. The company
has offered workers a 30 percent pay raise, up from 25 percent when the last set of talks began on Oct. 21.
“This is very unfair. The company pays the police much more than us,” Juli said.
“The company should care for us more than it cares for the outside forces.”
An even more pressing question is whether the payments affect the neutrality of the security forces.
Poengky Indarti, executive director of the Indonesian Human Rights Monitor (Imparsial), said the payments could
create a conflict of interest for the police, who are supposed to be serving the state. But Boy said the payments
had no effect on police neutrality in the labor dispute.
On Oct. 10, police opened fire on striking Freeport workers who tried to board Freeport buses from a nearby town,
Timika, to demonstrate by the mine’s gate.
Police cited a 2004 presidential decree classifying mining areas, including the Grasberg mine, as “national vital
objects” to argue that they were obliged to protect Freeport’s assets — the buses. One striker died from gunshot
wounds amid the ensuing chaos.
Juli said it was not until that incident that the police took a more neutral, cautious approach to the strike.
Questionable legality
The other question is whether the funds are legal at all.
“This provision of support is consistent with our obligations under our agreements with the respective governments,
our philosophy of responsible corporate citizenship and the Voluntary Principles on Security and Human Rights,”
Kinneberg said.
Ratified in 2000 by the UK and US governments along with energy and mining companies, the principles stipulate
that “in cases where there is a need to supplement security provided by host governments, companies may be required
or expected to contribute to, or otherwise reimburse, the costs of protecting Company facilities and personnel
borne by public security.”
But the principles also say that companies should consider the human-rights records of public security forces.
In Indonesia’s case, human rights abuses by its military and police have long been a public issue.
The payments have also raised questions about whether Freeport has violated the US’s Foreign Corrupt Practices
Act.
The Pittsburgh-based United Steelworks Union sent a letter on Tuesday to the US Department of Justice, asking the
government to look into whether Freeport violated the FCPA by “engaging in what we believe is likely bribery of
security forces in Indonesia.”
However, the US Justice Department has already looked into Freeport’s payments, ending its inquiries a few years
ago without any resulting prosecution under the FCPA. Since 2003, the company has filed accounts of the security
payments in an annual report with the US Securities and Exchange Commission.
“If the payments are not secret, if they are totally transparent, then I don’t think they can be seen as a bribe,”
said Sethi, who specializes in international business and corporate codes of conduct. “The practice may be unsavory
and maybe it shouldn’t be done, but having said that, it’s not the same thing as a violation of the Foreign Corrupt
Practices Act.”
Firdaus Ilyas, a researcher from the Indonesia Corruption Watch, maintains the payments violate Indonesian laws.
“There is not a single rule that allows this,” he said. “They have to have a legal basis and the payment should
be made to an account the public can scrutinize.”
ICW also questioned the size of the payments. According to Freeport reports, it grew from $4.7 million in 2001
to $14 million in 2010.
“You don’t buy vehicles every year, you don’t build police housing and barracks every year. People in the field
only get Rp 1.25 million each per month. So where does the rest of the money go?” Firdaus said.
National Police chief Gen. Timur Pradopo said on Friday that an internal investigation had been launched into how
much police received from Freeport.
“We welcome all sides to audit,” he said. “It is better for independent parties like the KPK [Corruption Eradication
Commission] and the BPK [Supreme Audit Agency] to audit it.”
Additional reporting by Igor O’Neill and Farouk Arnaz
Despite threats by members of the House of Representatives’ budget committee to boycott deliberations
of the 2012 budget, the antigraft body says it will go ahead with plans to question the committee leaders on Wednesday.
“We will again summon the budget committee [leaders] Tamsil Linrung and Olly Dondokambey for questioning on Wednesday
as witnesses in the bribery case at the Manpower and Transmigration Ministry,” Corruption Eradication Commission
(KPK) spokesman Johan Budi said Tuesday.
“We were unable to question them last week.”
Last week, the committee threatened to boycott its budget deliberations and argued that its budgeting function
was being targeted by the KPK, after the commission summoned its four leaders in relation to the high-profile bribery
case implicating minister Muhaimin Iskandar.
Tamsil from the Prosperous Justice Party (PKS), Olly from the Indonesian Democratic Party of Struggle (PDI-P),
Mirwan Amir from the Democratic Party and committee chairman Melchias Marcus Mekeng from the Golkar Party were
questioned as witnesses in the case.
Last week, the four announced that they had never asked for kickbacks from a construction company that won a
Rp 73 billion (US$8.2 million) project to build infrastructures in resettlement areas in Papua proposed by the
Manpower
and Transmigration Ministry.
The allegation was first made by an employee from PT Alam Jaya Papua, Dharnawati, who has
also been named a suspect in the case.
Through her lawyer, Farhat Abbas, Dharnawati said the company was required to channel 10 percent of the project
value in “commitment fees” to the House’s budget committee if it wanted to be offered the tender for the government
project.
When Indonesian President Susilo Bambang Yudhoyono took office in 2004, he vowed to wage a campaign of "shock
therapy" to help rid his country of endemic corruption. With two of his ministries currently embroiled in
scandal, the timing couldn't be better to deliver a strong electric jolt — and it could result in some departures
from his government. Facing mounting public pressure, Yudhoyono is expected to reshuffle his cabinet before he
finishes the second year of his second term on Oct. 20. "The president wants to find new ways to improve performance,"
Daniel Sparringa, a presidential advisor on political affairs, told TIME.
Most analysts agree that Yudhoyono, who has three years left in his final term, has little choice but to shake
up his cabinet, which is made up of coalition partners from different parties, many of whom have competing interests
and various competency issues. The recent corruption scandals have brought these weaknesses into sharp relief and
cast Yudhoyono's cabinet, as well as his party, in an unflattering light.
Whether the cabinet reshuffle changes anything remains to be seen. Corruption is still a serious problem in
Indonesia despite Yudhoyono's various attempts to stamp it out over the years. Since 2004, the Corruption Eradiation
Commission (or KPK) has received more than 48,000 complaints from the public involving judges, governors, ambassadors
and parliamentarians, with 7,800 of them deemed to show indications of corruption. But even though the commission
has a 100% conviction rate, KPK officials say corruption has only gotten worse in recent years. Mochamad Jassin,
a KPK deputy commissioner, recently told reporters that corruption is "bigger than [in] the Suharto period"
and that it usually takes the form of "mark-ups and abuse of regional budgets." Put simply, he said,
"In the area of public service, corruption is still rampant."
Ironically, the fear of corruption investigations might be holding the country back, too. Indonesia may be humming
along at an enviable 6.4% growth rate, but many economists feel that it's still not living up to its full economic
potential. Umar Juoro, a senior economist at the Center for Information and Development Studies, a Jakarta-based
think tank, believes Indonesia has the potential to grow at 9% per year, but the economy has been slowed, in part,
by the government's inability to disburse funds fast enough. One of the reasons? Ministries are fearful of anything
that smacks of corruption, he says. "If the government could disburse budgetary funds more quickly we could
still do better, even with all the corruption," he says. "Corruption will always be there but it's no
excuse for the government not to get things done."
In Indonesia, the apprehension of the fugitive former treasurer of the ruling Democrat Party has transfixed
a public that sees corruption as a greater threat to democracy than even terrorism.
The case may provide new insights into the pervasiveness of corruption within the political elite, but analysts
worry it also could shake public confidence in the country's fledgling democratic system.
Since the start of President Susilo Bambang Yudhoyono's second term in 2009, investigations into allegations of
corruption within his Democrat Party and in every level of government have dominated headlines and sidelined the
president's legislative priorities.
The case of former Democrat Party Treasurer Muhammad Nazaruddin threatens to be a serious political blow to the
president’s party in the next election and analysts say it could have much broader implications for the country’s
government.
Nazaruddin, 32, fled the country in May, after being accused of accepting bribes worth almost $3 million in exchange
for approving construction projects for the 2011 Southeast Asian games in Indonesia.
While on the run, he gave interviews accusing senior officials of corruption, including some on the independent
Corruption Eradication Commission. Those accused denied the allegations. Nazaruddin was recently apprehended in
Colombia and has been returned to Indonesia to face charges.
“In the end, it can register the trust to the government and I guess it will be affected, the public trust on the
Democrat Party and will be affected in the election for the Democrat Party,” said Danang Widoyoko of the independent
advocacy organization Indonesia Corruption Watch.
Widoyoko says the allegations call into question the future of the Democrat Party. He says there have been incremental
improvements in curbing corruption since the 1998 fall of the dictator Suharto, but freedom of the press has brought
increased public attention to the problem. He says that increased attention also has undermined faith in the democratic
system that allowed the media to flourish.
“Media is free to do investigative reporting on corruption cases and no intervention for the media anymore to write
about the corruption stories everyday. That is why it seems corruption is happening everywhere,” Widoyoko said.
Kuntoro Mangkusubroto, head of a presidential unit to facilitate government reform says the government decentralization
that accompanied the growth of democracy spread corruption to local levels.
“Now it doesn't guarantee that if you are close to the president then things will get smooth on the ground. No,
because there are so many things happening on the ground and so many power holders on the ground... from my point
of view that is making things more complicated," Mangkusubroto said. "Well sometimes people say complication
is the mother of corruption, right?”
Tobias Basuki, a political science lecturer at Pelita Harapan University in suburban Jakarta, says the public's
frustration with corruption could lead to support for more authoritarian governments.
“Now we see the rule of law commonly ignored and there is a lot discrimination and there is also a danger I believe
to radicalism with a lack of action by, this continued perceived corruption, people would actually seek other forms
of values and ideas and theologies other than the state to fulfill their sense of justice,” Basuki said.
He says the Nazaruddin case also offers President Yudhoyono an opportunity to re-establish his image as a reformer
and corruption fighter if he is willing to go after high-ranking members of his own party who are complicit in
the graft.
“I think if he would take action beyond actually the legacy, I mean, beyond saving his party and beyond actually
pleasing everyone, I think this should be the moment where he actually takes action that may also not be completely
popular but would actually change the course of a lot of things,” Basuki said.
He says, although Indonesia's young democratic system seems stable, it is still fragile. He worries that if the
elected leadership does not take strong action to fight corruption, the public could lose faith in democracy, itself.
JAKARTA – Presiden Susilo Bambang Yudhoyono menolak upaya pelemahan Komisi Pemberantasan Korupsi (KPK) dan meminta
agar regulasi antikorupsi disempurnakan serta keberadaan lembaga antikorupsi diperkuat.
"Upaya melemahkan KPK harus kita cegah sekuat tenaga," ungkapnya dalam pidato kenegaraan yang disampaikan
di Sidang Bersama DPR-DPD untuk memperingati HUT Kemerdekaan RI 17 Agustus 1945 di Gedung DPR/MPR, Selasa (16/8).
Lembaga seperti KPK, PPATK, LPSK, menurut Presiden, harus diperkuat agar kerjanya efektif.
Berpidato di depan anggota kabinet, para pejabat negara dan pemimpin negara sahabat, Presiden mengatakan bahwa
saat ini merupakan momentum terbaik untuk terus membersihkan Indonesia dari korupsi.
Peningkatan Indeks Persepsi Korupsi Indonesia, kata Presiden, merupakan yang terbaik dari seluruh negara ASEAN.
Pada 2004 skor IPK Indonesia yang dicatat Transparancy International Indonesia 2,00 "Membaik menjadi 2,8 pada
2010," ujarnya.
Meski peningkatan Indeks Prestasi Korupsi sebesar 0,8 merupakan yang tertinggi di seluruh negara ASEAN, tapi Presiden
menyatakan Indonesia harus bekerja lebih keras lagi di masa mendatang.
Selain mencegah pelemahan KPK, Presiden mengatakan proses seleksi pemimpin KPK harus dikawal dengan serius. Hal
itu agar menghasilkan pemimpin KPK yang berintegritas dan profesional. "Mekanisme kerja KPK juga perlu disempurnakan
agar tetap steril dari korupsi," paparnya.
Pada saat yang sama, katanya, pemerintah juga mendorong agar kejaksaan dan kepolisian terus berbenah diri melanjutkan
reformasi. "Kedua lembaga itu harus menjadi lembaga yang kredibel di depan publik," ujarnya.
Seperti diketahui, beberapa waktu lalu Setara Institute mengeluarkan hasil survei yang menyatakan kegagalan utama
pemerintahan Yudhoyono adalah dalam pemberantasan korupsi.
Jamin Rakyat Miskin
Dalam pidatonya, Presiden juga mengatakan bahwa pemerintah menjamin warga berpenghasilan rendah memperoleh layanan
kesehatan dan pendidikan. "Saat ini saya dapat memastikan bahwa semua warga negara berpenghasilan rendah memiliki
hak memperoleh pelayanan kesehatan dan pendidikan dari pemerintah," katanya.
Presiden menyatakan di masa lalu masyarakat miskin kesulitan mengakses pelayanan dasar. "Keadaan ini telah
berubah," tegasnya.
