a survey of national policies and...
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A Survey of National Policies
and Approaches
Soren Davidsen, Vishnu Juwono, and David G. Timberman
The United States– Indonesia Society
Centre for Strategic and International Studies
Curbing Corruptionin Indonesia, 2004–2006
A SURVEY OF NATIONAL POLICIES
AND APPROACHES
Soren Davidsen, Vishnu Juwonoand David G. Timberman
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CURBING CORRUPTION IN INDONESIA, 2004–2006A survey of National Policies and Approaches
© 2006
First published 2006
Published by CSIS and USINDO
ISBN 979-8026-99-3
All rights reserved.No part of this publication may be reproduced in any form or by any means, includingphotocopying, without permission from the author or the publisher.
Printed by Kanisius Printing House Yogyakartawww.kanisiusmedia.com
CSIS and USINDO
The United States–
Indonesia Society
Centre for Strategic and
International Studies
The writing and publication of this study is financed by the Dutch Trust Fund Program for Institutional Devel-
opment and Capacity Building, administered by The World Bank. All views expressed in this study are those of
Strategic and International Studies (CSIS), Jakarta, and the United States—Indonesia Society (USINDO).
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December 2006
the authors and do not reflect the views of the World Bank, the Royal Netherlands Government, the Centre for
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FOREWORD
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The public discussion about Indonesia’s commitment to effective anti-corruption
measures is complex, both as to the nature of the problem and the implications for governance.
In this debate, one fact is indisputable: Indonesia’s ability to attract sound and durable
investment depends on greater adherence to the Rule of Law in the judiciary and on all levels
of government.
The Centre for Strategic and International Studies (CSIS) in Jakarta, Indonesia’s leading
think tank, and the United States-Indonesia Society (USINDO) in Washington, D.C. are
pleased to co-publish this important study illuminating today’s issues and efforts. Research,
which entitled Curbing Corruption in Indonesia. 2004 - 2006: A Survey of National
Policies and Approaches, by Soren Davidsen, Vishnu Juwono, and David G. Timberman
was sponsored by The World Bank in order to provide impartial information in the debate
on corruption issues. The authors not only describe the legal backdrop and current situation,
but they also indicate the scope for systemic improvements in bureaucratic accountability
and how public expectations can be met more effectively.
USINDO and CSIS believe that publication of this report will support the commitment
to an improvement in governmental integrity by the administration of President Susilo
Bambang Yudhoyono and add to informed public discourse of this critical topic. The views
represented herein are those of the authors, however, and do not necessarily represent those
of USINDO, CSIS or The World Bank. We are grateful to The World Bank for sponsoring
this study and for contributing to the cost of publication.
Hadi Soesastro Alphonse F. La Porta
Executive Director President
Centre for Strategic and International Studies United States-Indonesia Society
v
Jakarta, Indonesia and Washington, D.C., November 2006
THE AUTHORS
Soren Davidsen is a governance specialist who has held positions with the World Bank
in Indonesia and Vietnam, where he has worked on the Bank’s investment projects and
budget support loans. He is an expert on civil service reform and anti-corruption, and
has worked on both the demand and the supply side of governance reforms. Prior to his
assignments with the World Bank, Mr. Davidsen was employed by undp and also was a
lecturer at the University of Aarhus in Denmark. He holds a Masters Degree in Politi-
cal Science and a Masters Degree in East Asian Area Studies from the University of
Aarhus. He can be reached at [email protected] or [email protected]
has worked for the International Monetary Fund (imf ) and Danareksa, Indonesia’s state-
owned investment bank. He has published articles in several Indonesian newspapers,
including Kompas, Koran Tempo, Media Indonesia and Suara Pembaruan. He graduated
Affairs degree from Columbia University’s School of International and Public Affairs, New
York. He can be reached at [email protected] and [email protected].
David G. Timberman is a Jakarta-based consultant and writer specializing in Asian
politics and governance. He has held staff positions with the Asia Society, the Asia Foun-
dation and the U.S. Agency for International Development (usaid) and has served as a
consultant to the National Democratic Institute for International Affairs, Management
Systems International, usaid and the World Bank. He has written or edited a number
of books and articles on the Philippines, Cambodia, and the political economy of South-
east Asia. He can be reached at [email protected].
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Vishnu Juwono is a governance consultant with the World Bank in Indonesia. He also
from the University of Indonesia’s School of Economics and holds Masters of International
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ACKNOWLEDGEMENTS
Badan Rehabilitasi dan Rekonstruksi (brr): Kevin Evans
Bawasda of East Java: Imam Buchori
Bawasda of Kabupaten Tuban: Heri Sisworo
Center for Law and Good Governance Studies fhui: Safri Nugraha
City of Surabaya: Aris Affandi, Muhlas Udin
dprd East Java Province: H. Sabron Djamil Pasaribu
dprd Kabupaten Tuban: Marwan
fitra: Ismail Amir, Madekhan Ali
forum 2004: Romli Atmasasmita
Emerson Yuntho
Jawa Pos Newspaper Daily: Azrul Ananda, Tofan Mahdi
kadin: Mas Achmad Daniri, Miftahul Hakim
kadin Surabaya: Muh. Rudiansyah, DJ Gagat SW, Bagus Taruno Legowo
Kementerian Koordinator Politik, Hukum dan Keamanan: Vice Admiral Djoko
Sumaryono, Brig. Gen. Soedibyo, Andi Amir Husri, S.M.T. Gultom
Kementerian pan: Gunawan Hadisusilo,Lukman Sukarma
Indonesia Corruption Watch (icw): Danang Widoyoko, Luky Djani, Yunita,
ix
The authors wish to express their appreciation to the World Bank and the Dutchgovernment for supporting this study. Joel Hellman, Chief Governance Adviser, theWorld Bank Jakarta, played an important role in shaping the focus and contents ofthe study. We also greatly appreciate the efforts made by Ambassador Al La Porta andthe staff of the U.S.-Indonesia Society and by Pak Hadi Soesastro and Pak BantartoBandoro of CSIS to publish and disseminate this study. Finally, we also wish tothank the following people for giving us their time an insights:
Kementerian ppn/bappenas: Syahrial Loetan, Diani Sadiawati
Komisi Hukum Nasional: Frans H. Winarta
Komisi Ombudsman Nasional: Sunaryati Hartono
Kompas: Daniel Dhakidae
kpk: Erry Ryana Hardjpamekas, Amien Sunaryadi, Waluyo
Local Governance Support Program: Hans Antlov
ndi Indonesia: Paul Rowland, Tom Cormier
Nahdlatul Ulama East Java Province: Ali Maschan Moesa
Nahdlatul Ulama Kabupaten Tuban: Nur Nahar Husein
Partnership for Governance Reform in Indonesia: Bambang Widjayanto,
Sofie Arjon Schutte
Pemerintah Kabupaten Tuban: Soekarman
Tempo Magazine: Bambang Harymurti
Transparency International Indonesia: Todung Mulya Lubis, Rezki S. Wibowo,
Endang Kartiningtyas, Heni Yulianto
The World Bank Jakarta: Sebastiaan Pompe, Steve C. Burgess, Kundhavi Kadiresan,
Renganaden (Raj) Soopramanien, Rizal H.Rivai, Anne-Lise Klausen,
Guy Janssen, Lieke S. Riyanti
US Agency for International Development: Kusumastutu and Jason Singer
US Department of Justice: Benjamin Wagner
US Embassy Jakarta: Ruth Mary Hall and William Heidt
While the insights and information provided by these individuals are gratefully acknowledged,
any mistakes or omissions are solely the responsibility of the authors.
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x
TABLE OF CONTENTS
1. Executive Summary 1
2. Introduction 9
Corruption in Indonesia 9
About this Report 10
3. Anti-Corruption Measures Since “Reformasi” 13
4. The SBY Government’s Campaign Against Corruption 17
SBY’s Approach: Cautiously Attacking Corruption on Multiple Fronts 18
Increasing Investigations and Prosecutions 20
Presidential Instruction 5 (inpres 5/2004) 21
31
Impact at the Local Level 35
5. Important Dimensions of Corruption Eradication 39
Not Covered by INPRES 5 and RAN-PK
Reducing Corruption in the Justice Sector 39
Increasing Financial Sector Supervision 41
Reducing the Influence of “Money Politics” in Elections, 42
Political Parties and Legislatures
Reforming Military Procurement and Military-owned Businesses 43
6. The KPK and the Special Court for Corruption 47
Overview of the kpk 47
The kpk’s Legal Mandate 47
The kpk’s Strategy 48
Investigations and Prosecutions 49
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The National Action Plan on Corruption Eradication (RAN-PK)
xi
Prevention 49
Organizational Development 52
The Special Court for Corruption 53
Assessment of the kpk 53
Looking Ahead 55
7. Other Independent Bodies 57
Indonesian Financial Transaction Reports and Analysis Center (ppatk) 57
National Ombudsman Commission or kon (Komisi Ombudsman Nasional) 58
Business Competition Supervisory Commission or kppu 58
(Komisi Pengawas Persaingan Usaha)
The Judicial Commission 59
8. The Legal Framework for Fighting Corruption 61
The Existing Legal Framework 61
Additions or Revisions Needed 62
9. Non-Governmental Partners in the Fight Against Corruption 65
Anti-Corruption ngos 66
Muslim Social Organizations 68
Business Associations 69
Mass Media 69
Schools, Universities and Think Tanks 70
10. Measuring Political Will and Progress 73
Indicators of Political Will and Ability to Combat Corruption 73
Measuring Progress in Reducing Corruption 74
11. Conclusion 77
The Challenge of Translating Presidential Commitment 77
Into Bureaucratic Action
The Importance—and Limits—of Punitive Measures 78
Managing Expectations and Fears 78
The Road Ahead 79
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xii
Appendices
Appendix 1 81
Appendix 2 82
Appendix 3 84
Appendix 4 85
Sources of Information 87
Endnotes 91
Glossary 97
List of Tables
Table 1: Major Obstacles Faced by Businesses 11
Table 2: The Biggest Optimists 18
Table 3: Recovery of Fines and Indemnification Payments by the ago 27
Table 4: Wealth Reports of State Officials as of June 11, 2006 51
List of Boxes
Box 1: Anti-Corruption Measures, 1998–2004 14
Box 2: Key Elements of inpres 5/2004 22
Box 3: Prosecutions of Special Crime Cases by the ago, 1994–2005 27
Box 4: Summary of Key Elements of ran-pk 32
Box 5: Examples of Local Government Initiatives to Address Corruption 36
Box 6: Major Anti-Corruption ngos and ngo Networks in Indonesia 67
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xiii
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EXECUTIVE SUMMARY
INTRODUCTION
In 2004 Susilo Bambang Yudhoyono was elected President of Indonesia in large part
because of his promises to improve governance and fight corruption. Over the last two
years, President Yudhoyono has been outspoken about the need to reduce corruption,
and his government has taken a number of steps in support of this goal. Two years into
the President’s term, it is an appropriate time to examine what his government has done
to fight corruption, and to what effect. Recognizing that reducing corruption is a diffi-
cult, long-term endeavor, this report offers a stocktaking of the variety of anti-corrup-
tion initiatives begun or enhanced since 2004. A central concern of this report is whether
these initiatives can produce a significant and lasting decline in the level of corruption
in Indonesia.
This report describes and analyzes the range of anti-corruption initiatives that have
been undertaken or supported by the administration of President Yudhoyono1 as of mid-
2006. It focuses on the wide range of initiatives included under Presidential Instruction
5 of 2004 (inpres 5/2004) and the subsequent National Action Plan for the Eradication
of Corruption (ran pk). It also includes an examination of the Commission for the Erad-
ication of Corruption (kpk), which although an independent agency, has taken a lead-
ing role in the government’s efforts to fight corruption.2
THE YUDHOYONO GOVERNMENT’S ANTI-CORRUPTION PROGRAM
President Yudhoyono is committed to punishing corruption, and there is a small but
significant constellation of reform-minded actors inside and outside the government who
have the potential to make a difference. However, there also are real political and bureau-
cratic constraints on the pace and scope of reform. Because the president’s cabinet is
essentially a coalition government, his ability to push (or punish) his Ministers and other
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senior officials is limited. Moreover, it doesn’t appear that the Office of the President has
the capacity to continually press the anti-corruption agenda.
The Yudhoyono government’s approach to fighting corruption has a number of
notable characteristics: First, the president has made anti-corruption “his” issue: to date
he has not delegated leadership and oversight to anyone else in his government. (How-
ever, the president appears to have designated the kpk as his proxy in the fight against
corruption.) Second, the president’s approach is multi-faceted: it includes prosecutions,
prevention and education. To date, however, the most noticeable thrust has been in the
realm of prosecutions. Third, the approach is incremental and “rehabilitative”: the pres-
ident seems to have ruled out the wholesale replacement of government officials and
instead believes that they can be induced to stop their corrupt behavior. Fourth, it also
appears to be very attuned to political considerations. To date, there has been only lim-
ited action taken against those at the apex of power in Indonesia, namely politicians and
generals who currently hold high level positions in the national government, political
parties or military. Finally, it is notable for the absence of any explicit emphasis on inves-
tigating and prosecuting corruption by former president Soeharto and his family and
close associates—despite continued calls to do so from civil society.
