JAKARTA, June 17 (Reuters) – Indonesia’s corruption court on Wednesday jailed one of President Susilo Bambang Yudhoyono’s in-laws for graft, a decision that could help the President’s re-election by showing his commitment to fight such crimes.
The case against former central bank official Aulia Pohan was seen as an important test of Indonesia’s efforts to clamp down on corruption, especially where it involved the powerful or well-connected. Here are some questions and answers on Indonesia’s efforts to tackle corruption:
HOW BAD IS CORRUPTION IN INDONESIA?
Getting better, but still pretty bad.
Transparency International (TI) gave Indonesia a Corruption Perceptions Index (CPI) score of 2.6 last year (a score of 1 denotes most corrupt while 10 means graft-free), a slight improvement on its score of 2.0 a decade earlier.
TI ranked former president Suharto as the world’s worst kleptocrat, estimating his assets at between $15-$35 billion during his 32 years in power. Suharto, pressured out of office amidst widespread unrest in 1998, always maintained he was innocent and efforts to convict him failed.
The real fight against graft only began once the Corruption Eradication Commission (KPK) came into force. It was set up under former president Megawati Sukarnoputri but started to show its teeth under Yudhoyono.
HOW DOES INDONESIA COMPARE WITH OTHERS IN ASIA?
TI’s Global Corruption Barometer 2009 showed Indonesia ranks poorly in Asia and worldwide.
It got a score of 3.7 (where a score of 5 means extremely corrupt while 1 is not at all corrupt), which means it is considered more corrupt than India (3.5), Malaysia (3.4), Thailand (3.3), Hong Kong (3.2) and Singapore (2.2) but less corrupt than South Korea (3.9) and Japan (3.9).
The difference between TI’s Corruption Perceptions Index and its Global Corruption Barometer is that the former surveys business executives while the latter surveys ordinary people. For a table on corruption levels in Asian countries, please click on [ID:nSP348850].
WHAT DAMAGE HAS CORRUPTION DONE IN INDONESIA?
A 2005 survey of companies by the Asian Development Bank found corruption among the top four factors that deter foreign investment in Indonesia, after macro-economic stability and uncertainty over economic and regulatory policy.
Endemic graft creates uncertainty for investors, making it hard to predict the overall cost of doing business and rule of law because it often affects decisions made by key institutions such as the police and judiciary.
Numerous corruption cases have shown government ministries and departments frequently solicit bribes when awarding infrastructure or other contracts, rather than choosing the best contractor, potentially affecting project standards.
WHAT HAS BEEN DONE SO FAR?
Efforts to fight corruption in Indonesia have been patchy.
President Yudhoyono was elected in 2004 on promises to tackle graft and both the KPK and corruption court play important roles.
The KPK has investigated several business and political figures, handing over its cases to the corruption court for trial.
TI’s Global Corruption Barometer found that nearly three-quarters of Indonesians surveyed considered the government’s anti-corruption efforts to be effective, one of the highest scores for all the countries included in the report.
However, local anti-corruption campaigners say the KPK has failed to go after enough big fish and has mainly targeted mid-ranking officials.
WHAT ARE THE MAIN HURDLES IN FIGHTING CORRUPTION?
The main institutions responsible for tackling graft — parliament, the judiciary, and the police — are all regarded as corrupt, which makes them less effective in fighting graft.
That’s one reason why the special corruption court was set up, but its future isn’t assured. [ID:nJAK277522]
Cultural factors also play a part. Police,
Recently I have asked on Twitter what Indonesians think that Indonesia needs change with. Overwhelmingly the response has been corruption. Since then, I have been in contact with people who have had personal experience with that, so let me give you a little example as to what corruption looks like in Indonesia:
A foreign business owner came here 14 years ago and has built a factory to produce furniture from wood coming from the forest of Kalimantan. The Indonesian part of Borneo that is. Huge pieces of rainforest, quality wood, teak at its best.