Presiden menyatakan keuangan negara semakin membaik. Karena itu pemerintah meningkatkan kualitas pelayanan dan
akses warga negara terhadap pendidikan dan kesehatan.
"Tidak boleh ada lagi anak-anak kita dalam usia wajib belajar yang tidak bisa sekolah. Tidak boleh ada warga
negara gagal memperoleh pelayanan dasar kesehatan dari pemerintah," papar Presiden.
Sementara Maret lalu, Menteri Pendidikan Nasional Muhammad Nuh mengungkap fakta bahwa lebih dari 50 persen tenaga
kerja Indonesia hanya lulusan SD atau bahkan tak tamat SD.
Presiden mengatakan pemerintah membagi program bantuan kepada rakyat miskin dalam empat klaster. Pertama bantuan
dan perlindungan sosial yang di antaranya berwujud beras murah untuk masyarakat ekonomi tidak mampu, program Bantuan
Operasional Sekolah (BOS) dan jaminan kesehatan masyarakat.
Klaster kedua program Pemberdayaan Masyarakat. Ketiga, Kredit Usaha Rakyat (KUR) serta klaster terakhir yang akan
mulai aktif 2012 yaitu program rumah murah, air murah, angkutan murah, listrik murah, dan peningkatan kehidupan
nelayan serta masyarakat miskin perkotaan.
Menanggapi kondisi keamanan di Papua, Presiden menyatakan pemerintah akan tetap bertindak tegas menjamin terjaganya
keamanan dan ketertiban masyarakat. Presiden menyatakan pemerintah telah memberi kewenangan yang besar untuk menjalankan
pembangunan di Papua. Desentralisasi fiskal di Papua, cukup besar.
Presiden mengatakan dalam satu dasawarsa 1999 hingga 2009 terbentuk 205 daerah baru, yang terdiri atas tujuh daerah
baru setingkat provinsi 164 daerah baru, setingkat kabupaten dan 34 daerah baru setingkat kota. Dengan penambahan
itu, kini Indonesia memiliki 33 provinsi, 398 kabupaten, dan 93 kota.
"Perubahan ini membawa sejumlah konsekuensi serius dalam postur APBN. Karena itu perkembangan ini harus dikendalikan
agar pelayanan masyarakat lebih efektif," ujarnya.
Erosi Kepercayaan
Sebelumnya, Ketua Dewan Perwakilan Daerah (DPD) Irman Gusman dalam pidato pendahuluan mengatakan, erosi kepercayaan
masyarakat terhadap pemerintahan saat ini kian akut.
Hal itu terjadi karena belum terjaminnya persamaan keadilan yang dirasakan oleh banyak warga negara dan daerah.
Ketidakarifan dan ketidakbijaksanaan menyebabkan hal itu terjadi. Sistem yang ada saat ini juga dinilai meminggirkan
rakyat yang miskin.
Irman mengatakan, sistem yang ada saat ini telah memarginalkan warga negara yang miskin. Selain itu, menurut Irman,
hak-hak kelompok marginal atau miskin masih terasa diabaikan. "Hal itu tidak perlu terjadi jika arif dan bijaksana,"
ujar Irman. Ia mengatakan, semangat perjuangan bersama perlu dibangkitkan.
Selain itu, Irman mengatakan, pemerintah pusat menyerap aspirasi daerah tidak sepadan sehingga termarginalkan.
Daerah-daerah yang menjadi penghasil sumber daya alam justru menjadi sumber kemiskinan.
Hal itu terjadi akibat pengelolaan kekayaan alam yang tidak sesuai dengan konstitusi. Sikap pemerintah pusat terhadap
Papua juga tidak lepas dari sorotan. Menurut Irman, Papua telah dilupakan dan dipinggirkan oleh pemerintah pusat.
Selain itu, Irman menyoroti soal perselingkuhan politik dengan hukum yang hingga sekarang masih terus terjadi.
Irman mengatakan, belum terjaminnya persamaan keadilan telah mendorong erosi kepercayaan rakyat kian akut terhadap
pemerintah. Oleh karena itu, kata Irman, empat pilar kebangsaan yaitu Pancasila, Undang-Undang Dasar 1945, Negara
Kesatuan Republik Indonesia (NKRI), dan Bhinneka Tunggal Ika dibutuhkan untuk menjaga teguh bangsa Indonesia.
Meski demikian, Irman mengatakan, apa pun kesulitan yang sedang dihadapi bangsa Indonesia masih ada kesempatan
untuk memperbaiki segala kekurangan yang terjadi saat ini. "Harapan masih terbit," ujarnya. Semangat
proklamasi adalah semangat membentuk dan membangun negara.
Despite the apparent appeal of Indonesian President Susilo Bambang Yudhoyono's record of fighting corruption foreigners
would be wise not to jump to simple conclusions about the centrality of the anti-corruption agenda in this year’s
presidential contest. Not every group of voters views the corruption issue the same way. After a detailed review
of recent anti-corruption activities and a strong counter-reaction, van Klinken concludes that the contest between
Yudhoyono and Megawati could bring to light differences over the direction in which Indonesia as a whole should
be going. Class is making its presence felt in subtle ways. An essentially negative anti-graft program by itself
is not enough to transform Indonesian governance. Anti-corruption talk, and the increasingly verbalised resistance
to it, is merely one part of a broader (though understated) debate about the nature of the state in Indonesia.
Most polls are predicting that Indonesians will re-elect President Susilo Bambang Yudhoyono (SBY) in July this
year. Many commentators add that they will do so mainly because of his strong record of fighting corruption. “Graft-Busting
Yudhoyono To Keep Reins In Jakarta”, read a headline in The Age, 2 January 2009. Australian foreign policymakers
from the prime minister down are reportedly hoping quietly SBY will win (AAP, 5 March 2009). The polls predicting
an SBY win are certainly strong, and there is widespread agreement in Indonesia that corruption is a bad thing.
Even so, foreigners would be wise not to jump to simple conclusions about the centrality of the anti-corruption
agenda in this year’s presidential contest. Not every group of voters views the corruption issue the same way.
Some of those who appear to prioritise other agendas might have good reasons to do so. As far as foreign policymakers
are concerned, trying to hear what Indonesians are saying they want their government to do might be more important
than deciding it for them.
The SBY government’s fight against corruption certainly made headlines in 2008. With elections around the corner,
it became an increasingly political theme. It moved into the upper echelons of parliament, the central bank, and
even the cabinet. A review of the key stories of last year will demonstrate just how serious his government’s anti-corruption
credentials are. But more than that, it will illustrate some of the complexities of the issue. These must qualify
the rather black-and-white storyline about corruption in the western press as the central governance issue in Indonesia.
The country’s premier anti-corruption agency is a superbody named the Corruption Eradication Commission (Komisi
Pemberantasan Korupsi, KPK). In 2008 it continued to make spectacular arrests of top officials and parliamentarians.
But its very success also stimulated increasingly organised resistance. The outgoing parliament has just dealt
it a blow by failing to ratify a law to ensure its continuation.
An end to ‘corruption, collusion and nepotism’ was among the central demands of the 1998 reformasi movement that
brought down President Suharto’s New Order regime. Since then, public pressure has continued through a much more
open press and frequent elections. Reforms occurred both inside the existing system and by creating special bodies
outside it. Internal reforms have included the de-politicisation of the courts and the frequent appointment of
new ‘clean’ attorneys. But they have been largely ineffective. Although the regular system enthusiastically prosecutes
corrupters, the main motive appears to be to extort them, not to clean up corruption. Reports from the civil society
organisation Indonesia Corruption Watch have detailed the complex of techniques that police, prosecutors and judges
have deployed at every step of the way to extort bribes from those who enter the system.
The Lobby Queen and Post-New Order Corruption
Just how little has changed inside the regular judicial system became clear in several high-profile cases in 2008.
The most spectacular was the case of the ‘Lobby Queen’. Many corruption scandals are still emerging from the aftermath
of the banking bail-out that occurred during the Asian Economic Crisis of 1998. As in the West today, so in Indonesia
in 1998, Indonesia’s central Bank Indonesia (BI) gave ‘last-resort lending’ to dozens of commercial banks in the
early months of the crisis. It totaled some Rp 144.5 trillion (US$14 billion). But the recipient banks misused
a substantial part of this so-called Bank Indonesia Liquidity Assistance for various illegal purposes. Of the dozens
of recalcitrant debtors and errant bankers implicated in the scandal, only three have ever been imprisoned. One
of the few not to escape the threat of prosecution was the tycoon Sjamsul Nursalim, who has chosen to live in Singapore
for the time being. Attorney General M.A. Rachman dropped his case as a ‘special gift’ in June 2004. Six months
later the new attorney general, Abdul Rahman Saleh, re-opened it. It took his successor, Hendarman Supandji, actually
to form a team to take the case forward in mid-2007. Heading the team was prosecutor Urip Tri Gunawan.
Press accounts say Sjamsul Nursalim employed Artalyta Suryani, a skilled businesswoman, to try to get the case
dropped again. She lobbied effectively through the busy round of receptions by which members of Indonesia’s elite
keep in touch, focusing on developing a friendship with Deputy Attorney General for Special Crimes, Kemas Yahya
Rahman. On 29 February 2008, Kemas Yahya announced that the case against Nursalim had been dropped for lack of
evidence. Two days later the KPK caught prosecutor Urip, one of Kemas’s underlings, carrying US$660,000. It also
arrested Artalyta. The embarrassed attorney general, Hendarman Supandji, made a public apology and removed Kemas
Yahya and another implicated colleague named Muhammad Salim from office. It was the first time an active deputy
attorney general had been removed. Artalyta was sentenced in July 2008 to five years in prison, and Urip in September
to an unprecedented 20 years. But the attorney general did not resign, nor was he sacked.
The courts are as contaminated as the Attorney General's Office, and two big cases in the past 12 months did nothing
to alter this image. Most corruption cases still go to the regular district courts, and most of the accused have
been regional parliamentarians. In 2006, there were 265 corruption cases involving local legislative bodies with
almost 1,000 suspects handled by prosecutorial offices across Indonesia. They handled 46 corruption cases implicating
61 provincial governors and district heads in the same year. One indicator suggesting judicial corruption is the
high acquittal rate in the regular courts—just over half in 2008. The bulk of West Sumatra’s provincial parliament
was convicted of corruption by a district court in 2004 for embezzling half a million dollars of state funds two
years earlier. But upon appeal, the Supreme Court threw out the charges against them all between late 2007 and
mid-2008, without any prison time being served. In November 2007 the Medan district court acquitted ‘Timber King’
Adelin Lis of all charges of illegal logging in North Sumatra’s protected forests. Adelin’s case had been strengthened
by a letter from the forestry minister, M.S. Kaban, stating that this case was ‘only’ an administrative matter.
On the day of his release, the police announced they were laying fresh charges against Adelin, for money laundering.
However, he had already slipped out of the country. The Judicial Commission announced it was preparing to investigate
the five judges who ruled on this case.
Post-New Order office-holders hoping to be re-elected on their record increasingly found such familiar failures
embarrassing political burdens. They supported the establishment of an anti-corruption ‘superbody’ outside the
regular system. The need for foreign approval also played a role at first. The World Bank and USAID had done preparatory
studies on legal development in the 1990s, and their recommendations proved influential in designing many reforms
in 1998–99. When Law 31/1999 on the Eradication of Corruption required the establishment of a Corruption Eradication
Commission, the Asian Development Bank helped with the planning and the International Monetary Fund made success
one of its conditions for continued assistance. The law on the KPK and its associated Anti-Corruption Court was
enacted in 2002, but some foot-dragging meant it took until the last days of President Megawati’s term in office
in mid-2004 for it to become a reality. The KPK replaced the Civil Servants Wealth Audit Commission (Komisi Pemeriksa
Kekayaan Penyelenggara Negara, KPKPN), which had made many embarrassing revelations. The KPK’s terms of reference
are designed to short-circuit problems with the existing system, such as police–public prosecutor rivalry, excessive
prosecutorial discretion, and judicial procrastination. It has a substantial budget (US$25 million in 2007) and
around 450 ‘embedded’ staff from the police and the Attorney General's Office. Even so, it can only take on the
most high-profile among the corruption cases that arise. It sees itself as a ‘trigger mechanism’ for further reform.
In 2004 the outsider presidential candidate Susilo Bambang Yudhoyono (SBY) made fighting corruption a central plank
of his election campaign. When he entered the palace in October 2004 he gave the KPK its head. On the strategy
of starting with ‘low-hanging fruit’, it kicked off by detaining Aceh’s governor, Abdullah Puteh, that December.