The President’s anti-corruption effort also is notable less for the introduction of
institutional reforms than for an emphasis on ending a variety of practices that histori-
cally have bred and abetted corruption, including cronyism in appointments, political
favoritism in commercial and regulatory decisions, and political intervention in inde-
pendent commissions and oversight bodies. He has been less proactive in developing and
implementing a strategy of institutional reforms to reduce the incentives and opportu-
nities to engage in corruption.
Under President Yudhoyono, the number of anti-corruption prosecutions has
increased, continuing a trend since 2001. This is the result of the combined efforts of the
kpk, ago, polri, bpk, ppatk and several other agencies. These punitive measures are send-
ing a message that corruption is not risk-free. Indeed, many Indonesian commentators
are already claiming that these measures are changing the way bureaucrats behave, includ-
ing causing them to slow down the release of funds for government projects. But it is
unlikely that by themselves, these measures will fundamentally change the risk-reward
calculation over the long term.
To date, the impact of the national government’s anti-corruption initiatives at the
local level is also a mixed picture—which is not surprising given decentralization. On
the one hand, some 1,000 members of dprds (local assemblies) across the country are
under investigation for misuse of dprd funds.3 On the other hand, there continue to be
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numerous opportunities for corruption and collusion at the local level. The kpk has only
a very limited reach beyond Jakarta and in most places local auditing functions are still
at a low stage of development. Moreover, the capacity of local civil society groups and
capacities to expose and prosecute corruption are improving. An encouraging develop-
ment is the national government’s recent decision to launch a “National Community
Empowerment Program.” This program enables individual communities across the coun-
try to decide how their development funds will be spent. To guard against corruption
and elite capture, the program emphasizes transparency, participatory decision-making
and participatory monitoring of development projects.
INPRES 5/2004 AND RAN-PK
In December 2004, President Yudhoyono issued Presidential Instruction 5 (inpres 5/2004)
which instructs all institutions of the government that fall under the authority of the
executive branch to expedite efforts to eradicate corruption. inpres 5 is a signal to the
bureaucracy and the public of presidential commitment to fighting corruption. It is rel-
atively comprehensive and multi-faceted, including instructions to bolster prosecutions,
prevention and education.
However, while inpres 5 includes a number of general and specific instructions
directed at virtually every part of the executive branch, it doesn’t include any deadlines
or sanctions; nor does it prioritize reforms in Indonesia’s most corruption prone min-
istries. And the Ministry for State Administration (MenPAN), the ministry tasked with
coordinating, monitoring and evaluating implementation, is most notable for its lack of
bureaucratic clout.
Moreover, there are several important corruption-prone arenas of governance that
are not covered by inpres 5: 1) the judicial sector; 2) supervision of the financial sector;
3) political parties and parliaments; and 4) military procurement and military-owned
businesses. Addressing corruption in all four of these areas is critical to the overall fight
against corruption.
The creation of a National Action Plan for the Eradication of Corruption (ran-pk)
establishes a government-wide framework for addressing corruption. While ran-pk is
comprehensive, it lacks some key elements of an effective strategy: it is weak on priori-
tization, vague on time frames and doesn’t specify clear incentives and sanctions. inpres
5 assigns MenPAN the responsibility for coordinating and monitoring implementation
of ran-pk, but it doesn’t give any organization the responsibility, authority or resources
to take a leading role in moving the plan forward. As a result, there appears to be a low
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media to detect corruption varies greatly. However, there are some indications that local
level of engagement on the part of first and second echelon officials, who are crucial to
any effort to accelerate change within the bureaucracy.
As a result, ran-pk is in danger of becoming little more than the bureaucracy’s way
of doing the minimum required to show the president that it is complying with inpres
5. For ran-pk to be meaningful, it should be used by the government as the starting point
for creating a genuine anti-corruption strategy that establishes priorities, recognizes the
need for sequencing, and provides resources, incentives and sanctions.
THE KPK AND OTHER INDEPENDENT AGENCIES
The independent Commission for the Eradication of Corruption (kpk) and the Special
Court on Corruption were created by legislation passed in December 2002. The creation
of the kpk and the Special Court were de jure recognition of the failure of other law
enforcement agencies and courts to seriously and effectively address corruption.
Although the kpk receives the most attention for its investigations and prosecutions,
its leadership sees the kpk (and its prosecutions) as a catalyst for stimulating institutional
reforms, especially in the judiciary and the civil service. It sees prosecutions as the cut-
ting edge for implementing broader institutional reforms. Although it recognizes the
importance of preventive measures, to date, its strategic emphasis has been more on puni-
tive activities.
The kpk has posted some important successes with its investigations and prosecu-
tions, and it has helped to energize other anti-corruption efforts. However, it has yet to
become a significant force for promoting preventive reforms, and to date its effort to col-
lect and investigate wealth reports of government officials has been lackluster.
In addition to the kpk and the Special Court, there are four other independent bod-
ies that are playing, or have the potential to play, important roles in the fight against cor-
ruption. These are: 1) the Indonesian Financial Transaction Reports and Analysis Center
(ppatk), which watches for possible money laundering; 2) the National Ombudsman
Commission (kon), which is supposed to facilitate the redress of public complaints about
government services; 3) the Business Competition Supervisory Commission (kppu),
which investigates monopolies and other forms of collusion in business; and 4) the Judi-
cial Commission, which is intended to improve the quality and integrity of judges. All
four share two common characteristics: First, while their mandates tend to be broad,
their actual authority tends to be limited; and second, their capacity to carry out their
mandate is reduced by serious resource constraints.
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THE LEGAL FRAMEWORK
Most observers feel that the existing body of laws provides an adequate legal basis for
addressing corruption. More at issue is the willingness and ability of the various agencies
of the government to fully and effectively implement these laws. This said, there are sev-
eral ways the legal regime to fight corruption can be strengthened: First, the existing evi-
dence code is out-of-date, overly narrow, and inconsistently adhered to by judges. Second,
the Indonesian legal system doesn’t offer any incentives—such as immunity or plea bar-
gaining—for cooperating with investigations and prosecutions. Third, efforts to fight cor-
ruption would benefit from the passage or revision of a number of laws and regulations.
THE ROLE OF CIVIL SOCIETY
The overall “non-governmental” landscape for fighting corruption is a mixed one: On
the one hand, since the fall of Soeharto and the advent of decentralization, there has been
a dramatic expansion in the number of civil society and media organizations. On the
other hand, the capacity and influence of most ngo’s tends to be very limited, and there
are relatively few ngos that are able to serve as competent anti-corruption watchdogs.
The capacity and willingness of the media to expose corruption—as opposed to merely
report on it—is mixed but generally limited. It does not appear that many universities
and think tanks have made corruption a major subject of research and analysis; and the
student movements that used to demonstrate against kkn seem to have lost their energy.
Increasingly elements of the business community profess an understanding of the
long term costs of corruption, but few individual businesses are prepared to forego cor-
rupt practices if it means losing business. Political parties, with the possible exception of
pks, have shown little interest in addressing the manifold problems associated with money
politics. Finally, decentralization creates the potential for greater local-level transparency
and accountability; but in many parts of the country, the capacity of powerful local offi-
cials and wealthy businesses to engage in corrupt practices is still much greater than the
capacity of individuals, local ngos and the media to detect and deter the corruption.
THE ROAD AHEAD
It appears there are high public expectations regarding the government and kpk’s anti-
corruption efforts. The 2005 Transparency International survey indicates that Indone-
sians believe there has been a decline in corruption over the last three years and are
optimistic that it will decline even more over the next three years. It is important that
the government and kpk manage expectations, deliver on their promises, and commu-
nicate their priorities and progress to the public.
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There also is a risk that the government and kpk’s anti-corruption initiatives will
provoke a political backlash or public disappointment—or both. The potential problems
include:
∫ The credibility of anti-corruption efforts could be undermined by the appearance
of partisanship and/or selectivity.
∫ Efforts to impose reforms on the judiciary could be seen as undermining the inde-
pendence of the judiciary.
∫ The failure of anti-corruption efforts to punish “big fish” or to improve the avail-
ability or quality of public services could fuel public frustration and cynicism.
The possibility also exists that a heavy emphasis on repressive measures could
cause risk-averse bureaucrats from making any decisions, thereby further slowing down
the functioning of national and local governments. It seems premature to worry very
much about the possible negative consequences of an anti-corruption drive that, to
date, has had only limited impact. However, the concern does highlight what ulti-
mately is involved in effectively addressing bureaucratic corruption in Indonesia,
namely significantly changing the existing system of bureaucratic decision-making,
which is based principally on patronage, discretion and rent-seeking. If the existing
system is changed, there needs to be a new system to replace it. This points to the
urgency of implementing meaningful civil service reform—including reforms that clar-
ify administrative procedures and responsibilities—so that honest civil servants can
perform their jobs with some measure of confidence that they’ll be rewarded rather
than punished.
The Yudhoyono government’s emphasis on prosecutions, commendable as it is, has
not been matched to date by a comparably vigorous effort to prevent corruption from
occurring within the bureaucracy. Until meaningful checks on corruption and collusion
are introduced into the civil service, the threat of punishment will have, at best, only a
limited deterrent effect.
For the Yudhoyono government and other anti-corruption agencies to produce a
significant and lasting decline in the level of corruption in Indonesia, there needs to be
further progress in a number of areas. These include:
∫ First, there must be no let up in the ongoing effort being made to increase the integrity
and capacity of the ago, polri and the courts, including the Special Court for Corruption.
∫ Second, it is critical that the kpk and other independent oversight and accountabil-
ity agencies have both the authority and resources they need to carry out their mandates.
∫ Third, the government must take meaningful steps to increase regulatory clarity and
transparency in budgeting, procurement and project implementation. In effect, this
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involves introducing a new culture and incentive structure within the bureaucracy, and
especially in Echelons 1 and 2.
Fourth, governments at the national and sub-national levels must increase the scope,
quality and integrity of internal and external auditing.
Finally, given Indonesia’s status as a new democracy, serious attention needs to be
paid to addressing the corrupting and corrosive influence of “money politics” on politi-
cal parties, elections and legislatures.
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∫
∫
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INTRODUCTION
“Almost every Indonesian has been a victim of corruption, particularly when
he deals with the bureaucracy”—Attorney General Abdul Rahman Saleh4
CORRUPTION IN INDONESIA
It is difficult to overstate the seriousness of the problem of corruption in Indonesia. Cor-
ruption is pervasive—that is, almost no sector of society is free of corruption. It is deeply
embedded in the fabric of society and institutions. And typically it is highly organized.
Corruption appears to be endemic in the bureaucracy, in State Owned Enterprises (soes)
and in government-business intercourse. It is also a serious problem in the police, Attor-
ney General’s Office (ago) and judiciary. Political parties, parliamentarians, civil society
groups and the media are not immune either.
Rather than being an aberration, corruption has been a core norm of Indonesia’s
political economy for decades. Corruption, of course, existed before the Soeharto regime;
but hierarchical, systemic corruption became one of the central features of the New
Order political economy. With the fall of Soeharto in 1998, the reintroduction of elec-
toral politics in 1999, and the implementation of decentralization in 2001, corruption
appears less hierarchical and organized. According to the World Bank’s Combating Cor-
ruption in Indonesia, “The political transition has led to greater competition among polit-
ical parties, forcing them to depend on the old elite for the considerable funds needed
to mount effective campaigns in such a vast country. And decentralization has opened
new avenues for corruption by the local elite, who may earlier have had difficulty get-
ting “their fair share of the cake” in a tightly centralized Indonesia.”5
Blatant, big-ticket corruption may have declined since the fall of Soeharto, but many
observers argue that smaller scale corruption may be increasing as more players enter the
fray in the absence of a chief “franchiser” or enforcer. While smaller scale or petty cor-
ruption is often viewed as being relatively benign, it contributes to a culture that is accept-
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, ,
ing of not just rent-seeking and patronage, but also of the attendant fraud, collusion and
disregard for the law.
The fall of Soeharto and the implementation of decentralization have allowed for a
dramatic improvement in the conditions that produce greater transparency and account-
ability. The most important are the expansion of media freedoms and civil society, the
creation of independent political parties and holding competitive elections, and the intro-
duction of at least rudimentary checks and balances in national and local government.
As a result, since 1998 we have seen the passage of tougher anti-corruption laws, greater
transparency and an increase in the number of corruption cases successfully prosecuted.
However, given the pervasiveness and embeddedness of corruption in Indonesia, it is too
early to conclude that these developments are causing a significant reduction in the preva-
lence of corruption.
Surveys point to corruption as a major problem in Indonesia, although the picture
is mixed. The cross-country evidence paints a grim image. Indonesia ranks 137th of 158
countries in the 2005 Country Perception Index of Transparency International, though
the cpi should be interpreted with some caution.6 The wbi governance indicator on cor-
ruption situates Indonesia in the bottom 25 percentile rank in a cross-country compar-
ison. However, an improvement is recorded from 2002 to 2005. On a point estimate,
where +3 is the best and -3 the worst, Indonesia’s score has improved from -1.19 to -0.86.7
This is not an insignificant improvement in relative terms.