One day in 2006 he made a big mistake and that was to accept an offer from the local police to buy the wood from THEM directly rather than from an Indonesian business owner and when I am talking about buying wood, I am referring to a few truck loads amounting to $45,000 worth the wood.
The wood got delivered. He didn’t pay for it. Not until he got the papers that the wood is legal which the police told him would come the next day.
Instead another police officer showed up that night and demanded papers for the wood and appeared to demand his “cut” for the deal to “close his eyes”.
Long story short:
The business owner did not pay him and he never got the paperwork. Instead his forester spent 9 months in jail for accepting the wood and he wound up having to pay a huge fine. The wood was market as illegal and it still sits in front of the factory which had to close down and all of his employees got laid off. The factory provides also housing for 80 employees. Financially wounded, he got back on his feet eventually.
Nobody got paid except the court system.
All of the Indonesian employees lost their job, furniture production stood still and police continued to try to get their cut.
Indonesians are very well aware of the corruption and so far little has been accomplished to change this on a national level.
I have not yet heard about a case where Indonesians have successfully challenged this on a higher scale.
So while I am waiting for more input and answers from my sources, here is a personal warning to all foreigners doing business in Indonesia:
1) Once you pay a bribe, you are being expect to continue. You will be considered scared and a target already labeled as “residual income”.
Getting out of that and fighting the harrassment is going to be much harder than saying no from the beginning.
Police officers will give you protection, place an officer wasting his business hours in front of your property as a way to say “thank you for the tip”.
Also as a constant reminder for you not to miss the next payment. Once you say yes, saying no at a later time will be a lot harder.
2) Do business with and support Indonesian business owners as well as the community. Do not support the police department as it will make them stronger and even more motivated to insist on you kicking down cash on a regular basis. Again: Once you are in, getting out gets harder.
You do not buy from police. You buy from a business providing products and services. Police have their own business which is protecting the people and if you are allowing them to financially gain where they have no business gaining, you are encouraging them to hit you up again and again.
3) Network with other business owners in the area at all times and seek advice.
Know what you want to do and set goals according to your principles.
Are you afraid and think paying the police is an easy way out? Look at it like a drug habit. It starts slow, and the fees will increase. You have to look a few years down the line. If indeed you decide to pay bribes, beware of the consequences and I will you the best with getting yourself out which I hope you will wind up choosing.
All in all, whenever corruption occurs, nobody gains except a few individuals who abuse their position.
Everyone else gets hurt. More than anything the Indonesian people get hurt as this slows down the economy, keeps money from coming into a country nobody trusts and enables police officers to wrongfully close down businesses for revenge not caring about 200 people losing their income from one day to the next as a result of this.
This is why this country is in bad shape when it comes to economical status. I always hear the excuse that “Indonesia has so many islands and it’s hard for one government to manage them all”. This is BS. What needs to happen as a part of the Indonesia Unite movement is that every Indonesian all over Indonesia unites and starts from the bottom and helps clean up corruption.
When corruption occurs in your area and you know about, don’t be like the millions of Germans in Nazi Germany who knew the Jews were disappearing, but didn’t seem to care. Take a stand and take it seriously. No citizen should be afraid of their law enforcement unless they are committing a crime!
Feel free to comment and feel free to give advice from your own personal experience.
This is your country. Claim it!
Added: you can also view ongoing discussions on an Indonesia Expat forum. Here is an excerpt:
Originally Posted by firetown
Has anybody here successfully beat corruption without giving in?
Yes there is. I know a lot of people, who are doing a lot of effort on a daily basis to bring down the level of corruption in Indonesia. On a personal note, I am trying my best not to indulge in corruption and I have to say that I am proud of a few achievments. In the past 8/9 years I have seen things improving a lot in Indonesia, and I would even say that these improvments were mainly done in the past 5 years. Wonder if there is a coincidence with a shift in politics… ,
Incidentally, I won two trials (out of two) where I was the defendant (never the best position) in indonesian courts without resorting to bribes. However, I have to admit that the demands were very insisting to say the least. Both cases were initiated by people thinking that, as a foreigner, it would be easy to get me down and/or to get bribes. They were wrong and I guess that they are now fully aware of it. In the second case, the person who decided to go to court may well face a sentence to up to 7 years in jail for perjury and false testimony if the acquittal that was pronounced is confirmed by the Supreme Court. Things can backfire to people looking for trouble without ground or counting too much on corruption.