The president issued a flurry of instructions (Inpres 5/2004), plans (RAN-PK) and letters authorising the investigation
of senior officials, and in 2006 he signed the UN Convention Against Corruption. Over the period 2005–07, KPK pursued
27 high-profile cases through the special Anti-Corruption Court, located in South Jakarta, and won convictions
in every case that went to trial. The KPK owes much of its grit to four deputy directors who come from outside
the Attorney General's Office. Most famous among them was Amien Sunaryadi, who left the giant multinational business
advisory and auditing firm PricewaterhouseCoopers in 2003 to join KPK, reportedly taking a 90% pay cut for the
privilege. He introduced new forensic auditing and investigative techniques, which led to some spectacular arrests.
KPK and the Bank Indonesia Scandal
In the past year, KPK arrests reached higher levels than ever before. The most spectacular cases arose once again
from the liquidity assistance given to the banks in 1997–98 by the central bank. Bank Indonesia was unable to recover
much of these loans from the recipient banks. In 2003 it formulated a draft amendment to the Law on Bank Indonesia
that transferred the repayment obligation to the government. Bank Indonesia knew from experience that the larger
the amount of money involved, the more it would cost to "persuade" parliament of the virtue of this move.
"Bank Indonesia has been under extortion for so long", a source in the central bank told Tempo Magazine.
A meeting of the Bank Indonesia board of governors in June 2003 decided to set aside Rp 100 billion (US$10 million).
Two-thirds was to help several indicted Bank Indonesia officials pay off prosecutors, and a third was for the parliamentarians.
It was borrowed or otherwise appropriated from an educational fund intended to support the central bank’s training
institution, LPPI (Lembaga Pengembangan Perbankan Indonesia, Indonesian Banking Development Institute). On 28 January
2008, the bank’s governor, Burhanuddin Abdullah, was arrested for misappropriating bank funds. This humiliation
came just a few months after Global Finance magazine had named him the best central banker in 2007 and the Indonesian
government had conferred on him the prestigious Mahaputra Award. In February 2008, KPK placed travel bans on all
those present at the 2003 meeting that had taken the bribing decision along with Burhanuddin. One of them was deputy
bank governor Aulia Pohan, who is related by marriage to President SBY. He had arranged to obtain the money from
the educational fund. The president won praise for not intervening when Pohan too was arrested at the end of November
2008 and placed in police detention.
Two further arrests caused the president more headaches. They were of two members of the parliament’s Commission
IX on Finance and Banking, which was responsible for handling the Bank Indonesia law amendment. During hearings
of the case at the Anti-Corruption Court in August 2008, one of the two, Hamka Yandhu, acknowledged he had handled
the money, and proceeded to name those to whom he had distributed it. Envelopes contained between Rp 300 million
and Rp 1 billion, depending on the seniority of the recipients. Fat envelopes are a common sight in the parliament
building. Among the recipients this time were two members of parliament who are now in cabinet. M.S. Kaban is the
forestry minister. Paskah Suzetta, who joined the cabinet in a December 2005 reshuffle, is chief of the National
Planning Agency and State Minister for National Development Planning. In 2003 he was the chairman of the working
committee in charge of the Bank Indonesia law amendment. Forestry minister Kaban is close to the timber industry.
Tackling illegal logging had been one of SBY’s core election promises, but when in 2007 police arrested loggers
who had accumulated a gigantic stockpile of illegal timber in Riau province, Kaban accused national police chief
General Sutanto of threatening an industry that had created thousands of jobs and was generating foreign reserves.
At about this time he also wrote his glowing letter in support of illegal logging suspect Adelin Lis.
SBY did not react to these allegations as resolutely as he might have done. Another of his election promises had
been to sack any minister tainted by corruption. He had actually done this in May 2007, when he dismissed the State
Secretary, Yusril Mahendra, and the Minister for Justice and Human Rights, Hamid Awaluddin, after allegations that
they had helped Tommy Soeharto transfer corruptly obtained money. He now called Kaban and Suzetta into his office
to explain. ‘Being veteran politicians’ (as Tempo magazine put it), they each said they knew nothing about it.
Afterwards the president said he would not suspend them. Commentators thought that, less than a year before elections,
he had acted cautiously in order not to endanger support from their parties. President Yudhoyono’s cabinet has
representatives from eight different parties, with PDIP being the only large non-participant. Paskah Suzetta is
deputy treasurer for the Golkar Party; Kaban chairs the (Muslim) Star and Crescent Party (PBB). KPK has since questioned
Suzetta over the case.
Irresolution can also be found within the Corruption Eradication Commission itself, which evidently considers some
people untouchable. Vice President Jusuf Kalla in 2005 became embroiled in controversy after the irregular purchase
of 40 used German military helicopters. Governor Abdullah Puteh got 10 years in prison for the shoddy purchase
of just one helicopter, but Kalla never faced an official investigation.
President Yuhoyono and the KPK
President Susilo Bambang Yudhoyono’s anti-corruption campaign has thus run into some serious problems. Nevertheless,
I think it is fair to say that the most realistic hopes for the anti-corruption campaign still lie with his re-election
in July 2009. Few believe he is personally corrupt. He and his wife have no personal foundations of the kind Soeharto
used as slush funds. But he cannot do it all alone.
He needs political and business allies towards his re-election. Five years ago, each aspiring presidential team
spent around US$10 million. Vice President Jusuf Kalla has been among the most important of SBY’s allies, both
as head of Golkar and as one of Indonesia’s wealthy entrepreneurs. Indonesia’s richest man - until the current
global crisis undid him - also sits in SBY’s cabinet. Coordinating Minister for People’s Welfare Aburizal Bakrie’s
family until recently owned 40% of Bumi Resources, Indonesia’s largest coal producer. Both represent potential
sources of embarrassment—arising, perhaps, out of Kalla’s helicopters, Bakrie’s Lapindo mud volcano in East Java,
or Bakrie’s special pleading for assistance over the Bumi Resources share price collapse. State agencies are also
thought to remain cash cows for anyone who can gain control of them—and the stuff of scandal for opponents. Early
in 2008, state oil and gas agency Pertamina’s directors were once more replaced, amid allegations that the changes
were driven by political factions hoping to obtain access to Pertamina funding. The Corruption Eradication Commission
in July 2008 began examining reports from Indonesia Corruption Watch and the Supreme Audit Agency that some Rp
200 trillion (US$22 billion) of Pertamina funds had been misappropriated over the period 2000–07. Much of this
may have been lost to oil smuggling stimulated by high fuel subsidies, but Pertamina’s role as a slush fund in
Soeharto’s days has not been forgotten.
A bigger problem for the anti-corruption agenda lies in parliament. KPK’s daring actions began in 2008 to stimulate
resistance among the politicians who approved its mandate in the first place. Last year KPK arrested six active
parliamentarians in various cases. Some had been involved with the Bank Indonesia draft law bribery case mentioned
above. Another was arrested over corruption in relation to the re-zoning of a mangrove forest and protected forest
(this once more involved forestry minister Kaban as well), and yet another over bribery in the procurement of patrol
boats. The most dramatic arrest of the year was that of a member of parliamentary Commission IV in charge of forestry.
Al Amin Nasution belonged to the Islamic party PPP (Partai Persatuan Pembangunan, United Development Party). He
had demanded Rp 2.2 billion (US$242,000) to expedite the issue of a permit to convert protected forest land on
Bintan Island so as to allow an office construction project. The money was to be distributed to all committee members,
in the usual way. In April 2008, KPK officers arrested him at midnight in a luxurious Jakarta hotel, in the company
of a prostitute and with the cash and paperwork in his car, afterwards releasing transcripts of tapped phone conversations.
Counter-Pressures
The jolt of this public shaming caused many parliamentarians to stop carrying large amounts of cash to lunchtime
meetings, and to modify their mobile phone habits. Some started speaking out against the KPK. PPP faction head
Lukman Hakim Saifuddin said angrily: ‘That extraordinary authority [of the KPK] must be controlled.’ Commission
III (legal affairs) called the KPK in for a closed-door session to answer questions about possible violations during
the arrests of parliamentarians. Commission chairman Trimedya Panjaitan ‘warned the KPK against attempting to discredit
the legislative institution’. The commission had begun in May 2008 to draft a law to restrict phone tapping.
Even the president felt compelled to join the condemnation of KPK’s strategy. In an opening speech to the National
Law Convention in Jakarta on 15 April 2008 he told KPK, along with the Supreme Audit Agency and the Attorney General's
Office, to avoid ‘entrapping’ citizens by taking advantage of their ignorance of laws and regulations on corruption.
They should give priority to preventive measures over legal action, he said. Parliamentarians in the audience emitted
loud cries of ‘Amen!’ The Al Amin Nasution arrest had triggered a failure of political nerve.
The major parties increasingly thought of the KPK mainly as a political weapon in the hands of their opponents.
The opposition party PDIP complained the loudest. In March 2007, a joint KPK and Attorney General's Office team
arrested Widjanarko, chief of the food logistics agency, Bulog, for diverting cash from an Australian cattle import
scheme. (He had kept the cash in buckets in his bathroom.) He was a PDIP member with powerful connections. Like
most of the large state enterprises, Bulog has long been a political cash cow. The government immediately replaced
Widjanarko, but with a Golkar man—former Aceh caretaker governor Mustafa Abubakar. PDIP secretary-general Pramono
Anung said the KPK was doing the government’s bidding in undermining the PDIP ahead of 2009 elections. Commission
III chairperson Trimedya Panjaitan, also from PDIP, echoed the sentiment. PDIP was exaggerating: in reality, plenty
of prominent Golkar members have also been imprisoned. But there is no doubt that when corrupt practices are as
universal as they are in Indonesia, any efforts to combat them inevitably become partisan and produce ‘Why me?’
reactions.
The future of the KPK–Anti-Corruption Court package is now threatened from a wholly different direction as well,
albeit initially for a good reason. The Constitutional Court ruled in late 2006 that the Anti-Corruption Court
was unconstitutional because it created ‘legal uncertainty’ for defendants, who could not be sure whether they
would be sent to this court or to the regular district court. It gave parliament three years, until the end of
2009, to prepare fresh legislation. If parliament is unable to complete the new law in time to meet the December
2009 deadline, the Anti-Corruption Court will disappear by default. This would not end the effort to eradicate
corruption, but anti-graft work could once more become a lucrative part of a predatory bureaucratic system.
To its credit, the government drafting committee resisted pressure to reduce the role of non-career ad hoc judges,
who currently hold three of the five positions on the court and are less subject than career judges to corrupt
inducements within the system. But the draft being discussed in parliament creates anti-corruption courts in every
one of the over 450 districts, where they would fall under the regular district court. Non-career talent is scarcer
there. When parliament closed in March ahead of the 9 April general elections, it had failed to pass the legislation.
The big question now is whether the new parliament will rediscover its appetite for a strong Anti-Corruption Court,
or whether it will neuter this special body, as has been the fate of other such bodies in the past.
Beyond Anti-Corruption Politics?
This takes us back to the bottom line, political will. Clearly that will is being weakened by some rapacious behaviour
within the nation’s top echelons. At the same time, a case can be made that a reduced priority on the anti-corruption
campaign might not be the unmitigated failure it is often made out to be. At the elite level, as corruption greases
wheels all over the world, anti-corruption efforts arguably seize them up again. Vice President Jusuf Kalla has
openly suggested as much by repeatedly expressing scepticism about the value of a punitive anti-corruption drive.
‘In the first five years, the KPK frightened us. That is important. However, in the future, the KPK cannot remain
a frightening entity’, he said in late 2007. A year earlier he told a KPK seminar that the nation’s antigraft drive
was hindering the economy. Though not particularly helpful to his president’s campaign, his words contain some
truth. Unspent development funds more than doubled between late 2004 and early 2006, and one credible explanation
is that the anticorruption drive was discouraging government officials from making procurement decisions. Indeed,
some independent observers have also argued that promoting an anti-corruption program as an end in itself could
in fact do more harm than good.
For the public, too, anti-corruption measures are not all there is to politics. No doubt they are popular. The
humiliation of high officials also has entertainment value. Suggestions that corruptors should be shot have been
tabloid fare for decades, and the supreme penalty actually became a provision in the 1999 law on the eradication
of corruption. Indonesia is unlikely to apply the Chinese shot in the neck any time soon, but local electorates
have frequently punished corrupt or incompetent incumbents. Of 211 incumbents who sought a new mandate in regional
polls in 2005, 87 were defeated. It is true that some of these contests are won on personal popularity rather than
policy. The most famous example was an upset win in West Java’s gubernatorial election in April 2008 by a young
challenger who paired with movie and television star Dede Yusuf. But the West Java incumbent was under a KPK cloud,
and that was a disaster for him. Similar problems caused defeats in South and Southeast Sulawesi.