Interestingly, country specific surveying confirms the positive trend identified in the
wbi governance indicators. According to the 2005 Investment Climate Survey a signifi-
cant decline in both national and local corruption as an obstacle to doing business was
recorded from 2003 to 2005. This overall trend is supported by Henderson & Kuncoro,
who find that bribes as percentage of cost for businesses has declined from 2001 to 2004.8
Nevertheless, corruption is still perceived as one of the four most important impediments
for doing business.
ABOUT THIS REPORT
In September 2004 Susilo Bambang Yudhoyono was elected President of Indonesia in
large part because of his promises to improve governance and fight corruption. Over the
last two years, President Yudhoyono has been outspoken about the need to reduce cor-
ruption, and his government has taken a number of steps in support of this goal. Two
years into the President’s term, it is an appropriate time to examine what his government
has done to fight corruption and to what effect. Recognizing that reducing corruption
is a difficult, long-term endeavor, this report offers a stocktaking of the variety of anti-
10
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TABLE 1: MAJOR OBSTACLES FACED BY BUSINESSES
(% OF RESPONDENTS WHO IDENTIFY THE PROBLEM AS MODERATE, SEVERE OR VERY SEVERE)
Source: Investment Climate Survey 2005
corruption initiatives begun or enhanced since 2004. A central concern of this report is
whether these initiatives can produce a significant and lasting decline in the level of cor-
ruption in Indonesia.
This report describes and analyzes the range of anti-corruption initiatives that have
been undertaken by or with the support of the Yudhoyono government9 as of mid-2006.
It covers the variety of measures included under Presidential Instruction 5 (inpres 5/2004)
and the National Action Plan for the Eradication of Corruption (ran-pk). It also includes
an examination of the Corruption Eradication Commission (kpk), which is an inde-
pendent agency, but has emerged as a leader in the government’s anti-corruption cam-
paign.10 Finally, it also describes the larger context in which these efforts are playing out,
including the legal framework and the involvement of “civil society.”
This report examines inpres 5 and ran-pk for two reasons. First, because the Pres-
idential Instruction and Action Plan are, to date, the principal official expressions of the
Yudhoyono government’s anti-corruption objectives and approaches.11 And second,
because they do set out the government’s self-proclaimed anti-corruption objectives, the
two documents can be used as a basis for assessing the government’s progress in address-
ing corruption. This report also takes a more in-depth look at the kpk because of the
leading role it is now playing in attacking corruption. Finally, the report endeavors to
11
Macroeconomic Instability
Economic Policy Uncertainty
Local Corruption
National Corruption
System and Conflict Resolution
Transport
Tax Administration
Labor Skill and Education
Cost of Financing
Tax Rate
Labor Regulation-Regional
IMS & Trade Regulation-Regional
IMS & Trade Regulation-National
Licensing and Permits-Regional
Electricity
Labor Regulation-National
Licensing and permits-National
Monopoly Practices
Crime
Access to Financing
Telecommunication
Access to Land
0% 10% 20% 30% 40% 50% 60% 70% 80%
2005
2003
Corruption output 11/28/06 2:41 PM Page 11
focus on the “preventive” aspects of anti-corruption. However, given the presumed deter-
rent effect of effective prosecutions—especially in a society where impunity has been the
norm for so long—the report also addresses the critical issue of law enforcement.
The purpose of this report is to provide policymakers, other stakeholders and inter-
ested observers with a better understanding of the current status of the wide range of anti-
corruption initiatives being carried out by the government and by independent bodies like
the kpk. We hope the information and analysis contained in the report will contribute in
a small way to better informed policymaking and policy dialogue, to greater public under-
standing of the strengths and weaknesses of the current efforts to address corruption in
Indonesia, and to academic efforts to understand the Indonesian political economy.
It is important to note in advance the limited scope of this report. First, it is not
intended to provide a detailed analysis of the causes or consequences of corruption in
Indonesia; this has already been done by the World Bank, Partnership for Governance
Reform, Asian Development Bank and others.12 Second, this report does not seek to
describe and assess the extent of anti-corruption efforts in every government ministry.
While it would be useful to do this, it would require a significantly larger research effort.13
Third, this report attempts to capture the status of the sby administration’s efforts
as of mid-2006. As such, it is a snap shot of a highly complex and continually evolving
landscape. The information contained in this report is based on research and interviews
with government officials, civil society groups, the media and donors. Although the focus
of this report is on the national government, it also factors in the experiences in East Java
and West Sumatra.
This report is organized as follows:
∫ Section III briefly reviews anti-corruption efforts from the fall of Soeharto in 1998
through the Megawati presidency.
∫ Section IV describes the sby government’s major anti-corruption initiatives.
∫ Section V briefly comments on four corruption-prone arenas of public life not cov-
ered under the executive branch’s initiatives.
∫ Section VI focuses on the kpk and the Special Court for Corruption
∫ Section VII briefly describes four other independent agencies that play or could play
important roles in the fight against corruption.
∫ Section VIII reviews the legal framework and the special court for corruption.
∫ Section IX surveys the universe of non-governmental actors.
∫ Section X outlines ways of measuring political will and progress in fighting corrup-
tion
∫ Section XI offers conclusions and recommendations.
12
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ANTI-CORRUPTION MEASURES SINCE “REFORMASI”
“The new framework for governance in post-Soeharto Indonesia continues to be
shaped by many of the same interests that were active during Soeharto’s time. For them,
an effective system of checks and balances constitutes no less than a fundamental threat,
especially if the system involves more meaningful and wide ranging public scrutiny
and accountability.” –Vedi Hadiz14
The Yudhoyono government’s efforts to address corruption must be viewed in the con-
text of what has preceded them. In particular, it is important to be cognizant of the pol-
itics of the “kkn” (corruption, collusion and nepotism) issue, public attitudes about
corruption and the half-hearted efforts to address corruption since 1998.
Governments since the Soekarno era have felt compelled to address—or appear to
address—the problem of corruption. As one study has reported, “. . . the Indonesian gov-
ernment has throughout its history launched numerous anti-corruption initiatives begin-
ning in 1957, and continuing throughout the Old Order, the New Order and the Reform
governments of B.J. Habibie and Abdurrahman Wahid. During the New Order, no less
than 14 initiatives, including the issuance of laws and regulations, the establishment of
special teams, commissions and the like were implemented. Between 1973 and 1998, each
five-year General Outline of the State Guidelines (gbhn) drawn up by the mpr placed
the eradication of corruption high on the agenda . . .”15
Ending kkn was, of course, a central demand of the students who played a lead-
ing role in unseating President Soeharto in May 1998. Not surprisingly, since the fall of
Soeharto, ending corruption, along with democratization, have been central elements
of the reformasi (reform) agenda. Those concerned with reducing corruption include
reformers in the government and parliaments, religious leaders, students and academ-
ics, assorted ngos, and some in the business community who have come to recognize
the long term costs of rampant corruption. The ability of these groups to expose and
13
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address corruption has been aided hugely by the freeing of the media and increased plu-
ralism in Indonesian politics.16
As a result, corruption remains a potent political issue that can have major conse-
quences for Indonesian politics. As Emmy Hafild, the former Executive Director of
Transparency International Indonesia, has pointed out, the first three governments that
followed Soeharto were either impeached (Wahid) or rejected (Habibie and Megawati)
in part due to their perceived complicity in corruption.17 Pledges to attack corruption
were important factors in the electoral success in 2004 of both Yudhoyono and the
Islamist pks party.
The Habibie, Wahid and Megawati governments, along with the reformasi-era dpr
all recognized the need to address corruption, and so between 1998 and 2003 there was
a spate of new laws and decrees that dealt with corruption. The most important of these
are included in Box 1.
BOX 1: ANTI-CORRUPTION MEASURES, 1998–2004
∫ In 1998 and 1999 President Habibie presided over the freeing of media. He also signed into law
several of the MPR decrees and DPR laws mentioned below.
∫ In October 1999 the MPR passed a decree calling for a state apparatus that “functions in provid-
ing services to the people that are professional, efficient, productive, transparent and free from corrup-
tion, collusion and nepotism.”
∫ The Clean Government Law (Law 28/1999) passed in 1999 requires public officials to declare their
wealth and agree to periodic audits. It also established the Commission to Audit the Wealth of State Offi-
cials (KPKPN).
∫ The Law on the Eradication of Criminal Acts of Corruption (Law 31/1999) passed in 1999 defines
criminal corruption and establishes charges and procedures for prosecution. An amendment to the Law
(Law 20/2001) broadens and clarifies the definition of corruption and increases the penalties.
∫ In 2000 President Wahid issued KEPPRES 44/2000 establishing the National Ombudsman’s Com-
mission (KON). He also created, under the coordination of the AGO, the Joint Team for the Eradication
of the Criminal Act of Corruption (TGPTPK).
∫ The issuance of KEPPRES 18/2000 in 2000 resulted in some improvements in procurement pro-
cedures. It was replaced in November 2003 by a new KEPPRES on government procurement, KEPPRES
80/2003, which establishes a National Procurement Office (NPPO).
∫ In April 2002 the DPR passed the Anti-money Laundering Law (Law 15/2002), which established
the Center for Financial Transactions Reporting and Analysis (PPATK); the Law was strengthened by an
amendment in October 2003.
∫ In December 2002 the DPR passed Law 30/2002 establishing the KPK and Special Court for Corruption.
∫ In 2004 the DPR passed Law 22/2004 establishing the Judicial Commission.
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Although many of the decrees and laws passed since 1998 have shortcomings, col-
lectively they are a big improvement in the legal framework compared to what existed
under Soeharto. Taken together they constitute a legal and institutional framework that,
though incomplete, can be used to fight corruption.
Furthermore, since 2003, significant progress has been made in the critical area of
reforming the management of state finances. Key actions have included:
∫ Passage in March 2003 of the Law on State Finances (Law 17/2003), which clarifies
and rationalizes multiple aspects of the formulation and management of the state budget.18
∫ Passage in December 2003 of the Law on State Treasury (Law 1/2004), which con-
tains provisions to deter fraud and corruption.
∫
∫ Partial procurement reform.
∫ The functional reorganization of the Ministry of Finance.
∫ The gradual enhancement of government accounting standards.
However, the overall impact of these and other measures to address corruption has
been less than many observers have hoped for. The reasons most frequently cited for this
include:
∫ A lack of will and commitment on the part of political leaders and senior bureaucrats;
∫ The persistence of a culture of impunity for the wealthy and the powerful;
∫ The strength and sophistication of the networks of corruption and collusion that
exist in the bureaucracy and among businesses;
∫ The failure to implement meaningful reform in the civil service, especially mean-
ingful procurement reform;
∫ Weaknesses and corruption within law enforcement agencies including the police,
ago and judiciary;
∫ The limited ability of civil society groups and the media to translate increased trans-
parency into increased accountability.
As a result, Indonesian public opinion regarding the prospects for reducing cor-
ruption seems to combine—or perhaps vacillate between—cynicism and hope. Said and
Suhendra, writing in 2001, observed: “Today it is clear that society is skeptical of the fea-
sibility of eliminating corruption as years of experience to the contrary have convinced
us of the government’s inability or unwillingness to take the necessary steps to this end.”19
At the same time, according to Transparency International’s 2005 Global Corruption
Barometer, 40% of Indonesians surveyed think corruption decreased “a lot or a little”
over the last three years, 28% think it increased a lot or a little and 27% think it stayed
the same.20
15
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In July 2004, passage of a Law on State Audit enacted.
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THE SBY GOVERNMENT’S CAMPAIGN AGAINST CORRUPTION
“Since the beginning, the government, has been determined to combat corruption.
We consider corruption as a serious crime that has brought suffering to the people and
damaged the morality of the nation. Having learned from past experiences, we must truly
be firm and consistent in eradicating corruption.”—President Yudhoyono21
In October 2004 former-general Susilo Bambang Yudhoyono (widely referred to as “sby”)
became Indonesia’s first directly elected president—in large part because he promised to
reform government and reduce corruption. His promise appears to have had resonance
with Indonesian voters, at least in part because of the inability of prior governments to
convince the Indonesian people of their seriousness about attacking kkn. sby’s promise
was given added credence because he is seen as having been a reformist within the mil-
itary and because he and his family have not been associated with government economic
programs or with big business.
sby’s electoral victory has given him a popular mandate to pursue reforms. But it also
has created expectations that may be difficult to meet. According to Transparency Inter-
national’s 2005 Global Corruption Barometer, 81% of Indonesians surveyed think cor-
ruption will decrease “a lot” or “a little” over the next 3 years. Only 10% surveyed think
it will get worse. This level of optimism was the highest of all the countries surveyed.
The Yudhoyono government’s agenda for its first 100 days was as broad as it was
bold. It proclaimed: “To create an Indonesia that is just and democratic, the main
agenda is to improve the performance and to restore public faith toward law enforce-
ment agencies, especially the ago and Police, also the functioning of judicial system
that is credible and accountable, and the implementation of civil service reform based
on good governance principle.”22
But there are significant practical political constraints on the pace and scope of the
President’s ambitious anti-corruption agenda. Although Yudhoyono won almost 61% of
17
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TABLE 2: THE BIGGEST OPTIMISTS
(COUNTRIES WHERE THE PUBLIC THINKS CORRUPTION WILL DECREASE)
COUNTRY 2003 2004 2005
Indonesia 55% 66% 81%
Uruguay N/A* 28% 57%
Nigeria 39% 27% 51%
Kosovo N/A* 52% 50%
Sample average 19% 17% 19%
* Country not included in Global Corruption Barometer 2003/2004.