Originally Posted by firetown
If so, please give advice.
1. Know the law perfectly. Hak dan kewajiban so that you can retaliate without getting caught for something else that you were unaware of. If you don’t know the law, log in to some forum… Some peoplemay give you a lead…
2. Before taking harsh measures or going to trial, always try to make your point by explaining the law to those in need. If you don’t get heard, go to a upper level.
3. Never loose your temper and reamin polite/cool in any circumstances.
4. Write down everything and if you wish to complain, do it by writing, not verbally.
Talking to allies in Riau, Sumatra, where Asia Pulp and Paper (APP) is logging tropical forests, it is clear that APP engages in corruption and utilizes a complete lack of transparency to profit at the sake of forests and local communities. But hard facts are incredibly hard to pin down on this kind of illegal activity; indeed, one of the main points of ‘Wild Money’ is that there is a complete lack of information pertaining to Indonesia’s forestry sector – it appears that not even Indonesia’s Department of Forestry has any clear idea of how much forest is being destroyed or how much money is being made.
The report complies financial data to make a conservative estimate of $2 Billion USD of lost revenue annually from timber companies evading taxes, receiving under-the-table subsidies, and logging without the proper permits.
To put this number in perspective, the report states that the World Bank has estimated with $2 Billion, Indonesia could provide health care to 100 million of its poor for almost 2 years.
‘Wild Money’ points to a historic case prosecuted by Indonesia’s Corruption Eradication Commission (KPK by its Indonesian abbreviation) in Indonesian Borneo’s West Kalimantan Province as an example of the worst of Indonesian forestry. In 2006, the KPK revealed their long running investigation into a illegal logging ring, and arrested the heads of the provincial police and forestry departments, as well as some high ranking military brass. Increadibly, the annual revenue from the illegal logs was estimated to be greater than that of the entire yearly budget of the province:
One informant who had been following the operation for its duration estimated that the actual value of the illegal logs was closer to seven times the province’s budget, or about $3 Billion USD.
Taking great risks to personal security, many of the sources and one of the authors of ‘Wild Money’ remain anonymous. Most likely, it is because of these very real threats , that the report chooses to not name the corporations, such as Asia Pulp and Paper (APP) or their competitor APRIL, who are driving this system of corruption.
It is painfully clear that Indonesia’s forestry sector needs immediate and deep reform, and that until investors, buyers, and the public puts pressure on the Indonesian Government, individuals and corporations will continue to destroy Indonesia’s rainforests at the expense of the Indonesian people and the environment.
‘Wild Money’ also addresses issues of human rights abuses and carbon trading in this report, more to come on Understory about those key issues.
David Gilbert is a Research Fellow at RAN. He has worked in the tropical forests of the Amazon and Indonesia, with a special focus on forest conservation and indigenous rights. He can be reached at email@example.com
2 Responses to “Wild Money: Massive corruption in Indonesia’s forestry sector”
- Ben Edwards Says:
December 4th, 2009 at 1:17 pm I agree that logging certainly contributes to deforestation in Indonesia, but forest burning is a huge cause as well. The ‘Wild Money’ report is also right that there has been a lack of information pertaining to Indonesia’s forestry sector. That’s why our team at the Center for Global Development created FORMA (Forest Monitoring for Action). This monthly-updating online tool uses freely available satellite data to detect where and when deforestation occurs. So far, the FORMA team has mapped all of Indonesia and plans to expand the tool to cover the rest of the tropic rainforests around the world. This and other complimentary tools could help Indonesia and the international community keep their forests intact.