Nevertheless, it is wise to be realistic about the extent of public outrage over the issue. Fighting corruption
was a major plank in SBY’s 2004 campaign, but security was just as important. The secessionist movement in Aceh
and the terror bombings of preceding years were fresh in voters’ minds. And President Yudhoyono knows that another
economic crisis will divert attention from an anti-corruption campaign. When he had to raise fuel prices again
in May 2008 to reduce burgeoning (and pro-rich) subsidies, he worried that demonstrations might produce deaths
and thus martyrs, as they had done in 1998. He suspected allies of retired General Wiranto—his former military
senior—of being behind the more vociferous protests. Wiranto’s ambitious little political party Hanura quickly
blamed ‘world oil capitalists’ for the reduction in fuel subsidies. A reasonably effective ‘direct cash assistance’
(BLT) program to compensate the poorest for rising fuel prices helped dampen protests.
Parliamentary elections are expected to bring about only marginal shifts in the political landscape, except that
SBY’s once fledgling Democratic Party is expected to rival Golkar in size. The two leading presidential candidates
are expected to be SBY and PDIP chairperson (and former president) Megawati Soekarnoputri. Polls place them far
ahead of the many other individuals expected to be nominated. Megawati’s popularity comes from her status as opposition
leader, not from fond memories of her mediocre earlier period in office. She led Yudhoyono after he was forced
to raise fuel prices in mid-2008, but cheaper fuel since then has given Yudhoyono back his commanding position
in the polls. Of the trailing challengers, the only one with a remote chance seems to be retired Lieutenant-General
Prabowo Subianto, who has been spending lavishly on television spots and wooing prominents from other parties.
The contest between Yudhoyono and Megawati could bring to light differences over the direction in which Indonesia
as a whole should be going, including differences over what people want done about corruption. Class is making
its presence felt in subtle ways. A September 2008 poll by the Indonesian Research and Development Institute (IRDI)
showed significant class differences between supporters of Yudhoyono and Megawati. Better-educated middle class
people, many of them civil servants, tended to prefer SBY, whereas poorly educated farmers and fishers, and the
unemployed, preferred Megawati. SBY’s 2004 anti-corruption campaign, so widely welcomed overseas, resonates in
Indonesia mainly with the middle class. Even there it does not have overwhelming support. Vice President Jusuf
Kalla, for example, whose scepticism was noted above, belongs to this same middle and upper group.
An essentially negative anti-graft program by itself is not enough to transform Indonesian governance. Only a program
that connects positively with what Indonesians want their government to do for them can inspire. Anti-corruption
talk, and the increasingly verbalised resistance to it, is merely one part of a broader (though much understated)
debate about the nature of the state in Indonesia. SBY’s technocratic vision of a lean clean state, internally
competitive to improve “service delivery”, contrasts with an older but still vital image of the state as a large
and inclusive political community that will bring prosperity to all. PDIP upholds this image, and Prabowo’s campaign
even offers “socialism” as the answer to the nation’s economic crisis. Neither have done much to flesh out the
populist rhetoric with policy proposals. Moises Naim once noted in his 2005 article "Bad Medicine" in
Foreign Policy critical of the "good governance’ agenda "[t]he corruption obsession ... crowds out debate
on other crucial problems". Indonesian politicians and foreign observers alike need to understand the wider
contours of this debate much better than they do. What kind of government do Indonesians really want?
An earlier version of this article was part of another article that appeared in the December 2008 edition of
the Bulletin of Indonesian Economic Studies.
Gerry van Klinken is a research fellow with the Royal Netherlands Institute of Southeast Asian and Caribbean Studies
(KITLV), where he coordinates the Dutch-Indonesian research program “In Search of Middle Indonesia”, which studies
middle classes and youth in provincial towns. He was editor of the magazine Inside Indonesia. In 2002-2004 he spent
nine months as research advisor to the Commission for Reception, Truth and Reconciliation in East Timor (CAVR).
With Richard Tanter and Desmond Ball he co-edited the second edition of Masters of Terror: the Indonesian military
in East Timor in 1999 (Rowman and Littlefield, second edition 2006). His most recent books are Communal violence
and democratization in Indonesia; small town wars, (Routledge, 2007); and (with Henk Schulte Nordholt), Renegotiating
boundaries; local politics in post-Suharto Indonesia, Leiden: KITLV, 2007. Email: klinken@kitlv.nl
This article originally appeared in the Nautilus Austral Policy Forum 09-9A, 30 March 2009.
Posted at The Asia-Pacific Journal April 12, 2009.
Recommended citation: Gerry van Klinken, "Indonesia’s Politically Driven Anti-corruption Agenda and the
Post-Election Future," The Asia-Pacific Journal, Vol 15-2-09, April 12, 2009.
Monday, August 15, 2011 EXPOSE
The recently unveiled barrage of graft cases involving legislator Muhammad Nazaruddin,
the former treasurer of President Susilo Bambang Yudhoyono’s Democratic Party, has added a chapter to the history
of deep-rooted corruption at the House of Representatives. The Jakarta Post’s Hasyim Widhiarto explores political
parties’ shadowy fund-raising methods.
Guilty: Veteran Golkar Party politician and former National Development Planning Agency chairman Paskah Suzetta
leaves a court hearing in Jakarta before judges handed him a 16-month prison sentence for his role in a graft case
on June 17. Political corruption is spiraling out of control as parties seek to accumulate funds for the upcoming
2014 general election and for daily operational expenses. JP/Ricky Yudhistira
The recently unveiled barrage of graft cases involving legislator Muhammad Nazaruddin, the former treasurer
of President Susilo Bambang Yudhoyono’s Democratic Party, has added a chapter to the history of deep-rooted corruption
at the House of Representatives. The Jakarta Post’s Hasyim Widhiarto explores political parties’ shadowy fund-raising
methods.
Amid the scandal following the graft allegations against Nazaruddin, the ruling Democratic Party spent over Rp
5 billion (US$585,000) last month to hold a coordinating meeting at the Sentul International Convention Center
(SICC), 40 kilometers south of Jakarta.
With a more than 10,000-seat capacity, SICC’s main hall, which already hosted international pop singers Justin
Bieber and Kylie Minogue this year, had more than enough room for the 5,000 who participated in the meeting.
The organizers also shelled out for meals and accommodations for participants coming from as far away as Papua.
According to deputy party chairman Johnny Allen Marbun, several companies helped sponsor the meeting, but the bulk
of the event was paid for from the party’s coffers, money that comes from the party’s legislators.
“Every month, our 148 lawmakers donate at least Rp 5 million of their salary to the party. In one year, the party
receives around Rp 9 billion alone from them. That’s more than enough for us to hold a decent annual meeting,”
Johnny said.
Such incidental costs exclude the daily operations at party headquarters, which requires at least Rp 3 billion
(US$351,000) a month, according to a source inside the party.
But questions arise whether contributions from members’ monthly incomes are sufficient to finance party activities
that stretch from local election campaigns to gearing up for the 2014 general election.
With a steady flow of politicians to prison for graft, coupled with a refusal from nearly all parties to publish
transparent financial reports, suspicions abound that politicians are tapping illegal financial wells, too.
Uchok Sky Khadafi, the investigation and advocacy coordinator of the Indonesian Forum for Budget Transparency (Fitra),
said that parties’ refusal to publish financial reports indicated that something was fishy with how parties accumulated
money.
“If they publish the reports, anti-graft NGOs and the media would know the identities of the party’s major financial
supporters and would be able to probe whether the party’s decisions to support certain policies or budget allocations
have brought their donors direct financial advantages.”
Such transparency would also allow the public to spot money that was gathered illicitly by the parties, which watchdogs
and insiders said have long enjoyed the gains of pocketing graft money to make ends meet.
Commission-seeking among ministries, state agencies and regional administrations during state budget deliberations
by the House of Representatives’ budget committee is currently considered the simplest means of graft.
Committee members approach representatives from ministries, state agencies or regional administrations to strike
deals to approve proposed funding and projects in exchange for commission rewards, according to National Mandate
Party (PAN) committee member Wa Ode Nurhayati.
Wa Ode came into the media spotlight after she recently accused House leaders of receiving money for acting as
brokers in the budgetary committee.
She said the overwhelming authority of the House to decide how to allocate the state budget, granted to the House
after the 1998 reform movement, left the door open for widespread rent-seeking practices.
The House has the authority of final approval for most of the detailed project expenditures of a ministry – a role
supposedly held by the Finance Ministry and the National Development Planning Agency (Bappenas).
The committee members can also pocket fees from companies for successfully lobbying government officials to grant
them infrastructure projects that were approved by the committee.
Anticorruption activists and analysts have repeatedly warned that the unchecked authority of the House’s budget
committee has allowed political parties to feed illegally from the state budget to finance their day-to-day operations
and accumulate capital for the 2014 general election.
Under the 2011 state budget, the government and state institutions are earmarked to spend Rp 1,320 trillion ($132
billion).
Concern over graft in the budget committee was highlighted by Nazaruddin’s repeated allegations that committee
members received fees for lobbying Youth and Sports Ministry officials to grant the construction project of an
athletes’ village for the upcoming SEA Games to a contractor with close ties to political parties
The Corruption Eradication Commission (KPK) has named Nazaruddin as a suspect in the case, but he fled overseas
on May 23 to escape justice.
Colombian police apprehended Nazaruddin on Aug. 7 in Cartagena as he was on his way to watch a soccer match in
Bogota.
Nazaruddin arrived in Indonesia on Saturday evening and was being held at the Mobile Brigade detention center in
Depok, West Java, for further questioning by the KPK.
KPK chairman Busyro Muqoddas said on Saturday that Nazaruddin was expected to uncover the mafia ring in the budget
committee, as he had fully awareness of their operations.
Aside from his alleged involvement in the Southeast Asian Games project graft case, Nazaruddin is also allegedly
involved in 31 other cases valued at around Rp 6 trillion in total and that involve five different ministries,
Busyro said.
A legislator who refused to be named said the cases against Nazaruddin stemmed
from budget committee negotiations.
“The start of Nazaruddin’s graft cases was in the budget committee,” the legislator said.
He said Nazaruddin’s case would not only drag down Democratic Party politicians but also those from other major
parties, particularly the other committee members.
“Nazaruddin’s case is not exclusive to the Democratic Party. Other parties are also jittery right now over concerns
that he will uncover all of the committee’s tricks,” the legislator added.
Golkar Party politician Melchias Markus Mekeng, who chairs the House budget committee, has repeatedly denied the
allegations of fee-seeking during the negotiation of the state budget.
He said limited infrastructure funds had forced the committee to prioritize certain projects without any intentions
of members seeking any gratuities for themselves at the end of the day.
Politicians are also believed to have explored other illicit means of pocketing additional money through state-owned
companies and donations from businesses in exchange for lobbying for certain favorable policies.
Analysts have repeatedly said that political corruption has spiraled out of control because of the high costs of
political operations, which are not balanced by a culture of donation by party members and supporters, as widely
practiced in other democracies.
Parties must not only spend overhead costs for maintaining offices throughout the archipelago in order to maintain
their network of supporters and members, but also to finance their candidates’ campaigns in local elections and
to raise money for the 2014 general election.
Political parties’ financial sources
Party member contributions: most political parties obligate members in public posts, including lawmakers, regional
leaders and ministers, to allocate a fixed percentage of their monthly salary, usually up to 50 percent, to fill
their coffers.
Government contributions: A 2009 government regulation on financial aid for political parties stipulates that the
state must provide “annual financial assistance” to political parties that have members in the House of Representatives
to partly cover administrative costs and fund political awareness programs. State budget watchdog Fitra said the
government last year allocated Rp 8.7 billion in subsidies for the nine parties in the House.
State agencies and state-owned companies: Major political parties establish networks of financial resources by
putting members or public figures who close to them in strategic positions in state agencies or state companies.
The members are expected to influence policies at the agencies or companies to benefit the parties.
Brokering state projects: Lawmakers use political lobbying to help state or private sector companies secure state-funded
projects from ministries and other state institutions. Fees for such assistance start from at least 10 percent
of the total amount of project.
Brokering state budget allocations: During state budget deliberations, lawmakers at the House’s budgetary committee
work hand-in-hand to grant certain infrastructure projects or funds to regional leaders in exchange for “commissions”.
The budget committee is also plagued with legislators allegedly receiving fees from ministries or state agencies
for approving their requested annual budget allocation requests.
Vote buying: Lawmakers receive kickbacks during crucial decision-making processes at the House, including during
the selection of high-profile public officials and during the passing of key legislation.
Private sector: Some companies and businessmen fund parties in the hope that the parties will lobby on their behalf
for certain concessions and favorable policies.
June 15, 2011
Indonesian President Susilo Bambang Yudhoyono
talks with CNN's Andrew Stevens about tackling corruption.
President Susilo Bambang Yudhoyono talks with CNN’s Andrew Stevens during the Talk Asia program.
Photo Courtesy of CNN's Talk Asia
SBY Says Graft Is Biggest Challenge
Addressing an international audience on Wednesday, President Susilo Bambang Yudhoyono admitted that corruption
was Indonesia’s biggest challenge, as well as his own.
Ulma Haryanto | 11:27 PM June 15, 2011
Addressing an international audience on Wednesday, President Susilo Bambang Yudhoyono admitted that corruption
was Indonesia’s biggest challenge, as well as his own.