Source: Transparency International Global Corruption Barometer 2005.
the vote for the presidency, his political party, the Democrat Party, won just 10% of the
seats in the national parliament. His Vice President, Jusuf Kalla, is from Golkar (the
largest political party, controlling 23% of the seats in the dpr) and has extensive business
interests of his own. The President’s cabinet includes representatives of eight different
political parties. As the leader of a minority party, the President sees a need to maintain
the support of the bureaucracy and military, political party leaders (especially in Golkar
and pdi-p) and the dpr. Therefore, it is likely that the President, who is known to be a
cautious and incremental decisionmaker, sees a need to proceed carefully with his efforts
to address corruption.
Moreover, as important as fighting corruption may be, as a long term issue it can
easily be bumped down the president’s list of priorities by other, more pressing short-
term concerns. This may have been the case for the president during most of 2005. For
large portions of the year his government was preoccupied first with the tsunami recov-
ery and negotiations with gam, then with the ending of fuel subsidies October 1, and
finally with a year-end cabinet reshuffle.
SBY’S APPROACH: CAUTIOUSLY ATTACKING CORRUPTION ON MULTIPLE FRONTS
“I want this entire machine to work. All agencies involved in eradicating corruption must
work in synergy.”—President Yudhoyono23
Since coming into office in October 2004, the Yudhoyono government has taken a
number of specific steps to address corruption. The President has:
∫ Expressed support for the kpk and worked closely with it;
∫ Issued inpres 5/2004 on Eradicating Corruption and formulated the national
Action Plan for the Eradication of Corruption (ran-pk);
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∫ Issued keppres 17/2004 authorizing the creation of a National Police Commission;
∫ Issued keppres 18/2004, authorizing creation of an Attorney General’s Commission;
∫ Issued inpres11/2005, creating an inter-agency “Coordinating Team for the Eradi-
cation of Corruption” (“Timtas Tipikor”);
∫ Established a “hunting team,” under the Attorney General and the Coordinating
Minister for Political, Legal and Security Affairs (Menko Polhukam), to search for fugi-
tives and their assets;
∫ Approved the investigation of some 84 government officials;24
∫ Expressed support for judicial reform, including the prospective review of judges
and complaints by the Judicial Commission;
∫ Appointed well-regarded, reform-minded people as Attorney General and head of
the national police (polri);
∫ Increased civil service salaries, although not in the context of broader civil service
reform;
∫ Supported reform of tni procurement and budgeting.
∫ Supported a strong emphasis on combating corruption in the process of rebuilding
the tsunami-devastated provinces of Aceh and Nias.
The Yudhoyono government’s approach to fighting corruption has the following
notable characteristics:
First, the president has made anti-corruption “his” issue: to date he has not dele-
gated leadership and oversight to anyone else in his government. (However, the presi-
dent appears to have designated the kpk as his proxy in the fight against corruption.)
Second, the president’s approach is multi-faceted: it includes prosecutions, preven-
tion and education. To date, however, the most noticeable thrust has been in the realm
of prosecutions.
Third, the approach is incremental and “rehabilitative”: the president seems to have
ruled out the wholesale replacement of government officials and instead believes that
they can be induced to stop their corrupt behavior.
Fourth, it is attuned to political considerations. To date, there has been only lim-
ited legal action taken against politicians and generals who currently hold high level posi-
tions in the national government, political parties or military.
Finally, it is notable for the absence of any explicit emphasis on investigating and
prosecuting corruption by former president Soeharto and his family and close associ-
ates—despite continued calls to do so from civil society.
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INCREASING INVESTIGATIONS AND PROSECUTIONS
“There needs to be some shock therapy so that the people know that this government is serious
about corruption. . . .” — President Yudhoyono25
Under the current government, the number of anti-corruption prosecutions has
increased, continuing a trend since 2001. This is the result of the combined efforts of the
ago, Police, bpk, kpk, ppatk and several other agencies. An illustrative listing of high
profile corruption cases that have been prosecuted or are in the process of being investi-
gated or prosecuted is included as Appendix 1. The President also has shown his com-
mitment to fighting corruption by giving permission to the ago and polri to investigate,
at last count, more than 84 regional officials
To increase corruption investigations and prosecutions, the President has appointed
respected, reform-minded people to head the ago and polri. The sby government also
has created two inter-ministerial teams intended to accelerate the investigation and pros-
ecution of high profile and big ticket corruption cases.
Timtas Tipikor In May 2005 the President issued Keppres 11/2005 creating the Coordi-
nating Team for the Eradication of Criminal Corrupt Acts (“Timtas Tipikor”) to accel-
erate the investigation and prosecution of big corruption cases involving government
agencies such as the State Secretariat (SekNeg) and State-owned Enterprises (soes). To
facilitate its investigations, Timtas Tipikor is authorized to gather information from all
government agencies, including local governments, soes and regional soes. The team
has a two-year mandate, subject to renewal.
Timtas Tipikor is headed by the Deputy Attorney General for Special Crimes. There
are two deputies: the Director for Acts of Criminal Corruption of the Police and the Deputy
for Investigation of the Financial and Development Supervision Body (bpkp). The Attor-
ney General, head of the Police and the head of the bpkp act as advisors to the team.26 The
team consists of 15 people from the Attorney General’s Office, 15 from the Police and 15
from bpkp. In response to the President’s desire to monitor high level investigations and
prosecutions, the team reports to the president on its activities every three months.
As of early 2006 Timtas Tipikor was reported to be investigating about 10 corrup-
tion cases, and it had successfully prosecuted two cases: the misuse of Haj funds by the
former Minister of Religion under Megawati and corruption within the state-owned
insurance firm PT. Jamsostek involving its former President Director. (See Appendix 4
for a list of cases handled by Timtas Tipikor.)
The creation of the team is another sign of the President’s seriousness about prose-
cuting corruption, and if it is well managed, it should increase cooperation among the
20
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ago, Police and bpkp. At the same time, the creation of a separate team also increases the
risk that the mandates of the team, ago, Police and kpk will overlap and cause confu-
sion and possibly rivalries. The president’s close association with the team also makes the
team vulnerable to charges that its investigations and prosecutions are influenced by par-
tisan political considerations.
Other initiatives For its part, in early 2005 the Coordinating Minister for Political,
Legal and Security Affairs (Menko Polhukam) created an “Interdepartmental Team for
Hunting People Accused or Convicted of Criminal Corruption.” The purpose of the
team is to track down and repatriate fugitives who have fled abroad and recover their
assets. Most of the identified fugitives have been accused or convicted in cases involving
the misuse of emergency liquidity funds (blbi) extended to private banks by Bank
Indonesia during the financial crisis. The team is headed by a Deputy Attorney General
for Intelligence and includes representatives from the ago, Police, Menko Polhukam, the
Ministry of Law and Human Rights, Ministry of Foreign Affairs and ppatk. The effort
to repatriate fugitives and their offshore assets is hampered by Indonesia having extradi-
tion agreements with only four countries, and significantly, not with Singapore.
Additionally, within the Ministry of Finance, the first internal investigative team
was recently established within the Office of the Inspectorate General. So far the team
has been very proactive in its investigations; but it is too early to tell if they will lead to
successful prosecutions.
These steps are beginning to chip away at the longstanding culture of impunity. Still,
the number of cases being investigated and prosecuted is considered just a small fraction
of potential cases, and there appears to be reluctance on the part of the government’s law
enforcement and anti-corruption agencies to energetically pursue cases involving “big
fish.” Also, the process of investigating, prosecuting and sentencing is still very prone to
corruption and abuse. Between 1998 and 2004 staff in the ago successfully thwarted most
efforts to increase the integrity of the organization. There also are concerns about unclear
and/or overlapping mandates.
INPRES 5/2004
The President issued Presidential Instruction 5 (inpres 5/2004) in December 2004.
inpres 5 instructs all institutions of the government that fall under the authority of the
executive branch to expedite efforts to eradicate corruption. It consists of ten instruc-
tions that apply to all institutions and eleven special assignments to various Ministers.
(See Box 2.)
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BOX 2: KEY ELEMENTS OF INPRES 5/2004
INPRES 5/2004 consists of a set of instructions that apply to all state institutions and 11 special assign-
ments to various Ministers. These are:
GENERAL INSTRUCTIONS:
∫ All state officials should immediately submit wealth reports to the KPK and assist the KPK with the
reporting, registering, announcing and auditing of wealth reports.
∫ Civil service reform: Create performance criteria; standardize and make transparent fees for services
and licenses and eliminate illegal fees; and create “islands of integrity.”
∫ Implement KEPPRES 80/2003 on government procurement.
∫ Apply simplicity in official affairs and personal lifestyles and economize on state expenditures.
∫ Give maximum cooperation to the prosecution of corruption cases by POLRI, AGO and KPK.
∫ Cooperate with the KPK to determine if administrative systems invite or are susceptible to corruption.
∫ Increase supervision in order to eliminate corruption.
SPECIAL ASSIGNMENTS:
∫ The Coordinating Minister for Economic Affairs, the Minister of Finance and the head of BAPPENAS
to initiate a pilot project for government-wide e-procurement.
∫ The Minister of Finance to improve collection of taxes and customs, review laws and regulations
on state finances that invite corruption, and prepare draft laws as needed.
∫ Head of BAPPENAS to prepare a National Action Plan for Corruption Eradication (RAN-PK) for 2004-2009.
∫ MenPAN to prepare policies to improve the quality of public services and to introduce perform-
ance-based personnel management. MenPAN also tasked with coordinating, monitoring and evaluating
the implementation of INPRES 5.
∫ The Minister of Law and Human Rights to prepare laws and amendments as needed to eliminate
corruption.
∫ State Minister fir State-owned Enterprises to implement principles for good corporate governance in SoEs.
∫ The Minister of National Education to develop curricula cultivating the spirit of anti-corruption.
∫ The State Minister for Communications and Information to undertake an anti-corruption education
campaign.
∫ The Attorney General to optimize investigations and prosecutions of corruption, punish abuses of
power by prosecutors, and enhance cooperation with POLRI, BPKP, PPATK and other agencies.
∫ The Chief of Police to optimize investigations and prosecutions, punish abuses of power by the police,
and enhance cooperation with AGO, BPKP, PPATK and other agencies.
∫ Governors and Bupati/Walikota to adopt good governance principles, improve public service and
eliminate illegal fees, and prevent leakage from State and regional budgets.
22
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inpres 5 is a signal to the bureaucracy and the public of presidential commitment
to fighting corruption. It is comprehensive and multi-faceted, including instructions to
bolster prosecutions, prevention and education. However, the inpres doesn’t include any
deadlines or sanctions; nor does it prioritize reform of the most-corruption prone min-
istries. According to the kpk, inpres 5 has been poorly socialized within the government.
And MenPAN, the Ministry tasked with coordinating, monitoring and evaluating imple-
mentation, is most notable for its lack of bureaucratic clout. (It is noteworthy that nei-
ther Menko Polhukam nor bappenas were assigned the tasks of coordinating, monitoring
and evaluating implementation.) Finally, it is important to note that for valid constitu-
tional reasons, inpres 5 doesn’t address corruption in the judiciary, the financial sector,
or legislatures. It also doesn’t address corruption in tni.
Although they have their shortcomings, inpres 5 and ran-pk are the official expres-
sions of the totality of the sby government’s anti-corruption priorities. As such, and
because inpres 5 and ran-pk are quite comprehensive, it makes sense to assess the gov-
ernment’s anti-corruption efforts largely—though not entirely—in terms of the progress
being made with the individual elements of inpres 5. Brief assessments of the major ele-
ments of inpres 5 follow.27 This is followed by a discussion of ran-pk. Finally, we com-
ment briefly on four important, corruption-prone arenas of governance not included in
inpres 5 and ran-pk: namely the judiciary, supervision of the financial sector, political
parties and parliaments and the military procurement and businesses. A separate, more
detailed discussion of the kpk is contained in a later section.
Reforming the civil service and reducing corruption in the delivery of public services
At least three of inpres 5’s ten general instructions concern reforming the civil service
and reducing corruption in the delivery of public services. This is an appropriate recog-
nition of the necessity of civil service reform in order for there to be a meaningful and
lasting decline in corruption.
Stephen Sherlock has succinctly described the problem with Indonesia’s civil service:
“The current civil service is process based, not results based, and performance is
measured by obedience to one’s superiors. Recruitment, promotion and pay are
structured around control of the service by its senior echelons. Interactions with
the public are regarded not as occasions to deliver public services but as opportu-
nities to levy informal taxes. Because accountability is entirely internal, individual
civil servants find it either desirable to participate in corrupt practices or impossi-
ble to combat such practices because promotion, pay and position are at stake.”28
23
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In the area of civil service reform, inpres 5 assigns MenPAN to:
∫ Prepare policy documents to enhance the quality of public services;
∫ Prepare policy documents to improve performance measurement for high officials;
∫ Prepare policy documents for good governance in regional governments and non-
department government institutions and departments;
∫ Undertake research with a view to improving the State’s personnel management
system.
ran-pk further elaborates these objectives. For instance, ran-pk aims to “Develop
open recruitment for strategic positions in the central and local government,” “to improve
the remuneration system for the civil service, the armed forces and polri,” and to pass
laws—an administrative procedure code and a law on public service delivery—to
improve public service delivery. While these are commendable objectives, their poten-
tial to produce tangible results remains limited. Thus open recruitment for strategic posi-
tions is not expected to be launched before mid-2008.
Some progress can be noted in the efforts to reform the compensation system. A key
first step has been the effort to design a new remuneration policy for high-ranking state
officials, so-called pejabat negara (e.g. ministers, legislators, judges and heads of special
commissions and agencies). The Minister of Finance has set up a task force to examine
the entire compensation package with the goal of creating a more transparent, systematic
and coherent framework of pay and allowances linked to a comprehensive review of job
classifications and categories. This is intended to lead to an independent remuneration
commission to recommend both the level and structure of the compensation package to
Indonesia’s highest ranking political officials. Such an approach would be followed by a
similar comprehensive review of pay issues for the larger civil service. However, it would
be mistaken to claim that this reform is attributable to the Action Plan.
ran-pk also suggests that civil service pay should be increased to curb corruption.
Evidence from elsewhere, however, suggests that the link between government wages and
corruption is tenuous at best. Low earnings prompt individuals to seek alternative sources
of income. But high earnings are not sufficient to counter corrupt practices. Financial
scandals involving government officials whether in Britain, Japan or the U.S. are cases
in point.
Rather than seeing corruption as a response to low pay, it is more helpful to view
corruption as a response to opportunity. Corruption represents a calculated risk where
costs and benefits are weighed. If the risk of getting caught is low and punishment min-
imal, corruption is more likely to flourish. Increases in official pay, alone, do little to
change the cost/benefit calculation and corruption need not abate. In addition, up to
24
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now there have been no thorough studies confirming the public myth that civil servants
are underpaid compared to the private sector. In short, pay increases can play a role in
changing behavior but they must be part of an over all policy package designed to influence
civil servant behavior.
The draft bills on public service delivery, the administrative procedure code and the
law on the ombudsman are intended to become the legal umbrella for the implementa-
tion of public service activities and to create sanctions and entitlements. As of mid-2006,
the draft bill for public service and the draft administrative procedure code initiated by
MenPAN are still being discussed with the Commission II of the dpr.
The effectiveness of a new legal framework to improve public services is question-
able. First, the introduction of new laws and regulation in the absence of institutional
capacity and incentives to actually implement these could spur public cynicism. One of
the key articles in the draft public service bill thus entitles citizens to seek legal recourse
in case of misuse of administrative power by civil servants. However, the probability of
enforcing this in the context of weak judicial and legal institutions remains low. Second,
there are potential overlaps and contradictions among several of the provisions in the law
on public service, the administrative procedure code and new law on the ombudsman.
At a more general level, this underscores a general shortcoming in the integrity sys-
tem, namely the inclination to pass new policies and regulation with little consideration
to establish institutional capacity and incentives to implement them.
Improving investigations and prosecutions by the Attorney General’s Office. The
Public Prosecutor’s Office (ppo) within the Attorney General’s Office (ago) is critical to
the effective investigation and prosecution of corruption cases. And its importance is
magnified because it is one of the arms of the national government that wasn’t devolved
with decentralization. inpres 5 explicitly calls on the ago to “optimize efforts to inves-
tigate and prosecute corruption crimes to punish actors and secure state money.”
Historically, institutional weaknesses and corruption within the Public Prosecutor’s
Office have constituted serious impediments to investigating and prosecuting corruption
cases. Many prosecutors are suspected of not pursuing or intentionally weakening cases
in exchange for bribes. Another problem has been the unclear division of labor between
the ago and the Police with regard to investigations. Since the fall of Soeharto, there have
been six Attorneys General—several of whom have been considered reformers—but there
has been only limited progress in increasing the integrity and capacity of prosecutors.
The current Attorney General, Abdul Rahman Saleh, is widely viewed as being hon-
est and reform-minded. His priorities have been:
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∫ To intensify the investigation and prosecution of corruption cases;
∫ To review corruption cases that were ended when predecessors terminated the inves-
tigations;
∫ To promote internal reform with the ago;
∫ To create an independent prosecutorial commission to serve as an external control
mechanism for the ago.29
In July 2005 Attorney General Salleh launched an “ago Reform Agenda” that calls
for across the board reforms in the ago, and particularly the Public Prosecution Service.
The Reform Agenda seeks to improve the organizational structure, working procedures
and human resource management. It also seeks to reform the case management system
and strengthen oversight and supervision of the Public Prosecution Service.30 In mid
2006 the ago conducted an assessment of the Office’s commitment to implementation
of the Reform Agenda. The assessment points to an increase in the number of serious
sanctions against prosecutors as evidence of the ago’s commitment to enforce “profes-
sionalism, discipline and ethical conduct of the prosecutors.”31 It also notes a gradual
improvement in the quality and transparency of the ago’s case and information man-
agement systems.32
The assessment also highlights the increasing cooperation between the ago and other
law enforcement agencies. The ago signed an MoU with the kpk in early 2005, under
which the Public Prosecution Service provides the kpk with personnel and operational
support. Timtas Tipikor was formed in part to improve ago-Police coordination. The pps
also cooperates with bpk, Bank Indonesia, ppatk, and the National Ombudsman.
In 2005 the President authorized creation of an Attorney General Commission to
monitor and evaluate the performance of prosecutors and ago staff. On March 16, 2006,
the President inaugurated 7 members of the Commission.
However, progress remains incremental. As the ago’s assessment points out, a vari-
ety of new decrees are still needed in order to improve the quality and integrity of pros-
ecutions. Inadequate budgets and low salaries also slow the pace of reform. Moreover,
according to one interviewee, part of the problem is that the Attorney General’s approach
to investigating corruption is focused on individuals rather than on the systems and net-
works that perpetuate corruption.
It also appears that the ago has been unable or unwilling to enforce fines and recover
losses to the state. As of late 2005 the ago had failed to collect more than Rp 3.9 billion
in fines and more than Rp 2.5 trillion in indemnification money from guilty parties.
26
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27
TABLE 3: PROSECUTIONS OF SPECIAL CRIME CASES
BY THE ATTORNEY GENERAL OFF ICE, 1994–2005
Number of Cases in Prosecution Stage
No Year Carried over from prior year New Cases Settled
1 1994 49 129 125
2 1995 53 143 138
3 1996 58 108 109
4 1997 57 128 131
5 1998 54 540 115
6 1999 479 314 688
7 2000 105 185 230
8 2001 56 440 435
9 2002 61 444 433
10 2003 71 533 584
11 2004 40 577 586
12 2005 31 654 637
Sources: Evaluation of One Year sby-Kalla Government: Commitment Without Support.” Indonesia Corruption
Watch (2005), pp. 31; “Attorney General Office Agenda in Combating Corruption,” Presentation Material by
Attorney General, Abdul Rahman Saleh in JFCC Forum, January 11, 2006.
BOX 3: RECOVERY OF F INES AND INDEMNIF ICATION PAYMENTS BY
THE CRIMINAL CORRUPTION SECTION OF THE ATTORNEY GENERAL’S OFF ICE
FINES
Uncollected in 2004 Rp 3,015,744,500
Fines applied through Sept.2005 Rp 1,190,100,000
Total through Sept. 2005 Rp 4,205,844,500
Fines Paid Rp 227,000,000
Fines Unpaid Rp 3,978,844,500
INDEMNIFICATION PAYMENTS
Total due as of Sept 2005 Rp 5,317,737,001,799
Paid as of November 2005 Rp 2,747,875,786,559
Amount not paid Rp 2,569,861,215,240
Sources: Material on hearing between Attorney General Office and commission III of dpr on November 28, 2005.
Pp. 44—45
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Finally, it is important to note, as the Asian Development Bank has, “By itself, the
ago cannot go far in reforming the prosecution service. Some key aspects of reform are
beyond its jurisdiction. . . . The institutional reform of the public prosecution service
therefore depends on the political will and leadership of the president, and on coordi-
nation between several ministers and the dpr.”33
Reforming the Police. The National Police (polri), along with the ago, plays a criti-
cal role in investigating suspected cases of corruption. And like the ago, historically its
ability to discharge this function has been compromised by inadequate resources and
capacity and by corruption. The adb reported that in 2003, “ The national Corruption
Crime Directorate in police headquarters, which deals with corruption in government,
state enterprises, financial institutions, and international development projects, has only
40 operative officers assigned to combat corruption and a yearly budget of Rp 160 mil-
lion (about $16,000)—far from enough to cover salaries and operational expenses.”34 As
with state prosecutors, there is a history of police investigators tampering with evidence
and altering their findings in exchange for bribes.
The current police chief, General Sutanto, is considered a reformer, and he has
wasted no time sending some important signals: He has spoken out forcefully against
police involvement in gambling. He has allowed the former head of the Criminal Inves-
tigation Bureau to be named as a suspect in the bni corruption case. And he has put a
number of capable senior officers in key positions—for example appointing Made
Mangku Pastika as Chief of the National Narcotics Agency. Also, in 2004 the president
issued a Keppres authorizing the creation of an independent National Police Commis-
sion. In June 2006 the President inaugurated 9 members to serve as Commission mem-
bers—3 from government (including Menko Polhukam as a chairman) and 6 members
representing various civil society groups.
These are positive initial steps, but the wholesale professionalization of the police
will come slowly and incrementally. In the meantime, one of the key priorities with
regard to fighting corruption should be strengthening the integrity and capacity of police
investigative units.
Reform of tax collection. inpres 5 calls for the Minister of Finance to “supervise the
implementation of provisions on taxation, customs and excise, non-tax state revenues and
budget to abolish irregularities in the receipt of state finance, as well as assess legislation
related to state finance, which can open opportunities for corrupt practices . . .” The Tax
Directorate of the Ministry of Finance collects Rp 362 trillion ($38.5 billion) a year, about
28
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70% of the State’s revenues. A recent report by the MoF’s Inspectorate General illustrated
how widespread corruption in the tax service occurs primarily because of the services exces-
sive powers, including its power to set tax policy, collect taxes and supervise tax collec-
tion. The report also points to the corruption being highly organized and institutionalized.
It is beyond the scope of this report to comment in detail on steps being taken in
the MoF to reform the tax system and reduce corruption and leakage. It can be noted,
however, that the Directorate General of Tax is undertaking a major reform program that
includes modernizing tax laws and strengthening integrity and accountability. Likewise,
the Directorate General of Customs and Excise is also implementing a modernization
program that includes measures to enhance transparency and accountability. Addition-
ally, legislation submitted to the dpr would alter the existing system of tax collection.35
Finally, Minister Sri Mulyani has begun a reorganization of the Ministry that will strip
the tax service of its authority to determine tax policies and limit it to managing the col-
lection of taxes.36
Preparing laws and regulations to support corruption eradication. A number of
new laws and several changes to existing laws and regulations are needed to optimize the
fight against corruption.37 As of mid-2006, legislation being contemplated includes:
∫ A bill on freedom of information,
∫ A bill on the National Ombudsman Office,
∫ Amendment of the extradition law (Law 1/1979),
∫ Amendment of Law 30/2002 establishing the kpk, and
∫ Amendment of the laws and regulations on money laundering.
Some observers believe movement on the legal front was slow during 2005 due to
the Minister of Justice and Human Rights’ deep involvement in the Aceh peace negoti-
ations. The dpr also has been slow to move through its legislative agenda. Several of these
laws are discussed in greater detail in later sections of this report.
Improving internal and external auditing: the BPKP and BPK. inpres 5 emphasizes
the importance of better cooperation between the law enforcement agencies and the bpkp
(the Financial and Development Supervision Body), the government’s internal audit
body. inpres 5 does not include bpk, the Supreme Audit Agency, presumably because it
is an independent agency and not part of the Executive branch. For the sake of coher-
ence, both are discussed here.
The bpkp has wide-ranging responsibilities on the central government level for for-
mulating and preparing control plans and programs, exercising general control of
29
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national government finances, by auditing the activities of line ministries and their proj-
ect offices. Since decentralization, bpkp no longer has the mandate to audit regional gov-
ernments. bpkp’s budget is substantial, but it is nevertheless inadequate to cover all its
expenditures. It is forced to demand funds from the institutions it audits, a practice that
jeopardizes its integrity.38
Indonesia’s constitution establishes the bpk as the Supreme Audit Institution in
Indonesia. The constitution provides for the independence of the bpk as the sole exter-
nal audit authority empowered to investigate state financial management and account-
ability. The main focus of audits tends to be compliance with financial regulations and
procedures. The bpk submits its reports to the dpr and relevant dprds. The bpk’s budget
is typically not enough to cover its operating expenses. Frequently the bpk requires the
institutions its auditing to pay for the audits, a practice that undermines the independ-
ence and credibility of bpk audits.39
The bpk has relatively good staff capacity, but also has been vulnerable to tamper-
ing with audit results in exchange for bribes. Also, some observers point to a problem
translating BKP audits into evidence that can be understood and used by ago and judges.