“Corruption is our biggest challenge, my biggest challenge. I have to be frank on that,” Yudhoyono said in an
interview on CNN’s Talk Asia that was broadcast on Wednesday afternoon.
However, the president was quick to point out that Indonesia had launched the most aggressive anticorruption campaign
in the country’s history since he took office in 2004.
“The results show for themselves. About 150 senior officials have faced the law, and some of them have been convicted
and sent to jail. There’s now a big movement in our society against corruption,” he said.
Yudhoyono added that the practice of collusion between government officials and businesses was no longer as bad
as it used to be.
“I see that we are headed in the right direction. I expect that Indonesia will need about 15 to 20 years to implement
a system that would spur a stronger culture or a climate of fear of corruption,” he continued.
Emerson Yuntho of Indonesia Corruption Watch warned that Transparency International still rated Indonesia quite
poorly on its corruption index.
“We have to remember that Indonesia’s corruption index is still alarming because the government has not given maximum
support to fight corruption,” Emerson said.
“There is still a chance for [Yudhoyono] to improve the fight against corruption by being firm. If a leader is
firm in his attitude toward corruption, then the rest [of the state officials] will follow.”
He also said that from 2004 to 2010, Indonesia’s corruption perception index improved by less than one point, from
1.9 to 2.8 out of the scale of 10.
“If he said we are going to improve within 15 to 20 years, with the current condition, I would highly doubt it,”
he said.
Emerson likened Indonesia’s corruption eradication effort to running on the treadmill. “Yes, we are running, but
we are going nowhere.”
Renowned lawyer and anticorruption activist Todung Mulya Lubis said that even though he agreed Indonesia had launched
the most aggressive corruption eradication campaign under SBY’s leadership, it was still not enough.
“True, there are a lot of arrests, but this does not create enough fear in people to commit the act. Besides, if
the aim is to arrest all corruptors, our jails would not be enough,” Todung said.
He urged the president to create a system that tightened the noose on the culture of corruption, ultimately by
accelerating bureaucratic reform.
“We’ve heard the term for a long time now, but nothing has really changed. They are not serious, and the reform
should be based on transparency and accountability,” he said.
The Rule of Law Index released by the World Justice Project on Monday put Indonesia second to last in the East
Asia and Pacific region. It was 47th of the 66 countries listed in the index.
Aside from an underdeveloped civil justice system, courts are also still prone to influence by corruption, the
report said.
“Police abuses and harsh conditions in correctional facilities are also a significant problem,” the report said.
The index, however, acknowledged the country’s main strengths in freedom of opinion and open government.
The protests marked 100 days of Mr Yudhoyono's second term in office
Protesters say President Susilo Bambang Yudhoyono has not delivered on his promise to eradicate corruption during
the first 100 days of his second term.
Correspondents say Mr Yudhoyono still has strong support, but his popularity has fallen slightly in recent polls.
The protesters' main complaint centres on the arrest of two officials from the anti-corruption commission.
Many are also angry at the government's bail-out of one particular bank, Bank Century, during the financial crisis.
Difficult times
President Yudhoyono was voted in with an overwhelming majority last year, but 100 days into his second term, he
is now facing one of his most difficult times in office.
In several cities across the country, people have come out to mark the anniversary with street protests. Numbers
range from 1,000 to 5,000 people, according to the BBC correspondent in Jakarta, Karishma Vaswani.
Two corruption scandals have dogged Mr Yudhoyono's administration in recent months.
First there was the anti-corruption commission saga, which began in November and saw two officials of the powerful
agency detained by the police.
Many Indonesians saw the arrests as an attempt to unfairly target one of the few institutions people think of as
credible.
The other scandal involves Bank Century, a small Indonesian lender that was bailed out by the Indonesian central
bank at the height of the financial crisis last year.
Allegations of misconduct have been levelled at the two people in charge of handling the bail-out - Indonesia's
Finance Minister Sri Mulyani Indrawati and Vice-President Boediono, two key members of President Yudhoyono's new
cabinet.
A parliamentary investigation is under way to determine whether the two officials misused their powers to save
Bank Century.
After the bail-out many of the bank's wealthy clients allegedly donated money to the president's election campaign.
A sample of corruption outside Indonesia
A U.S. government contractor in Iraq charged the Pentagon a whopping amount of money for inexpensive items,
including $900 for a $7 control switch, according to a new report from a U.S. watchdog
:A U.S. government contractor in Iraq charged the Pentagon a whopping amount of money for inexpensive items, including
$900 for a $7 control switch, according to a new report from a U.S. watchdog.
U.S. Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr. said review found that Anham, LLC, which
is based in suburban Washington, allowed its subcontractors in Iraq to also charge $3,000 for a $100 circuit breaker,
and $80 for a piece of plumbing equipment worth $1.41.
As a result, Bowen's inspectors are seeking to review all Anham contracts with the U.S. government in Iraq and
Afghanistan, which total about $3.9 billion.
Hassan S. Judeh, the administration director at Anham's headquarters in Vienna, Va., declined to respond to Bowen's
examples because he said the company has not seen the report. But Judeh said Anham has a history of providing competitive
prices for services, resulting so far in $132 million in savings to the government.
"Anham prides itself on the fact that it watches every penny and strives to always give the government the
best cost-benefit in a remarkably hostile war environment," Judeh said in a statement.
A spokesman for the U.S. military didn’t comment on the overcharges but issued a statement regarding the rest of
the report, which found that frequent bombings, assassinations and a resurgence in violence by Shiite militias
have made Iraq more dangerous now than it was just a year ago.
“We anticipated, and stated many times, that there would be militant and terrorist groups trying to take advantage
of this period as U.S. forces prepare to fulfill our commitments under the Security Agreement. These groups attack
both Iraqi and U.S. forces,” U.S. military spokesman Jeffrey Buchanan said.
“From our standpoint, Iraq’s security continues to be an important and complex issue and one that is difficult
to summarize in short-term trends and figures.”
The findings come during what Bowen called "a summer of uncertainty" in Baghdad over whether American
forces will stay past a year-end withdrawal deadline and continue military aid for the unstable nation.
"Iraq remains an extraordinarily dangerous place to work," Bowen concluded in his 172-page quarterly
report to Congress and the Obama administration on progress -- and setbacks -- in Iraq. "It is less safe,
in my judgment, than 12 months ago."
Comr. Gen. Susno Duadji never doubted that exposing corruption in the police force would be a lonely fight —
but he did not realize just how difficult it would be.
In an exclusive interview with the Jakarta Globe after he was sentenced to three and a half years in prison on
Friday, the police general revealed the blows he had suffered during the bitter battle.
Read the full interview in Saturday's Jakarta Globe newspaper.
The National Police chief of detectives said he became a virtual pariah among his former colleagues after he publicly
accused fellow generals of acting as case brokers in Gayus Tambunan’s money-laundering case.
His graft claims, delivered during a House of Representatives hearing last year, was meant to shake the police’s
foundations.
“I’ve always known I was alone in the battle to reform the police and punish the rogue officials within the force,”
he said.
But his crusade for justice came to a grinding halt when he was arrested for accepting bribes while handling a
fish-farm dispute as well as embezzling election-security funds during his stint as West Java police chief.
He dismissed the charges as attempts by some law enforcers to gag him or get back at him. But on Thursday, his
denials were harder to substantiate after he was convicted for taking Rp 500 million ($57,500) in bribes and stealing
Rp 8.4 billion in funds earmarked for security during the 2008 West Java gubernatorial election.
Susno said he was “saddened and infuriated” that not a single police officer supported him in his battle. Even
his wife, Herawati, said former friends and officers’ wives avoided her.
As a rare bright spot during the scandal, Susno’s whistle-blowing has led to the conviction of two officers, a
judge and a group of lawyers. Two prosecutors were charged with leaking top-secret prosecution dossiers.
But top officers said to be deeply involved remained untouched.
Hardened by his ordeal, Susno, once described by peers as cocky, now chooses his words carefully, avoiding controversial
topics that might hurt his chance of winning his appeal.
Proceedings in the bribery trial of high-ranking police officer Comr. Gen. Susno Duadji took an unusual turn
on Thursday when the defendant presented an online survey that he said showed overwhelming public support for him.
No Foul Play
in Death of Susno Witness: Police
Farouk Arnaz | March 10, 2011 The National Police has ruled out foul play in the death of a former bodyguard and defense witness for Comr.
Gen. Susno Duadji —
the second witness in the case to perish in a vehicular accident
Jakarta. President Susilo Bambang Yudhoyono said on Wednesday that although progress had been made in the fight
against corruption, it was not enough and more aggressive efforts were needed to rid the country of graft.
Speaking at a national conference on corruption, Yudhoyono cited surveys by Transparency International that found
Indonesia’s Corruption Perception Index had improved to 2.8 in 2010 from just 2 in 2004 — with 0 being the most
corrupt and 10 the least.
“The 2.8 is an increase and the highest achievement in Indonesian history — but you and I, we’re not satisfied,”
he said.
Indonesia Corruption Watch’s deputy coordinator, Adnan Topan Husodo, said the increase, which he called minor,
was a dismal result from Yudhoyono’s six years in office.
“Rising from 2 to 2.8 over the course of six years is not an achievement,” he said. “At this rate, when will Indonesia
be free from graft?”
In addition to corruption by regional heads, Yudhoyono said graft at institutions managing large budgets for procurements
was also still high, mainly because of illegal markups. Another problem, he added, was tax-related corruption.
“We should also prevent and eradicate corruption in law-enforcement institutions,” the president said. “If we want
to clean a dirty floor, we should make sure that our broom is clean.”
Yudhoyono also called on the customs and tax offices, and big state enterprises that contributed significantly
to the state coffers, to redouble their corruption-eradication efforts.
“I warn you once again, maintain your integrity and restrain yourself from committing corruption,” he said.
New efforts are needed to stamp out corruption once and for all, he said, including regulations to limit the opportunities
for people to engage in graft.
“We should ensure that the regulations and the monitoring systems become more effective,” he said. “We need to
close all the loopholes that could be abused by people to violate the law.”
ICW’s Adnan, meanwhile, said the president needed to take radical measures to restructure some government agencies
from top to bottom.
“So far, bureaucratic reform at public offices has only involved better remuneration, without any improvement to
the corruption-prone system,” he said.
Adnan said the Corruption Eradication Commission (KPK) also needed be strengthened, and more powers given to government
watchdogs like the National Police Commission.
Hasril Hertanto, a legal expert at the University of Indonesia, said Yudhoyono already had all the tools he needed
to effectively combat corruption.
“Now is the time to establish the proper mechanisms so that civil society and the public at large can make use
of the law to monitor the government’s spending and performance based on the spirit of transparency and accountability,”
he said.
Utama Kajo, head of public policy at the Indonesian Chamber of Commerce and Industry (Kadin), said corruption was
the biggest problem facing the nation.
“With rampant corruption, Indonesia still managed to get 5 percent annual economic growth — imagine if it was free
from corruption,” he said.
“Employers would gladly raise wages if only their income was not eaten up by illegal fees. We’d gladly make our
products more affordable if only competitors didn’t bribe their way to securing government projects or permits.”
US offers hand to fight graft
The Jakarta Post | Tue, 11/30/2010 12:04 PM | National A | A | A |
JAKARTA: The United States said it wanted to help Indonesia fight corruption by providing training courses for
Corruption Eradication Commission (KPK) staff and investigators, a top diplomat says.
US ambassador to Indonesia Scot Marciel was reported by Antara news agency on Monday as quoting President Barack
Obama, who during his recent visit to Jakarta said his country wanted to assist Indonesia in fighting graft.
The training will be focused on enhancing investigation methods and the use of technology, he said, adding that
there was no talk of cooperation in the handling of ongoing graft cases.
The training would also provide the staff with new insights on handling money laundering cases and the use of new
wiretapping technology, KPK deputy chairman M. Jasin said.
“Corrupters are very dynamic,” he said, adding that the KPK needed to adjust to new technologies. — JP
Comr. Gen. Susno Duadji never doubted that exposing corruption in the police force would be a lonely fight —
but he did not realize just how difficult it would be.
In an exclusive interview with the Jakarta Globe after he was sentenced to three and a half years in prison on
Friday, the police general revealed the blows he had suffered during the bitter battle.
Read the full interview in Saturday's Jakarta Globe newspaper.
The National Police chief of detectives said he became a virtual pariah among his former colleagues after he publicly
accused fellow generals of acting as case brokers in Gayus Tambunan’s money-laundering case.
His graft claims, delivered during a House of Representatives hearing last year, was meant to shake the police’s
foundations.
“I’ve always known I was alone in the battle to reform the police and punish the rogue officials within the force,”
he said.
But his crusade for justice came to a grinding halt when he was arrested for accepting bribes while handling a
fish-farm dispute as well as embezzling election-security funds during his stint as West Java police chief.