The BKP has become more proactive under Anwar Nasution, and as part of its new strat-
egy will strengthen its regional presence.
Implementation of KEPPRES 80/2003 on procurement and the piloting of an e-
procurement system. In November 2003, the Government issued the Presidential
Decree (keppres) 80/2003 as a new national procurement regulation. This keppres pro-
motes the basic principles of procurement: transparency, open and fair competition,
economy and efficiency. Although there are exceptions, keppres 80/2003 meets most of
what is generally regarded as accepted international practice.
However, with decentralization now well established, there is an urgent need for
national standardization. The strength and harmonizing effect of Indonesia’s legal frame-
work for public sector procurement can best be increased by anchoring that framework
with an overarching consolidated and comprehensive national public sector procurement
law with subordinate regulations.
Within the above context, the creation of a national public procurement office as a
procurement regulatory and oversight body is greatly needed. The government recognizes
this and has committed to creating one. However, the establishment of a national pro-
curement policy office has been delayed by the cabinet reshuffle in December 2005. A
presidential decree on establishing this office was well-advanced but with the leadership
change in bappenas, which is chairing the drafting committee, the outline of the decree
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is undergoing additional revisions. There are efforts, however, to link the establishment
of this office to the enactment of the decree on e-procurement, based on the idea that
instituting e-procurement would require a regulatory body to oversee implementation.
The Government has also committed to improving its procurement system by
expanding the use of e-procurement systems. To date, only the Ministry of Public Works
has published online standard bidding documents, contract opportunities and awards,
and this system isn’t a full-fledged e-procurement system. Several soes have experimented
with elements of e-procurement systems, including Angkasapura II (ports), pln (elec-
tricity), Garuda Indonesia (airline) and Kereta Api Indonesia (railways).
The e-procurement regulation is now being drafted. The pilot implementation will
be coordinated by the Center of Public Procurement Policy in the State Ministry of
Development Planning/bappenas, and will be launched in 3 ministries and 2 local gov-
ernments by the end of year 2006.
THE NATIONAL ACTION PLAN ON CORRUPTION ERADICATION (RAN-PK)
In inpres 5, the President instructed bappenas to prepare the National Action Plan for
the Eradication of Corruption or ran-pk. In December 2005 then bappenas Minister
Sri Mulyani established a team to draft the ran-pk.40 In the course of developing the
Action Plan, consultations were held with local officials and civil society groups in a num-
ber of cities. The action plan was completed in February 2005.
ran-pk includes plans to strengthen both preventive and repression of corruption.
However, ran-pk deals more with prevention than with repression. The matrix for ran-
pk includes 89 action plans for prevention, compared to 17 action plans for repression
and only 4 action plans for monitoring and evaluation. (See Box 4.)
In the area of corruption prevention, ran-pk’s priorities include:41
∫ Redesign public services, especially in those sectors that have a significant impact
on the daily lives of the public. The goal is to simplify people’s access to public services
that are professional, high quality, punctual and without extra cost.
∫ Strengthen transparency, supervision and sanctions on government activities related
to the economy and human resources. The goal is to increase the accountability of gov-
ernment in managing state and human resources. A second goal is to increase access to
information and other opportunities for people to participate in the economy.
∫ Empower people in the context of corruption prevention. The goal is to uphold the
“rule of law,” improve the awareness of people about the law and empower them so that
they can participate actively in the corruption eradication process.
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BOX 4: SUMMARY OF KEY ELEMENTS OF RAN-PK
PREVENTION
Improvement of Public Services
∫ Improve licensing mechanisms in Ministries/Non Ministry Bodies that are crucial for investment
(BKPM, Environment, Land Agency, Mining, etc.)
∫ Improve public services that have a big impact on society (Education, Health, Labor, Immigration,
Public Works, Police, Fisheries, etc.)
∫ Draft government regulations on one stop services in districts/cities.
Improvement in the Performance of Government Services
∫ Apply Integrity Pact on state apparatus involved in delivering public services
∫ Apply reward and punishment system on delivering public services in crucial Ministries/Non
Ministry Bodies (BKPM, Land Agencies, Health, Public Works, Fisheries, Environment, Police, Labor etc.)
∫ Improve performance accountability system of government officials and institutions
Improvement in the Performance of Public Service Institutions
∫ Implement pilot “islands of integrity” in several areas/government institutions
∫ Internalization and application of good governance principles within government management at
national and local levels;
∫ Internalization and application of good corporate governance principles within State Owned Enter-
prises (SOEs) and Regional SOEs
Improvement in Supervision of Government Services
∫ Increase people’s access to information about the status of public complaints and increase services
to respond to public complaints.
∫ Improve reporting, disclosure and investigations of government officials wealth reports and increase
people’s access to reports on gratification
∫ Harmonization and revision of laws and implementing regulations related to supervision and
internal investigation of government institutions
Improvement of State Financial Management System
∫ Application of “integrity pacts” on state officials responsible for government revenue and the imple-
mentation of the state budget
∫ Improvement of services and audit system on customs and developing e-government in the tax
and customs system
∫ Application of reward and punishment system on tax and customs management
∫ Revision of law and regulations on tax and customs
Improving Government Goods and Services Procurement System
∫ Application of “integrity pacts” on officers who have responsibility for goods and services, pro-
curement, business and other related players
∫ Application of an e-procurement system and empowerment of the internal audit institutions for the
procurement process
∫ Revision on laws and regulations in government goods and services procurement
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Improving Human Resource Management and State Apparatus Mentoring System
∫ Improving development system for government officials related to appointment, reassignment and
dismissal of position, performance appraisal and career development for law enforcement officers
∫ Creating database for the evaluation of integrity and quality of law enforcement officers in the
context for promotion and reassignment
∫ Improving recruitment system of strategic positions at national/local levels and for law enforce-
ment officials
Increasing the Awareness and Participation of the People
∫ Increasing the application for anti-corruption curricula from elementary level of education through
university
∫ Increasing the participation of public figures and anti-corruption campaigns
∫ Finishing all the laws/regulations in related to anti corruption (Freedom of Information, Witness
Protection, Public Service, Governmental Administrative Procedure, etc.)
REPRESSION
Accelerate the Handling and Execution of Corruption Cases
∫ Decide priority sectors for corruption eradication and apply performance indicators on the handling
existing corruption cases to accelerate the process
∫ Support an increase in the number of Ad-Hoc Judges for the Corruption Court
Increase the coordination between internal and external audit agencies with law enforcement agencies
Increase the Capacity of Law Enforcement Officials
∫ Provide asset tracing, legal audit, accounting/audit forensic and public relations training
∫ Improve management supervision system on law enforcement institutions
∫ Continue accelerating the establishment of Attorney General Commission and Police Commission
as external supervision institutions
MONITORING AND EVALUATION
∫ Creation of a monitoring team
∫ Compile information on the judicial process related to corruption
∫ Conduct survey on corruption
∫ Conduct supervision of the implementation of RAN-PK related to the improvement of the existing law
The repressive elements of ran-pk emphasize the application of sanctions on any
irregularities that violate norms, values, laws and regulations that cause state loss. The
priority action with regard to repression is the prosecution of big corruption cases and
the retrieval of money stolen from the state.42
Because of criticisms that arose during the consultative process, the government has
dubbed the Action Plan a “living document.” As a “living document” ran-pk will be
updated annually to include the latest corruption eradication initiatives. However, this
creates a problem for enforcement of the Action Plan, for as long as the Plan’s goals and
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targets are subject to change, then they remain essentially non-binding and therefore lose
most of their significance. bappenas has tried to overcome this deficiency by including
ran-pk in the Mid-Term Development Plan.43
In September 2006, bappenas published an updated version of ran-pk. However,
only three changes were introduced, all of them in the prevention pillar of ran-pk. One
new action plan was added, “Improvement of Public Service Institutions” with a specific
view to improve service delivery. Two minor revisions were introduced in the actions
plans covering “Budget System Reforms” and “Improvement of Tax Service.”
It is noteworthy that the September 2006 version of the ran-pk does not update
the Monitoring and Evaluation framework. For instance, the passage of the Witness Pro-
tection Bill and the ratification of the United Nations Convention on Anti-Corruption
are not reported.
Implementation and monitoring of RAN-PK It is beyond the scope of this report to
try to assess the extent to which the hundred-plus action plans included under ran-pk
are being implemented in a meaningful way. Instead, this report limits itself to looking
at several broader aspects of implementation: 1) leadership and coordination, 2) the
absence of incentives and sanctions to encourage follow through, and 3) monitoring and
evaluation.
With regard to leadership and coordination, it appears there is limited commitment
and capacity to advancing the ran-pk on the part of the two ministries assigned leading
roles: bappenas and MenPAN.44 bappenas apparently sees it role principally as coordi-
nating the preparation of the ran-pk; it doesn’t appear to want to play a further role.
MenPAN, which has the responsibility for monitoring and evaluating progress of
both ran-pk and inpres 5, is a politically weak ministry with limited capacity and lim-
ited presence at the local level.45 MenPAN sees its role in the fight against corruption
principally as being to establish civil service performance standards rather than explic-
itly trying to reduce or punish corruption in the civil service. MenPAN has stated that
the principal indicator they are using to gauge success with regard to reducing corrup-
tion is improving Indonesia’s ranking on TI’s Global Corruption Index.
Implementation of ran-pk has been left to each Ministry. For example, the Min-
istry of Public Works set up and has implemented an e-procurement system since 2002.
Another example is ran-pk’s sub-plan for the improvement of financial management sys-
tems. Most of the action plans in this sub-plan are carried over from the previous reform
program started under the Megawati presidency with the enactment of the new State
Finance Law no 17/ 2003 and Treasury Law no 1/2004. And as of mid-2006, the Min-
34
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istry of Education hasn’t decided whether to introduce corruption education a manda-
tory course or extracurricular subject in schools.46
While ran-pk sets out annual performance indicators, it doesn’t provide rewards for
good performers or sanctions for poor performers. Likewise, it doesn’t allocate extra
resources to support anti-corruption efforts or require that Ministries include funding
for their anti-corruption efforts in their budget requests.
To track the progress of government agencies towards fulfilling the targets they have
set out in ran-pk, MenPAN has created, at least on paper, an elaborate monitoring and
evaluation system (Kormonev). The Kormonev system is supposed to feed data from
every Ministry, Province and Kabupaten to MenPAN, where it is supposed to be aggre-
gated and analyzed. As of mid-2006, only polri and the Ministries of Public Works,
Transportation, and Labor and Migration have submitted reports to MenPAN. And as
of October, MenPAN had received reports on implementation of inpres 5 from 13 of 20
central government ministries, 17 of about 33 provincial governments and 38 kabupaten
and 8 cities out of about 441 kabupaten/cities.
MenPAN is mandated to submit to the President semi-annual reports on the imple-
mentation of ran-pk. It would be difficult, almost anywhere, to develop a system to mon-
itor and evaluate the performance of more than 500 disparate units of government.
However, the challenge in Indonesia is magnified because MenPAN doesn’t have the
authority or the financial and human resources to effectively carry out its monitoring
and evaluation function. As a result, more than a year and a half after the formulation
of the Action Plan, the President has yet to receive a progress report.
By way of summation, the creation of ran-pk establishes a government-wide frame-
work for addressing corruption. But it is not a strategy: the Action Plan is weak on pri-
oritization, vague on time frames and doesn’t create significant incentives and sanctions.
inpres 5 assigns MenPAN the responsibility for coordinating implementation of ran-
pk, but it doesn’t give any organization the responsibility, authority or resources to take
a leading role in moving the plan forward. As a result, there appears to be a low level of
engagement on the part of first and second echelon officials, who are crucial to any effort
to accelerate change within the bureaucracy.
IMPACT AT THE LOCAL LEVEL
“SBY’s shock therapy on corruption . . . is only happening in Jakarta” —Ervyn Kaffah,
National Coalition of NGOs Against Corruption47
The general instructions regarding the eradication of corruption contained in inpres
5 are addressed to sub-national executives, namely, Governors, Bupatis and Walikotas.
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But inpres 5 does not issue any special instructions to these sub-national officials. Under
ran-pk, however, Governors, Bupatis and Walikotas are expected to do the following:
∫ Improve licensing mechanisms in public works;
∫ Draft government regulations for “one stop” provision of government services;
∫ Promote the internalization and application of good governance principles;
∫ Undertake “zero toleration of corruption” campaigns.
Given Indonesia’s size and diversity, it is beyond the scope of this study to examine
the extent to which several hundred sub-national level officials are aware of their “duties”
under inpres 5 and ran-pk and have been advancing the goals set out in the inpres and
Action Plan. Therefore, we limit ourselves to making only the following general obser-
vations about the impact of national level anti-corruption efforts at the sub national level:
First, many local governments have moved ahead with their own laws and regula-
tions to improve governance and fight corruption; they’re not looking to the national
government for direction. (See Box 5 for two illustrations.) The kpk has relationships
with governments in a few kabupaten and provinces, but otherwise its influence outside
of the national government still is limited.