He dismissed the charges as attempts by some law enforcers to gag him or get back at him. But on Thursday, his
denials were harder to substantiate after he was convicted for taking Rp 500 million ($57,500) in bribes and stealing
Rp 8.4 billion in funds earmarked for security during the 2008 West Java gubernatorial election.
Susno said he was “saddened and infuriated” that not a single police officer supported him in his battle. Even
his wife, Herawati, said former friends and officers’ wives avoided her.
As a rare bright spot during the scandal, Susno’s whistle-blowing has led to the conviction of two officers, a
judge and a group of lawyers. Two prosecutors were charged with leaking top-secret prosecution dossiers.
But top officers said to be deeply involved remained untouched.
Hardened by his ordeal, Susno, once described by peers as cocky, now chooses his words carefully, avoiding controversial
topics that might hurt his chance of winning his appeal.
Proceedings in the bribery trial of high-ranking police officer Comr. Gen. Susno Duadji took an unusual turn
on Thursday when the defendant presented an online survey that he said showed overwhelming public support for him.
No Foul Play
in Death of Susno Witness: Police
Farouk Arnaz | March 10, 2011 The National Police has ruled out foul play in the death of a former bodyguard and defense witness for Comr.
Gen. Susno Duadji —
the second witness in the case to perish in a vehicular accident
Jakarta. President Susilo Bambang Yudhoyono said on Wednesday that although progress had been made in the fight
against corruption, it was not enough and more aggressive efforts were needed to rid the country of graft.
Speaking at a national conference on corruption, Yudhoyono cited surveys by Transparency International that found
Indonesia’s Corruption Perception Index had improved to 2.8 in 2010 from just 2 in 2004 — with 0 being the most
corrupt and 10 the least.
“The 2.8 is an increase and the highest achievement in Indonesian history — but you and I, we’re not satisfied,”
he said.
Indonesia Corruption Watch’s deputy coordinator, Adnan Topan Husodo, said the increase, which he called minor,
was a dismal result from Yudhoyono’s six years in office.
“Rising from 2 to 2.8 over the course of six years is not an achievement,” he said. “At this rate, when will Indonesia
be free from graft?”
In addition to corruption by regional heads, Yudhoyono said graft at institutions managing large budgets for procurements
was also still high, mainly because of illegal markups. Another problem, he added, was tax-related corruption.
“We should also prevent and eradicate corruption in law-enforcement institutions,” the president said. “If we want
to clean a dirty floor, we should make sure that our broom is clean.”
Yudhoyono also called on the customs and tax offices, and big state enterprises that contributed significantly
to the state coffers, to redouble their corruption-eradication efforts.
“I warn you once again, maintain your integrity and restrain yourself from committing corruption,” he said.
New efforts are needed to stamp out corruption once and for all, he said, including regulations to limit the opportunities
for people to engage in graft.
“We should ensure that the regulations and the monitoring systems become more effective,” he said. “We need to
close all the loopholes that could be abused by people to violate the law.”
ICW’s Adnan, meanwhile, said the president needed to take radical measures to restructure some government agencies
from top to bottom.
“So far, bureaucratic reform at public offices has only involved better remuneration, without any improvement to
the corruption-prone system,” he said.
Adnan said the Corruption Eradication Commission (KPK) also needed be strengthened, and more powers given to government
watchdogs like the National Police Commission.
Hasril Hertanto, a legal expert at the University of Indonesia, said Yudhoyono already had all the tools he needed
to effectively combat corruption.
“Now is the time to establish the proper mechanisms so that civil society and the public at large can make use
of the law to monitor the government’s spending and performance based on the spirit of transparency and accountability,”
he said.
Utama Kajo, head of public policy at the Indonesian Chamber of Commerce and Industry (Kadin), said corruption was
the biggest problem facing the nation.
“With rampant corruption, Indonesia still managed to get 5 percent annual economic growth — imagine if it was free
from corruption,” he said.
“Employers would gladly raise wages if only their income was not eaten up by illegal fees. We’d gladly make our
products more affordable if only competitors didn’t bribe their way to securing government projects or permits.”
US offers hand to fight graft
The Jakarta Post | Tue, 11/30/2010 12:04 PM | National A | A | A |
JAKARTA: The United States said it wanted to help Indonesia fight corruption by providing training courses for
Corruption Eradication Commission (KPK) staff and investigators, a top diplomat says.
US ambassador to Indonesia Scot Marciel was reported by Antara news agency on Monday as quoting President Barack
Obama, who during his recent visit to Jakarta said his country wanted to assist Indonesia in fighting graft.
The training will be focused on enhancing investigation methods and the use of technology, he said, adding that
there was no talk of cooperation in the handling of ongoing graft cases.
The training would also provide the staff with new insights on handling money laundering cases and the use of new
wiretapping technology, KPK deputy chairman M. Jasin said.
“Corrupters are very dynamic,” he said, adding that the KPK needed to adjust to new technologies. — JP
Corruption is a persistent huge problem in Indonesia.
Corruption eradication, establishing and upholding ethical business standards is a difficult process.
Corruption is deep-rooted and became an accepted culture in the developing society craving power and wealth starting
with the foreign asisitance and investment influx in the 1970's..
Corruption is a 2-way street with a giving and a receiving end. In the development years the foreign corporations
were the givers, the Indonesia power elite the receivers. In their strive to conquer favorable infrastructural,
industrial and mining concessions deep-pocketed foreign corporations did not hesitate to pay bribes to the power
elite. It continued over the 30 years in the Suharto period and created an in-bred culture of corruption and wealth
spread deeply into several layers of the reigning government.
It will be a long and difficult process to eradicate this deep-rooted problem, but Indonesia has started the
process.
The government has started the fight against corruption, a process vital to ensure responsible development of the
country.
However huge the problem, eradication is a must if this country, so rich of resources, wants to achieve its
economic development objectives and increase lving standards for all.
Sadly, the elite status of wealth and related power created by those corruption practices took deep roots in
the Indonesian business world and made it a standard modus operandi in business practices.. A culture of corruption
in business dealings has been fostered since the late 1960s. Indonesia has started an attempt at eradication, especially
internal corruption practices.
But what about the other side of the problem, the partners in corruption, the foreign
corporate investors?
Are they also working to correct the problem? Time will tell. Let us just wait and see.
Meanwhile, for foreign investments and transactions, it would be helpful if the media also starts delving into
the practices of the partners in corruption and not focus on the Indonesian side only.
Sri Mulyani Indrawati, the former Indonesian finance minister
and now a World Bank managing director, speaking at the
International Anti-Corruption Conference in Bangkok on Wednesday.
Bangkok. From her prestigious new position as a World Bank managing director, Sri Mulyani Indrawati has taken
another stab at old enemies, without naming names, an art she mastered after her ousting as Indonesia’s finance
minister in May.
“Corruption remains intertwined with politics, and there are brazen attacks on those fighting corruption,” she
said at the 14th International Anti-Corruption Conference in Bangkok on Wednesday.
Sri Mulyani’s comments echo those she made in May, when she said particular forces were “hijacking” economic reform
in Indonesia — comments believed to be directed at business tycoon and Golkar Party chairman Aburizal Bakrie, who
opposed many of her reformist policies.
Having lost her post as finance minister after a House of Representatives special committee found her Rp 6.7 trillion
($757 million) bailout of Bank Century in 2008 was illegal, Sri Mulyani appears to be enjoying the extra leg room
she has been granted at the World Bank, delivering a frank speech on corruption, pointing to Indonesia without
hesitation.
“Sometimes corruption comes in the form of counterfeit drugs, so people don’t get better, or they die,” she
said.
“Sometimes corruption is a building that collapses in the face of a natural disaster, because the quality inspector
took a payment from the construction contractor to falsify an inspection. Corruption can kill.”
She listed the World Bank’s achievements in improving transparency and fighting corruption, including the six-year
disbarment of publisher Macmillan for paying a bribe to try and win a World Bank contract in Africa.
She proved confident in her position when an audience member accused her of touting her personal views rather than
those of the institution.
“My own personal ethical values and the bank’s ethical values should match,” she said.
“In this case, I’m not going to entertain that I have my own personal values that are distant from the bank’s.
If the bank had a policy that did not reflect the view of anticorruption or good governance, it is the job of the
management, including myself, to correct it.”
While Sri Mulyani has reason enough to distrust the Indonesian government’s commitment to tackling corruption,
she remains optimistic that progress has been made since 15 years ago, when “the C-word was barely whispered, if
at all mentioned.”
“Corruption is an issue we know politicians can’t ignore now in Indonesia, and the KPK, our anticorruption commission,
has made huge progress, despite the difficulties they are facing,” she said.
Sri Mulyani’s continued commentary on corruption and politics in Indonesia has observers speculating that she may
be planning a return to politics and even a run for president in 2014.
But she said, “I am just concentrating on my role at the World Bank at the moment.
“Of course, the World Bank has many projects in Indonesia, just like in other countries, so it can help Indonesia
achieve its national development goals.”
Speculation about Sri Mulyani’s possible return to politics was sparked when the Alliance for Democracy Education
launched a Web site in her honor last month.
It carried a picture of Sri Mulyani along with the slogan “I’ll Be Back,” but the NGO says the site was only created
to improve public awareness of ethics.
The United Development Party (PPP) has already said it would support Sri Mulyani should she run for president,
and if she ends up going head-to-head with Bakrie, she will likely find international support from investors.
But Sri Mulyani has given no clue about whether she wants to return to Indonesia or keep working on a global scale.
Indonesia has witnessed some economic growth in recent years, mainly on the basis of booming private investment
and consumption. Foreign investment is on the rise in Indonesia, and there are significant improvements to be seen
with regard to the general investment climate. Despite the deregulation process being successfully implemented,
investors still point at corruption, red tape and an uncertain legal environment as the main challenges for conducting
business in the country. Companies continue to be concerned about concessions based on personal relationships and
demands for irregular fees to obtain government contracts, permits or licences.
Positive developments in relation to corruption and investment:
* Indonesia is trying to break a long tradition of corruption by implementing transparent and accountable governance.
* Several politicians, legislators and former ministers have been sentenced on corruption charges under the rule
of current President Yudhoyono.
* There seems to be a general and strong public sentiment condemning corruption and calling for the prosecution
of corrupt officials and seizure of their assets.
* Indonesia has a relatively open foreign investment regime. Recent reforms have put greater emphasis on improving
the business climate, enhancing regional competitiveness, and creating a more vibrant private sector.
Risks of corruption:
* Indonesian SMEs are relatively more affected by a corrupt environment than larger companies due to their limited
capacity and market power, as they report paying a larger percentage of their income in facilitation payments.
* Bribery typically occurs during licensing procedures, as the level of bribes is positively correlated to the
number of business licences a company must obtain in order to comply with regulations.
* Despite improvements in recent years, tax and customs administrations in Indonesia are perceived by many in the
business community as corrupt, and many regulations as onerous.
* Indonesia has a complex regulatory and legal environment that leads many foreign and domestic companies to avoid
the justice system. Companies are often advised by legal experts to resolve disputes through arbitration outside
Indonesia, because the judicial system operates irregularly and opaquely.
Indonesia is trying to break a long tradition of corruption by implementing transparent and accountable governance.
However, the former political, administrative and business elites continue to seek influence and consolidate their
position in the new democratic system through informal networks. Decades of collusion between business and government
have created a relatively stable, but highly unaccountable system, which does not benefit the general population.
Indonesia is ethnically and religiously heterogeneous, with great socioeconomic inequalities and large regional
economic differences. Institutionally, Indonesia has a federal structure and there has been wide-ranging decentralisation
over the past years. The party system and executive-legislative relations remain unstable and a strong institutional
framework is absent, although improvements have been seen in recent years. Hard hit by the Asian economic crisis
of 1997-1998, Indonesia has been slow to recover. Indonesia has also suffered from several natural disasters that
have had large human and economic consequences, notably the tsunami in 2004. Indonesia has furthermore suffered
from communal violence and terrorism.
President Yudhoyono won a landslide victory in 2004, gaining 61% of the votes based on a campaign platform focusing
on economic growth and fighting corruption. In April 2009, Indonesia held its first direct legislative elections.
Yudhoyono's Democratic Party came out as the winner with 21% of the votes, giving the party the right to nominate
a presidential candidate on its own for the election in July 2009. In July 2009, elections President Yudhoyono
won with approximately 60% of the vote in the first round, securing him re-election without a run-off. The President
has stated repeatedly that eliminating corruption is one of his administration's top priorities. Even though several
politicians, legislators and former ministers have been sentenced on corruption charges under his rule, Yudhoyono
has been criticised for failing to net key figures from the tenure of former dictator Suharto. Nonetheless, Transparency
International's Global Corruption Barometer 2009 reveals that the general public consider their government to be
effective in its fight against corruption, with 74% of the respondents citing the government's efforts to fight
corruption as effective and 19% as ineffective. This shows a large improvement compared to the Transparency International
Global Corruption Barometer 2007, in which 47% of the respondents considered the government's efforts to fight
corruption as ineffective. According to BBC News correspondents, President Yudhoyono's re-election was boosted
by the corruption-free image he enjoys in the country.
Indonesia's recently democratised system, however, contains some legislative and institutional shortcomings that
allow for continued corrupt practices. At the same time, many legal and institutional initiatives have been undertaken
to combat corruption, although many of these measures still require effective implementation. Several reports indicate
that corruption has now been decentralised to a large extent, due to policies of political and administrative decentralisation
which were initiated in 2001. The institutions cited in the Transparency International Global Corruption Barometer
2009 as most corrupt are public officials, the legislature, the judicial system and political parties. There seems
to be a general and strong public sentiment condemning corruption and calling for the prosecution of corrupt officials
and seizure of their assets.
Business and Corruption
Indonesia has witnessed some economic growth in recent years, which accelerated to a 10 year high of 6.1% in 2008,
mainly on the basis of booming private investment and consumption, as reported by the World Bank East Asia and
Pacific Update 2008. Foreign investment is on the rise in Indonesia, and there are significant improvements to
be seen with regard to the general investment climate. Despite the deregulation process being successfully implemented,
investors still point at corruption, red tape and an uncertain legal environment as the main challenges to doing
business in the country. Companies continue to be concerned about concessions based on personal relationships and
demands for irregular fees to obtain government contracts, permits or licences. According to Transparency International
Indonesia 2008, companies identify the judiciary and police as the two top priority institutions for the fights
against corruption.
According to a national survey on corruption cited by Credit-to-Cash Advisor, 35% of the interviewed companies
reported that they avoided investing in Indonesia because of widespread corruption. According to the World Bank
& IFC Enterprise Surveys 2009, 14.6% of the surveyed companies expect to pay bribes to public officials to
'get things done' and 14% state that corruption is a major problem for doing business in Indonesia. In the World
Economic Forum Global Competitiveness Report 2009-2010, the company executives surveyed point to corruption as
one of the four areas of primary concern for doing business and identify the diversion to public funds to individuals,
companies, or groups due to corruption as fairly common. In contrast, business executives report that the extent
to which government officials favour well-connected companies and individuals when deciding upon policies and contracts
constitutes a competitive business advantage for Indonesia. In Transparency International's Global Corruption Barometer
2009 survey, 15% of the respondents also consider the private sector to be 'extremely corrupt'. According to the
World Bank Indonesian Rural Investment Assessment 2006, decentralisation has led to smaller markets and restrictions
on inter-regional competition, and this has encouraged collusion and anti-competitive behaviour by companies and
local governments in several regions. Nearly 50% of companies polled report local level corruption as a major business
obstacle. Companies in the World Bank World Development Report 2005 state that bribes are frequently paid in business
operations and indicate that the annual cost of bribes amount to 4.6% of sales. Indonesian SMEs are relatively
more affected by a corrupt environment than larger companies due to their limited capacity and market power, and
they report paying a larger percentage of their income in facilitation payments. Bribery typically occur during
licensing procedures, as the level of bribes is positively correlated to the number of business licences a company
must obtain in order to comply with regulations. Service sector companies in resource rich and urban areas pay
higher amounts in bribes. More established and larger companies pay lower bribes. The financial sector regulation
is reported to be effective, however, most listed companies are either family-owned or government-controlled and
systems of corporate governance and auditing are well below international standards. According to the World Bank
& IFC Enterprise Surveys 2009, 65% of the service companies surveyed report that they compete against unregistered
or informal companies.
Many political parties rely on support from private companies and corporate donations are often associated with
influence-peddling in the form of kickbacks from companies or state agencies seeking to get legislation approved.
In general, companies are strongly recommended to develop, implement and strengthen integrity systems and to conduct
extensive due diligence when considering to do or when already doing business in Indonesia.
Regulatory Environment
Indonesia has a relatively open foreign investment regime. Recent reforms have put greater emphasis on improving
the business climate, enhancing regional competitiveness, and creating a more vibrant private sector. Moreover,
public finance management has improved, and tariff barriers have been lowered, as outlined by the Heritage Foundation
2010. However, despite these improvements, institutional challenges to the business environment persist. For instance,
tax and customs administrations in Indonesia are perceived by many in the business community as corrupt, and many
regulations as onerous. According to the World Bank World Development Report 2005, 48% of companies indicate policy
instability as a major constraint and 56% report that the interpretation of regulations is unpredictable. According
to the same report, senior management can expect to spend 14.6% of its time dealing with public officials and the
burden of government regulations. Nevertheless, business executives in the World Economic Forum Global Competitiveness
Report 2009-2010 indicate that the level of government regulation in the country represents a competitive business
advantage.
Generally, the lack of local compliance with national law and inconsistencies between local and national law is
a major problem in Indonesia. In fact, according to the US Department of State 2008, laws and regulations are often
vague and varying in implementation across different Indonesian regions, leading to increased business uncertainty
and rent-seeking opportunities. Some regions have enacted policies and laws that accord preferential treatment
to their own citizens and companies. This includes the attempt to exclude or to tax workers and companies that
come from outside the region and the imposition of taxes and charges on interregional traffic, a practice which
violates national law. Furthermore, the local governments have attempted to increase their own-source revenue,
which has resulted in numerous new local taxes and charges. Revenues from such charges have more than doubled since
1999-2000. According to the World Bank Rural Investment Assessment 2006, these local taxes are very inefficient
compared to state level taxes and have not led to improved local service delivery. Local business licences are
burdensome to comply with and allow widespread possibilities for corruption, meaning that the cost of compliance
is highly uncertain. State-owned companies still have primacy over private companies, and the legal and institutional
capacities for supporting a market economy are still not entirely in place.
Each business sector has its own licensing rules, and the costs and time spent in company registration are relatively
high. According to the World Bank & IFC Doing Business 2010, it takes 60 days and 9 procedures to start a company
at a cost of 26% of GNI per capita; the minimum capital required is 59.7% of GNI per capita. Dealing with licences
and permits for a standard construction project takes 160 days, 14 procedures and costs 194.8 % of income per capita
on average. Companies seem to receive a relatively uniform regulatory treatment by the government, although the
picture varies considerably from region to region. VAT and tax reimbursements are often delayed considerably. The
government is required to reimburse companies within 60 days, but the average is reported to be around 100 days.
Reforms of the judicial system are given high priority by President Yudhoyono, but the Indonesian court system
still cannot provide effective recourse to settle commercial disputes. According to the US Department of State
2008, Indonesia has a complex regulatory and legal environment that leads many foreign and domestic companies to
avoid the justice system. The judicial rulings are often irregular due to corrupt and collusive practices. Local
courts have in several cases accepted jurisdiction over commercial disputes despite contractual arbitration clauses
calling for adjudication in foreign venues. Companies are often advised by legal experts to resolve disputes through
arbitration outside Indonesia, because the judicial system operates irregularly and opaquely. For more information
on dispute settlement, see the section on the judicial system under Corruption Levels. Access the Lexadin World
Law Guide for a collection of legislation in Indonesia.
Sectors (Judicial System, Police, etc.) describe which kind of corruption can be encountered in different areas.
This section covers various forms of corruption, including bribes and facilitation payments. All information is
based on publicly available information and should be viewed as general guidelines on the types of corruption existing
in the country.
Levels of corruption in the different sectors indicate where corruption can be encountered. The levels are defined
as follows:
* Individual Corruption: Corruption that takes place primarily in relations between individual citizens and public
officials and authorities.
* Business Corruption: Corruption that takes place primarily in relations between enterprises/companies and public
officials and authorities.
* Political Corruption: Corruption that takes place in the higher echelons of public administration and on a political
level.
Frequency refers to quantitative surveys on corruption in the respective sectors.
Individual Corruption
In the Transparency International Global Corruption Barometer 2009, the legal system and courts are perceived to
be among the most corrupt public institutions in the country.
Indonesian citizens' low confidence in the judiciary is also evident in a 2006 survey conducted by the Partnership
for Governance Reform in Indonesia, in which 80% of households state that they prefer informal means of conflict
resolution over courts. Informal means of settlement include family, friends and local religious and community
leaders.
A survey conducted by Transparency International in September and December 2008 found that the total sum paid in
bribes to the judiciary is greater than in any other sector, including the police, as reported by Freedom House
2009.
Business Corruption
Legal uncertainty is a frequent complaint made by companies operating in the country; courts at several levels
are perceived as inefficient and corrupt. This is supported by the Heritage Foundation 2010, which characterises
the judicial enforcement in Indonesia as erratic and non-transparent. The Indonesian court system does not provide
effective recourse for resolving commercial disputes. Legal practitioners say irregular payments and other collusive
practices often influence case preparation and the judicial ruling.
Business executives do not report a high degree of confidence in Indonesia's judiciary or legal system in the World
Economic Forum Global Competitiveness Report 2009-2010. According to a 2006 survey conducted by the Partnership
for Governance Reform in Indonesia, two out of three companies prefer informal means of conflict resolution to
the courts. The reasons stated for resorting to unofficial means are the high level of unofficial costs, corruption,
incompetence, delays and lack of enforcement of court rulings. According to Transparency International Indonesia
2008, nearly a third of all business interactions with the courts involve bribery.
According to the US Department of State 2008, Indonesia has a complex regulatory and legal environment that leads
many foreign and domestic companies to avoid the justice system. Laws and regulations are often vague and require
substantial interpretation by implementing offices, leading to business uncertainty and rent-seeking opportunities.
Moreover court cases are handled very slowly unless a bribe is paid. However, deregulation has been somewhat successful
in reducing barriers and creating more transparent investment regimes.
In Indonesia, it is possible to appeal a criminal judgment and the mechanism is generally affordable for companies,
although procedures can be very slow.
Political Corruption
The independence of the judiciary has improved in recent years. However, there are concerns that military, business
and political interests still play a role. Bribery within the judicial service occurs when judges from lower courts
give 'gifts' to their superiors in order to obtain promotions, and recruitment is also said to be influenced by
bribes. There are reports of close relationships between lawyers and judges in the Supreme Courts. Buying and selling
of court decisions has been reported.
Courts are to a large extent still dominated by judges from the Suharto era, and a major increase in the number
of judges during the 1980s saw many incompetent judges enter office, leading to a deterioration of judicial quality.
The courts are known to be under-funded and, according to some estimates, only around 30% of the institutional
needs are covered by the officially allocated budget. Transparency and access to information is generally known
to be low in the judicial sector and access to decisions is usually limited to the litigating parties.
Executive actions can be challenged through the Supreme Court, but in practice the judiciary is unwilling to take
on politically sensitive issues. Reports indicate that except for some high profile cases, the higher echelons
of the political, military and business elite are protected against criminal proceedings. The political intervention
in smaller cases and discrimination in regional and national courts has decreased.
The Attorney General has been active in combating cases of graft, albeit mostly in cases of petty corruption. However,
corrupt practices have been found within the Attorney General's office itself.
Tommy Suharto, son of the former Indonesian dictator, went into hiding in 2000 after receiving an 18 month sentence
for corruption. While a fugitive, he paid two hit men to execute the Supreme Court judge who sentenced him. He
was later sentenced 15 years in prison for the murder. However, he was released in 2006 for good behaviour.
Frequency
The World Bank & IFC: Doing Business 2010:
- To enforce a commercial contract, a company is required to go through 39 procedures, taking 570 days at a cost
of 123% of the claim on average.
World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the independence of the judiciary from influences of members of government, citizens,
or companies a score of 3.8 on a 7-point scale (1 being 'heavily influenced' and 7 'entirely independent').
- Business executives give the efficiency of the legal framework for private companies to settle disputes and challenge
the legality of government actions and/or regulations a score of 3.8 and 3.9 respectively on a 7-point scale (1
being 'extremely inefficient' and 7 'highly efficient').
The World Bank & IFC: Enterprise Surveys 2009:
- 70% of companies believe the court system is fair, impartial and uncorrupted.
- 5% of companies identify the functioning of the courts as a major business constraint.
Transparency International: Global Corruption Barometer 2009:
- Citizens perceive the judiciary to be among the most corrupt institutions in Indonesia, and 48% of the surveyed
households give it a score of 5 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').
Transparency International Indonesia: Measuring Corruption in Indonesia: Indonesia Corruption Perception Index
and Bribery Index 2008:
- Companies report that 30% of all interactions with the courts involve bribery, for which the average bribe costs
approximately IDR 102.5 million.
Freedom House: Freedom in the World - Indonesia 2006:
- The bribe level to achieve a favourable decision in court ranged from USD 8,300 (Bandung District Court) to USD
600,000 (Supreme Court) depending on the trial venue.
Business Corruption Global Integrity 2008 describes Indonesia's public
procurement framework as 'strong'. Recent regulations have improved transparency in public procurement. The licence
requirement imposed on bidders has been eliminated, which has reduced possibilities for bribery. Tenders are made
public in newspapers or on the Internet at the national level, although there is still a lack of transparency at
local levels. Moreover, Global Integrity 2008 reports that it is sometimes difficult to access information concerning
public tenders and that bribery may occur in the process of gathering information concerning procurement procedures.