Second, there have been some impressive successes in both punishing and prevent-
ing corruption at the local level. A number of dprd members have been convicted of
BOX 5: EXAMPLES OF LOCAL GOVERNMENT INITIATIVES TO ADDRESS CORRUPTION
In Kabupaten Solok: Inspired by his participation in a TI workshop, in 2003 Bupati Gamawan Fauzi, now
the Governor of West Sumatra, required that all civil servants and suppliers sign an “Integrity Pact.” The
pact obliges them to refrain from corruption, not to receive or provide bribes, provide transparency to
public and avoid in collusion/cronyism. The Bupati has also reformed the rules for the procurement of
goods and services in the Kabupaten, simplifying documentation, reimbursement of funds, and corre-
spondence in the procurement process.48 Lastly, in early 2004, Solok eliminated civil servants’ hono-
raria, the salary supplements received by government staff for working on specific projects. The objec-
tive was to reduce corruption as well as improve employee welfare overall.
In city of Surabaya:49 In the response to Presidential Decree number 80/ 2003, in 2004 the newly-
elected Walikota of Surabaya developed an e-procurement system for the city. To set up the system, the
city government conducted its own research and tried to adopt the best practices of the procurement
system in Hong Kong and Singapore. It also received assistance setting up the computer system from
students at the local school of engineering. Initially the government faced resistance from big vendors,
who relied on payments and collusion to win their contracts. Since the implementation of the e-pro-
curement system, the savings from procurements has been substantial, and the savings has been allo-
cated to other city projects. In addition, the application of e-procurement increases the opportunity for
small and medium vendors to participate in the bidding process. As a result, a big portion of the city’s
projects now are won by small and medium sized vendors.
36
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corruption and a small but significant number of local governments have made a seri-
ous effort to improve governance and reduce corruption. Indeed, the large number of
former or current dprd members under investigation for misuse of their budgeting
authority—about 1,000 people—has prompted the dpr’s Working Committee for Law
Enforcement and Regional Governments to recommend to President Yudhoyono that
many of these cases be dropped. Many of the cases involve dprds that appropriated large
sums of money for members’ benefits, such as expensive health insurance and official
cars. At issue is whether, under the laws and regulations prevailing at the time, these self-
serving appropriations were illegal.50
Third, generally speaking, accountability mechanisms at the local level still are weak.
Collusion between Bupatis and dprd members appears to be a widespread problem, as
is corruption within dprds. The scope, quality and integrity of government auditing at
the local level is very uneven. And in many localities, ngos and media have limited capac-
ity to monitor government expenditures and uncover corrupt practices.
A recent World Bank study of ten cases of corruption in five provinces (West Suma-
tra, West Kalimantan, Central Sulawesi, East Java and West Nusa Tenggara) provides inter-
esting insights into the situation at the provincial and district levels. The study identifies
three basic motives for corruption: (i) to maintain smooth relations between the execu-
tive and the members of the legislature (dprd); (ii) to generate funds political parties need
to finance their operations and cultivate support; and (iii) to provide extra income for per-
sonal or group use. The modus operandi of most corruption is through collusive mark
ups or mark downs on government projects and misuse of the Regional Budget (apbd).
The basic finding of the study is that success in uncovering and prosecuting cor-
ruption has been mixed at the provincial and district levels. The positive developments
include: (i) law enforcement agencies at the local level have become more pro-active due
to the momentum created by the President’s anti-corruption agenda; (ii) in some cases
there is successful synergy between local ngos and local media; and (iii) local ngos are
getting better at uncovering corruption. However, local level efforts to reduce corrup-
tion continue to face a number of problems. These include: (i) collusion between local
executives and legislatures can be quite strong, especially if the executive and the leaders
of the legislature are from the same party; (ii) many local ngos and other stakeholders
still have a limited understanding of the law and law enforcement processes; and (iii)
sometimes religious and ethnic issues are used to divide the anti-corruption movement.
Fourth, a concerted effort is being made by the national and local governments and
non-governmental groups to guard against corruption in the reconstruction of the
tsunami-devastated provinces of Aceh and Nias.51 In response to the December 26, 2004
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tsunami, more than $4.5 billion in private and public funds have been committed to
rebuilding Aceh and Nias. The Yudhoyono government created the Rehabilitation and
Reconstruction Agency (the brr) to oversee the effort.52 From the outset, it was recog-
nized that controlling corruption had to be a central element of the reconstruction effort.
As a result, an Anti-Corruption Unit (the sak) was established within the brr and tasked
with corruption prevention, investigation and education.
The anti-corruption unit works with a variety of other government bodies and civil
society organizations. Because the sak has limited investigatory powers, it refers serious
cases to the kpk, which has a small office in Aceh. The sak also has established a work-
ing relationship with the Financial and Development Supervisory Agency (bpkp) and
the Business Competition Supervision Commission (kppu). This cooperation includes
the secondment of expert staff from bpkp to assist sak in the field.
sak also works with a variety of national and local ngos, including Transparency
International Indonesia (tii), Indonesian Corruption Watch (icw), Procurement Watch
and the People’s Movement for Anti-Corruption (GeRAK), and several university groups.
Over the last year, the brr joined with the kpk and Indonesia Procurement Watch to
sponsor anti-corruption public information programs across Aceh and Nias. In early
November, the brr signed an MoU with tii to evaluate brr’s integrity systems, improve
its use of technology and do additional anti-corruption education.53
Of the approximately 1,000 complaints and inquiries sent to the brr over the last
tigated by the kpk.54 According to the World Bank, there are indications that corrupt55 And
Indonesia Corruption Watch (icw) and the People’s Movement for Anti-corruption
in Aceh (GeRAK) have reported corruption in five projects worth a total of about $2.6
million.
Finally, an encouraging development in the fight against the misuse of village level
development funds is the national government’s recent decision to launch a “National
Community Empowerment Program.” This program will enable individual communi-
ties across the country to decide how their development funds will be spent. To guard
against corruption and elite capture, elements of the program promote transparency, par-
ticipatory decision-making and participatory monitoring of project expenditures and
implementation.
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practices capture about 5 percent of the $530 million multidonor trust fund.
one year, 131 have been classified as corruption cases. Of these, seven are being inves-
IMPORTANT DIMENSIONS OF CORRUPTION ERADICATION
NOT COVERED BY INPRES 5 AND RAN-PK
Although inpres 5 reflects a multi-dimensional approach to fighting corruption, there
are four important corruption-prone arenas of public life that are not covered by the
inpres. These are:
1) The justice sector,
2) Supervision of the financial sector,
3) Political parties and parliaments, and
4) Military procurement and businesses.
The first three are not included under inpres 5 because they involve branches of
the Indonesian state not under the control of the executive branch: the judiciary, Bank
Indonesia and legislatures.56 tni may not have been included in inpres 5 because of
its sensitivities and because its program of reform is set out in the tni Law (Law
34/2004).
Addressing corruption in all four of these areas is critical to the overall fight against
corruption. In particular, the prospects for reducing corruption in the judiciary and in
parliaments have an important influence on the government’s efforts to address corrup-
tion in other areas. Therefore, each is briefly discussed below.57
REDUCING CORRUPTION IN THE JUSTICE SECTOR
Judicial corruption represents a huge barrier to prosecuting corruption cases. Even the best
prepared prosecution will fail or be weakened if judges’ decisions are for sale. And given
the huge amounts involved in some corruption cases, millions of dollars of bribes may
be in play. In Transparency International Indonesia’s 2005 survey of 1,305 business peo-
ple in 21 regions/cities, the courts (followed by tax services) were at the top of the list of
institutions that need cleaning.58
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Describing the status of all the reforms needed in the judicial sector is beyond the
scope of this report.59 But a few aspects of judicial reform are particularly relevant to
anti-corruption and therefore should be mentioned. These include:
First, Bagir Manan, the Supreme Court Chief Justice, has been an advocate of judi-
cial reform and the Supreme Court has endorsed a comprehensive “Blue Print” for judi-
cial reform. However, judicial corruption is based on deeply entrenched and highly
lucrative networks and practices, and the ability of the Chief Justice to single-handedly
make sweeping changes is limited. Moreover, it may be that the Chief Justice’s author-
ity has been weakened by the kpk’s investigation of him and other justices in 2005.
Second, the kpk has as one of its highest priorities eradicating judicial corruption,
first in the Supreme Court, then throughout the court system. In late 2005 the kpk began
an investigation of the acceptance of bribes by three Supreme Court judges including
the Chief Justice.60
Third, in a December 2005 meeting with the Supreme Court, the president said that
he would review and restructure the remuneration system for senior state officials, and he
noted that Supreme Court salaries are lower than those of other senior state officials. He
expressed his hope that the government can establish a remuneration system that is more
equitable and will boost professionalism, especially in the Supreme Court.61
Finally, during 2005–2006 the independent Judicial Commission emerged as an
important force for judicial accountability. The seven members of the commission won
widespread respect for their integrity and assertiveness, and the commission was instru-
mental in addressing a host of scandals in the judiciary. During 2005 the Commission
asserted that it should have the authority to review the integrity of all 49 Supreme Court
justices. To this end, it proposed to the president the issuance of a government regula-
tion in substitute of the law (perpu) that would significantly increase the Commission’s
authority vis-à-vis the judiciary. The idea triggered resistance from the Supreme Court
and some members of the Parliament. In early 2006, 31 justices of the Supreme Court
formally requested the Constitutional Court to review the constitutionality of Law
Number 22/2004 on the Judicial Commission. Specifically, the justices objected to pro-
visions in the law that empowers the Judicial Commission to monitor judges and rec-
ommend sanctions. In August 2006 the Constitutional Court removed the Judicial
Commission’s mandate to monitor judges, claiming a conflict with the constitution.
The ruling limits the commission to its role in screening applicants for Supreme Court
vacancies.
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INCREASING F INANCIAL SECTOR SUPERVISION
According to the World Bank, Indonesia’s financial sector crisis in 1997–98 was one of
the costliest in the world, with public funds equivalent to more than 50 percent of
Indonesia’s gdp used to bail out the banking sector.62 The behavior of Bank Indonesia
(bi), other government agencies (such as the bank restructuring agency, ibra) and state
and private banks during and immediately following the financial crisis revealed the
extent of weak oversight, corruption and collusion within Indonesia’s financial sector.
The losses to the state (and therefore to Indonesian citizens) from the blbi loan scheme
totaled some Rp 138 trillion—based on bpk and bpkp audits.63 Given the past and poten-
tial magnitudes involved in the banking system—in part because of the continued dom-
inance of the banking sector by four state-owned state banks, which hold about 40% of
assets—it is essential that the integrity of the system be strengthened.
The Central Bank Law (Law 23/1999) creates a legal structure whereby Bank Indone-
sia can independently carry out its duties as monetary policymaker and banking sector
supervisor. The law also gives bi responsibility for regulating and supervising the banking
sector. (The Ministry of Finance is responsible for supervising the insurance sector and
bappepam supervises the stock exchange.64) In keeping with its new authorities and
responsibilities, bi has moved to strengthen the “infrastructure” of the banking system,
improve corporate governance, and improve the effectiveness of banking regulation and
supervision. As Vedi Hadiz has observed, “Bank Indonesia . . . is taking more seriously its
role of supervising state banks. Moreover, a governance and oversight unit for state and
recapitalized banks has been established, and the audit of state banks has been carried out
by international firms. The central bank itself now has to report to the parliament.”65
According to the World Bank, regulation and supervision of the financial sector has
“improved substantially” since 1998. However, the management and oversight of State-
owned banks, which continue to dominate the banking sector, remains a problem.66 In
May 2004, the joint imf/Government of Indonesia Monitoring Team on the Economic
Policy Package reported: “there has been considerable ongoing effort to improve the gov-
ernance and soundness of the state banks, but recent revelations of irregular banking
practices in bni and bri clearly demonstrate that more needs to be done to improve their
managerial, supervisory risk management and internal controls.”67 And according to the
World Bank, “the recent scandals in some state banks have revealed systemic weaknesses
in their internal controls. Even more worrying was the fact that repeated warnings from
the central bank about state banks’ operations went unheeded.”68
As Indonesia’s recent history has shown, financial crises can have a profound impact
on the country’s economic development and political stability. Financial crises impose
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huge costs on the State—and therefore on the public—and inevitably spill over into the
real sector. It is imperative, therefore, as the trauma of Indonesia’s most recent financial
crisis recedes, that the government, Bank Indonesia and the private sector continue to
strengthen oversight of financial institutions and reduce the opportunities for corrup-
tion and collusion.
REDUCING THE INFLUENCE OF “MONEY POLIT ICS” IN ELECTIONS, POLIT ICAL
PARTIES AND LEGISLATURES
The introduction, in 1999, of genuinely competitive, multi-party elections and the
empowerment of the dpr and regional dprds, represent major improvements in both
representation and government checks and balances in Indonesia. However, there also is
a downside to this: the apparently sharp increase in “money politics.” By “money poli-
tics” we mean the vicious circle wherein large amounts of money are needed to partici-
pate in politics, money becomes a key determinant of political behavior, and politics is
viewed as a way of making money.