While business executives in the World Economic Forum Global Competitiveness Report 2009-2010 report that government
officials will often favour well-connected companies and individuals when awarding contracts, Global Integrity
2008 reports that there is no mechanism to monitor the assets of procurement officials, fuelling a procurement
environment that is conducive to corruption.
Although competitive bidding is mandatory, review of the decisions by unsuccessful bidders is possible, and companies
that violate the regulations are officially required to be blacklisted, public procurement seems to be one of the
most corruption-ridden sectors in Indonesia. Blacklisting is often circumvented through the change of company name
and Global Integrity 2008 reports that investigations into alleged bribery in the procurement process rarely occur.
Several cases of irregularities in public procurement were prosecuted in 2005-2006. Most were related to collusion
between bidders and officials to inflate prices of bids. So-called 'collusion rings' exist in which bidders take
turns winning contracts and share the profits.
For further information on public procurement, see 'Public Anti-corruption Initiatives' in the Initiatives section.
Political Corruption
Lack of access to information and multiple interpretation of legislation (especially at regional levels of governance)
are cited as the primary explanations for corruption in public procurement, whereas weak law enforcement is cited
as an explanation for the problems in combating corruption. The public procurement systems in most sectors still
rely on the decisions of low level officials who are often more vulnerable to pressure and bribery. The lack of
an effective judiciary lowers the risks of prosecution of corrupt arrangements. The government auditors often lack
the resources and skills to investigate public procurement.
The Heritage Foundation 2010 reports that companies
cite awarding of government contracts and concessions in Indonesia as based on personal relationships.
In March 2008, Indonesia's Anti-Corruption Court sentenced Judicial Commission member Irawady Joenoes to 8 years
in prison for accepting bribes in a land procurement deal, as reported by the Jakarta Post. Global Integrity 2008
informs that Irawady was arrested by the Corruption Eradication Commission (KPK) in 2007.
In March 2009, a former official of the Manpower and Transmigration Ministry, Bahrun Effendi, was sentenced 4 years
in jail for having embezzled IDR 13.7 billion in funds from procurement projects.
Frequency
World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption
a score of 3.6 on a 7-point scale (1 being 'very common' and 7 'never occurs').
- Business executives give the favouritism of government officials towards well-connected companies and individuals
when deciding upon policies and contracts a score of 3.7 on a 7-point scale (1 being 'always show favouritism'
and 7 'never show favouritism'), constituting a competitive business advantage for the country.
The World Bank & IFC: Enterprise Surveys 2006:
- 53% of the companies surveyed expected to give gifts to secure a government contract.
- The average value of a gift expected to secure a government contract is 4.03% of the contract value.
US Embassy Jakarta: Press Release, 28 September 2007:
- According to Indonesian government estimates, corruption is responsible for USD 4 billion in losses each year
within the government procurement process.
By Denise Leith
Ph.D. in politics from Macquarie University, Sydney-Australia
The writer takes a close and detailed look at the a business culture anchored in corruption, collusion, and
nepotism.
It is unprecedented in its investigation of the wider political context of the relationship between Jakarta
and foreign capital, which to this day keeps the lucrative mining industry in Indonesia afloat.
A different political and economic scenario developed in the post-Sukarno period.
In the firm grip of powerful western countries and corporations, the IGGI, World Bank and IMF, Indonesia became
heavily saddled with debts and rampant with corruption to the detriment of the country's development. IGGI donor
countries provided mostly tied project aid, obligating Indonesia to spend the "aid" in the donor country
, benefiting the donor country's economy and industry. To protect their interests and ensure that Indonesia remained
a staunch ally, the West and their financial institutions closed their eyes to the heavily blown-up prices and
rampant high-level corruption.
The West's transnationals and lending institutions, with their laws against the practice in their home states,
became some of the system's beneficiaries. That is, corrupt Indonesian business practices continued not only because
of the absence of internal accountability procedures for both business and bureaucracy in Indonesia, but also because
of the West's indifference.
After the fall of Suharto, the World Bank acknowledged that it knew that 30 percent or more of all development
funds channeled directly through the government was being siphoned off. According to a project manager for the
World Bank's Jakarta office, many within the organization were able to conveniently rationalize this corruption
as "a kind of tax on an otherwise sound economy.In early 1999, after the collapse of the rupiah and the regime
and under pressure from the international community, the World Bank com-pleted a report on its performance in Indonesia
to explain how it could have misrepresented the situation so completely. The report confirmed that the institution
was aware of the level of corruption but laid the blame on "self-seeking" staff for whom "association
with a 'successful' large country was beneficial to their career (s) ."
Legacy
Suharto, a proclaimed staunch Western Ally,
left behind a heritage of corruption |that will be hard to erase.
Suharto Years 1967 - 1998 Foreign Corporate Greed controlling Development
and stimulating Corruption when negotiating
favorable contracts with Government Power Elite
Corruption
When discussing the big or greed-based corruption, we should note that the West's transnationals and lending
institutions, with their laws against the practice in their home states, became some of the system's beneficiaries.
That is, corrupt Indonesian business practices continued not only because of the absence of internal accountability
procedures for both business and bureaucracy in Indonesia, but also because of the West's indifference. After the
fall of Suharto, the World Bank acknowledged that it knew that 30 percent or more of all development funds channeled
directly through the government was being siphoned off. According to a project manager for the World Bank's Jakarta
office, many within the organization were able to conveniently rationalize this corruption as "a kind of tax
on an otherwise sound economy.In early 1999, after the collapse of the rupiah and the regime and under pressure
from the international community, the World Bank com-pleted a report on its performance in Indonesia to explain
how it could have misrepresented the situation so completely. The report confirmed that the institution was aware
of the level of corruption but laid the blame on "self-seeking" staff for whom "association with
a 'successful' large country was beneficial to their career (s) ."
This is an important book that should be read by anyone
who wants to know how the world is run to the advantage
of the wealthy few and the malicious disadvantage of the many poor.
This review is from: A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption
(Hardcover)
John Perkins' ground breaking expose' of the economic machinations and collusion of multinational corporations,
high levels of government and the international banking institutions and their brutal exploitation of third world
countries in his popular text Confessions of an Economic Hit Man, sent a ripple
of concern through this highly corrupt elite community, however mainstream publishing and media chose to ignore
these disturbing confessions, wanting proof other than Perkins text. As Perkins states in his introduction in this
sobering and informative text, A Game as Old as Empire,
"Eventually a courageous independent publisher, Berrett-Koehler, took the book on. Confessions success
among the public astounded me. During its first week in bookstores it went to number 4 on Amazon.com." (P.2)
Despite being on the New York Times best seller list for 25 weeks, The Times refused to review
it.
(Much later the book was featured in the Times Sunday Supplement)
The fact that the book implicates the highest echelons of government and corporations, including the IMF, WTO,
World Bank, U.S.A., Britain and the "G8" countries deeply involved in money laundering, tax evasion and
environmental disasters that turns
one's stomach, never mentioned in the main stream media, reveals the appalling extent of this corruption.
A Game as Old as Empire is a collection of essays by investigative journalists, EMH's, academics, practicing lawyers,
scientists and writers exposing the extent of corruption in the exploitation of developing countries; for example
lending billions of dollars, raising debt, knowing full well that particular regimes were pocketing the cash, opening
off shore accounts, while the regime's country falls further into abject poverty, then to lend more money, raising
debt further...
These essays are terribly disturbing as the greed, destruction and waste is so vast, crippling small countries,
causing poverty to become more entrenched to fill the pockets of a Global elitist few and their cronies.
One would logically assume that because of the billions of dollars poured into some third world countries for their
development, one would see the benefits of such huge investments. In actual fact, there has been no benefit, because
in most cases, the poverty has worsened. Why? Money is loaned to known corrupt regimes that pocket the money and
make the money clean through tax loopholes and off shore accounts.
Other reasons are presented such as the trade agreements of the World Trade Organization which makes it impossible
for developing countries with debt to produce and export because developed countries, per the WTO agreements, import
products into the local market underpricing them, thus making it impossible for the developing country to rise
out of debt, let alone make a living.
In this review I've chosen not to write specific examples of this high level corruption as this format, does not
allow the space. However, in order to understand the extent that these so-called elites go to... including genocide,
crimes against humanity and all out war and occupation in order to ensure access to resources such as oil and other
natural resources, read this text because it will make you wonder how and why it has gone on for so long.
Confessions of an Economic Hit Man started the ball rolling in terms of more awareness of the waste and destruction
that neo-liberalism and globalization has wrought on developing countries; A Game as Old as Empire is the confirmation
and the quintessential wake up call to actually do something about it.
In the last chapter, Global Uprising: The Web of Resistance, Antonia Juhasz writes a compelling piece for all concerned
individuals around the globe to do something about this entrenched elitist corruption. The bibliography is extensive
and worthy, including a list of important web sites to enhance your knowledge.
Even if you haven't read "Confessions", A Game as Old as Empire will inform, disturb, shock and hopefully
stir some of us into action before these elitist corporations, banks and exclusive, corrupt governments go too
far...
The Dark Underbelly of International Economics,
June 27, 2007
By Steven K. Szmutko
This review is from: A Game as Old as Empire: The Secret World of Economic Hit
Men and the Web of Global Corruption (Hardcover)
In CONFESSIONS OF AN ECONOMIC HIT MAN, John Perkins outlined his 20-year career as agent of the government and
multinational corporations as they attempted to (and succeeded in) exploiting lesser-developed countries. That
book, published by Berrett-Koehler in 2004, painted a rather gloomy picture of the dark side of globalization -
in theory, a worthy endeavor.
A GAME AS OLD AS EMPIRE, edited by Steven Hiatt with an introduction by Mr. Perkins,
continues the story of this exploitation, abuse, and waste in the name of "globalization." Let me say
- as an aside - that I remain a proponent of globalization within the context of responsible stewardship. Removing
barriers to trade, offering educational, vocational, and economic opportunities to men and women of all nations,
is a good thing. Done properly, economic development and stewardship offers the possibility of true societal progress,
ennobling humanity, enriching lives, nurturing the environment and increasing business activity and profits.
Unfortunately, the reality is far different from the ideal. The shortsightedness and greed of political and leaders
- focused only on personal enrichment or the next quarter's operating results - leads to a culture of global exploitation.
The pattern is familiar: special interests descend like locusts, consume everything in their path, and then move
on, leaving a wake of destruction, degradation, and despair.
The book presents a compelling exploration of these economic and human abuses through other voices, most of those
voices from men and women that participated for a time in the dance of exploitation for their temporal masters.
The individual essays focus on a number of issues ranging from the stranglehold of foreign debt, the culture of
ineptitude and corruption in many aspects of international banking, and the unconscionable extraction of natural
resources (as in the Congo) at the high cost of human life and economic prosperity.
A GAME AS OLD AS EMPIRE is expectedly one-sided in that it shows only the abuse and corruption of international
economics. There are many businesses that operate with high-principles and integrity (while maintaining high earnings
for both its management as well as other constituents). However, the book serves an important purpose in that it
shows that all is not sunshine and roses in the global economy. There is corruption, waste, incompetence, and short-sightedness
that is unacceptable from not only a human standpoint, but from a business valuation perspective as well. I would
recommend this book to anyone who seeks to undertake an intelligent study of the state of international economics
in the real world.
Review by Common Ground Magazine
March, 2007
Written by Adrian Zupp
In 2004, John Perkins' Confessions of an Economic Hitman created waves, spoke the unspeakable and became a New
York Times bestseller. In it Perkins came clean about how he'd helped US intelligence agencies and multinationals
exploit the economies of Third World nations. A Game As Old As Empire - for which he wrote the introduction - is
the follow-up, and this time a wide variety of in-the-know authors corroborate and expand upon Perkins' story.
And it's frightening stuff.
In plain language - and providing sufficient historical background - we are shown how First Word countries have
used "economic hit men," institutions like the World Bank and IMF, coercion and even outright strong-arm
tactics to steal from the developing countries - often in collusion with the elites of those countries who are
happy to hide their ill-gotten gain in offshore accounts.
A Game As Old As Empire is well referenced, very readable and perversely entertaining. Hard data is combined with
first-person narratives and the machinations of international economics are made accessible for the layperson.
And the book goes one step further by offering hope and practical advice. The chapter "Global Uprising: The
Web of Resistance" by policy-analyst Antonia Juhasz sheds light on how people can change the corruption and
help create a better world. There is also an appendix: "Resources for Hope."
With chapters such as "The Human Cost of Cheap Cell Phones" and "Hijacking Iraq's Oil Reserves,"
Game has a conscience-pricking currency.
This is an important book that should be read by anyone who wants to know how the world is run to the advantage
of the wealthy few and the malicious disadvantage of the many poor.