Elections are expensive in a country as large as Indonesia, and the more competitive
(and media-driven) they are, the more expensive they become. Indonesia’s campaign
finance law does not create realistic campaign expense limits nor does it require serious
disclosure of parties’ expenditures or the sources of funding. According to an ifes study
on campaign financing for the 2004 elections: “Although the legal framework for politi-
cal finance transparency in Indonesia was generally improved for the 2004 elections . . .
reporting obligations in these provisions were widely avoided by the political parties and
electoral participants. . . . This result is not surprising, however, given the absence of mean-
ingful sanctions in the relevant political laws for non-compliance with political finance
reporting obligations”.69
It is widely thought that in many political parties the order of ranking of legislative
candidates on their party’s list is influenced by money politics. At the local level, both
the election of Governors and Regents and their subsequent accountability sessions are
vulnerable to money politics. Additionally, “fit and proper” tests are also used by parlia-
mentarians to extort money.70
There is mounting evidence that once elected, a significant number of dpr and dprd
members also use their positions to extract funds for themselves and their parties. This
can take the form of appropriating themselves luxurious benefits, misusing appropria-
tions, and receiving payments for making hearings friendly, for ensuring appropriations
and for voting a certain way. According to Hadiz: “icw, as well as press reports, has
alleged that national parliamentarians of all parties regularly receive bribes from gov-
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ernment bodies and the private sector for voting a particular way on various bills. More-
over, certain parliamentary commissions are widely regarded as being particularly lucra-
tive or “wet”—for example, those that deal with finance and development. . . . As is true
in the national parliament, certain commissions in local parliaments are considered to
be more lucrative than others . . .”71
While one of the reasons for this behavior is self-enrichment, another (and not mutu-
ally exclusive) explanation is the need for representatives to recoup their election expenses,
contribute to party coffers and finance their political/patronage networks. But whatever
the mix of reasons, the result is the distortion of the legislative process in favor of those
who have money, a weakening of parliamentary oversight of the executive branch, and
growing public cynicism regarding parties and parliamentarians. According to TI’s 2005
Global Corruption Survey, Indonesians view political parties and parliaments as being the
country’s most corrupt institutions—even more so than the police and customs.
There does appear to be a growing recognition of the problem of money politics.
TI Indonesia made an effort to monitor party expenditures in the 2004 elections. A num-
ber of ngos monitor dprds and their budget processes. A small but still significant num-
ber of dprd members have been prosecuted and sentenced to jail. The President has
spoken out against the politicians who are also businessmen, noting that if the “dual
function” of the Army was once criticized, people should not accept the “dual function”
of politicians (as businessmen and politicians).
REFORMING MIL ITARY PROCUREMENT AND MIL ITARY-OWNED BUSINESSES
Finally, mention also needs to be made of the status of reforms in the Ministry of Defense
(MoD) and Armed Forces (tni) that are intended to reduce corruption. Reforms are being
made in two broad areas: 1) rationalization of budgeting and procurement, and 2) reduc-
ing the number and autonomy of military-owned businesses and foundations (yayasan).
A bit of context is required. Relative to total government spending, Indonesia has one
of the smallest defense budgets in Asia. The military budget for 2006 is about Rp 28 tril-
lion, which represents 6.3% of the national government budget and under 2% of gdp. (By
way of comparison, education receives about 10% of the budget and public works about
5%.) Of this, about two-thirds of the military’s budget is spent on personnel, food, mainte-
nance and other regular expenses. The conventional wisdom is that the military’s real budget
is about 30% higher than its official budget and this difference is funded by the profits of
numerous military-owned businesses and yayasans. But recently Defense Minister Sudar-
sono, Indonesia’s first civilian defense minister since the 1950s, put the percentage for off-
budget funding as being only about 5%. It is not clear which is the more accurate figure.72
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Minister Sudarsono has been outspoken on the need to clean up military budget-
ing and procurement and the Defense Ministry is taking steps to unify and rationalize
the budgets and procurement processes of the three branches of the armed forces. After
the budgets of the three defense forces are submitted to tni Headquarters for approval
they now are combined and submitted to the Defense Ministry.
There appears to be less progress reforming procurement procedures. In a recent
report on the Indonesian military’s economic activities, Human Rights Watch Asia noted:
“Many military equipment purchases in Indonesia are made using alternative financing
arrangements, such as export credit guarantees or counter-trade (barter) deals, that typ-
ically bypass normal procurement channels and frequently are associated with corrup-
tion.”73 The problem is compounded by the fact that the bpk, the Supreme Audit
Agency, has only limited access to the Armed Forces’ books.
Minster Sudarsono is trying to reduce the influential role individual generals (both
active and retired) traditionally have played in the procurement process.74 In early 2005
he issued ministerial decrees outlawing military services and their units from procuring
their own equipment. According to Marcus Mietzner, “The decision had the potential
to cut deeply into the entrenched network of military officials and business agents, and
to put an end to some of the collusion that had marked the procurement process. In prac-
tice, however, the decrees failed to address the underlying problems of the military pro-
curement system, which uses well-connected agents to pre-finance purchases that the
state is unable to cover through its actual budget. This mechanism has traditionally
opened the door for mark-ups and corruption, and this appears not to have changed.”75
Finally, there is the issue of the lack of transparency and oversight with regard to
military-owned businesses, cooperatives and yayasan. In the last days of the Megawati
administration, the dpr passed the Armed Forces Act (Law 34/2004), which included
language that mandated the government to take over all military businesses within five
years. Shortly after his appointment, Minister Sudarsono required tni to submit an
inventory of all enterprises, foundations and cooperatives run by armed forces head-
quarters and its various units. tni complied, but asserted that most of tni’s 219 core busi-
nesses (which had 1,520 subunits below them) were exempted from the transfer plan
because they were crucial for the welfare of soldiers and that cooperatives and most foun-
dations be excluded from the takeover. According to Mietzner: “With 194 of the main
219 enterprises being classified as cooperatives, the mandate of the Armed Forces Act had
been undermined by a simple semantic redefinition.”76
Moreover, according to Human Rights Watch, so far the government’s effort “has
focused exclusively on businesses in which the military has a documented ownership
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share, ignoring the informal and illegal arrangements that also need to be eliminated.”77
The next stage is the verification process will be conducted by an Inter-Ministerial
team that will classify military businesses into two categories: 1) military businesses that
are using state assets/property and 2) active/non active members of the armed forces who
participate in business activities.78 The military businesses that fit into the first category
will be transformed into soes. As for businesses that fit into the other category, the team
will decide its course of action later on.
Civilian oversight of military budgets—which typically involves a high degree of
public disclosure—is an important aspect of democratic governance. While there have been
significant improvements in the role of tni since 1998, it seems that increased trans-
parency regarding the military’s budget, its procurements and its businesses will occur
only gradually. The slow pace of change is regrettable because greater transparency has a
number of benefits not just for the public, but also for those in tni who seek a more pro-
fessional and effective military. First, greater transparency will cause less of the military’s
budget to be wasted or diverted, leaving more funds for modernization. Second, greater
transparency will improve the military’s case for getting the resources it needs from the
government budget. Finally, greater transparency will enhance the image and credibility
of tni, both domestically and internationally.
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THE KPK AND THE SPECIAL COURT FOR CORRUPTION
“The KPK is to be a State agency that will perform its duties and authority
independently, free from any and all influences. The KPK is formed with
the primary purpose of improving the effectiveness and efficiency of efforts
to eradicate criminal acts of corruption.” —Law 30/2002
We now turn to an examination of the Corruption Eradication Commission or kpk
(Komisi Pemberantasan Korupsi). The kpk has been operational for almost three years,
but it is only over the last year and a half that it began its investigative and prosecutor-
ial functions. During this time, the kpk has assumed an increasingly high profile role in
the fight against corruption, particularly with its publicly-expressed intention of attack-
ing corruption in the judiciary.
OVERVIEW OF THE KPK
The kpk was established under Law 30/2002, which was passed in December 2002. The
same law mandated the creation of a Special Court for Corruption. The Commission
was established a year later, in December 2003. With the creation of the kpk, the Com-
mission on the Appraisal of Wealth of Government Officials (the kpkpn) became part
of the kpk Prevention Department.
The kpk has five Commissioners, consisting of one Chairman and four Vice-Chair-
men. The Commissioners were selected by the dpr from a pool of candidates offered by
the President. They can serve for a maximum of two four-year terms.
Currently the kpk has about 400 employees. Under existing law, all of the kpk’s
investigators and prosecutors are seconded from the ago and polri.
THE KPK’S LEGAL MANDATE
As set out in Law 30/2002, the kpk’s responsibilities are as follows:
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∫ Coordinate with other state institutions to eradicate corruption.
∫ Supervise other state institutions authorized to eradicate corruption.
∫ Perform investigations, indictments and prosecutions of corruption cases.
∫ Take steps to prevent corruption, including:
∫ Examination of wealth and gratification reports;
∫ Conduct anti-corruption education and socialization programs; and
∫ Engage in bilateral and multilateral cooperation to eradicate corruption.
∫ Monitor the administration of state institutions and make recommendations for
making them more corruption-resistant.
The law also provides the kpk with the following extraordinary powers:
∫ To conduct surveillance of other state institutions whose tasks and authority are rel-
evant in the fight against corruption;
∫ To do wire taps, record conversations and access bank and tax records;
∫ To take over investigations or prosecutions being performed by the police or ago.
THE KPK’S STRATEGY
The leadership of the kpk sees the Commission as a “trigger mechanism” or catalyst for
stimulating anti-corruption reforms in the government, and especially in the judiciary
and the civil service. As such, the kpk’s investigations and prosecutions are as seen as
being the cutting edge for implementing broader institutional reforms that will prevent
corruption in the future.
Initially, the kpk’s leadership identified as its priorities attacking corruption in the
judiciary (especially the Supreme Court), the ago and police and the MoF (particularly
tax and customs). But in the course of its work, it has by necessity become somewhat
more opportunistic in deciding which cases to investigate and prosecute.
To date, the kpk’s strategic emphasis has been mainly on punitive activities: inves-
tigating and prosecuting corruption. To operationalize its “repressive” strategy, the kpk
has established Memoranda of Understanding (MoU) with the ago, polri, bpk and other
agencies.
The kpk is an advocate of increasing remuneration and introducing performance
based management systems throughout the government. It also is advocating the cre-
ation of “islands of integrity” and “integrity pacts.” Finally, it also seeks to change pub-
lic perceptions and cultural permissiveness towards corruption. To this end it plans to
undertake a major anti-corruption campaign in 2007.
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INVESTIGATIONS AND PROSECUTIONS
The kpk has significant powers of investigation and prosecution. Law 30/2002 authorizes
the kpk to conduct examinations, investigations, and prosecutions for corruption cases that:
∫ Involve law enforcement officials, judicial personnel, state officials and related third
parties;
∫ Attract the attention and dismay of the public; and/or
∫ Involve a minimum state loss of Rp 1 billion.
The Law also authorizes the kpk to take over investigations or prosecutions being
conducted by the Police or the ago if any of the following conditions exist:
∫ A public report is not acted on;
∫ A case is delayed for too long without explanation;
∫ There is bias in the handling of the case;
∫ There is obstructive intervention by the executive, judicial or legislative branches;
∫ Other circumstances make it impossible for the Police or ago to handle the case
well and responsibly.
In 2004, the first year the kpk was operational, it conducted 17 pre-investigations,
1 investigation and began 2 prosecutions. In 2005, the kpk had 31 pre-investigations, 19
investigations and 17 cases being prosecuted. The breakdown of kpk’s cases in 2005 is
included as Appendix 3.
PREVENTION
With regard to prevention of corruption, the kpk is authorized to conduct the follow-
ing preventive measures or efforts:
∫ Inventory and examine the wealth reports of state officials;
∫ Receive reports on gifts and decide on their status;
∫ Arrange anti-corruption education programs;
∫ Design and promote the execution of anti corruption socialization programs and
campaigns;
∫ Engage in bilateral and multilateral cooperation to eradicate corruption.
Collecting and auditing the wealth reports of state officials The potential impor-
tance of wealth reports is well summarized by Stephen Sherlock: “Public disclosure of assets
and expenditure far beyond their stated incomes could seriously embarrass officials, espe-
cially elected ones . . . More importantly, the information contained in declarations could,
by inclusion or omission, provide evidence for the investigation and prosecution of cor-
ruption by an anti-corruption commission or law enforcement agencies. If the supply of
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false or incomplete information were subject to prosecution, corrupt officials could be
punished without the actual corrupt transactions having to be proved.”79
According to the kpk, the issuance of inpres 5/2004, which included an instruction
for State officials to submit their wealth reports to the kpk, accelerated the submission
of reports by high level officials. To facilitate the submission of reports, the kpk has pro-
vided information to officials and conducted workshops to walk them through the prepa-
ration of the reports.
As of mid-2006, 55% of national and local government officials required to submit
wealth reports had done so. (See Table 4) The kpk has published the wealth reports of
the 29 current cabinet ministers and those of 182 regents, mayors and governors who
recently won office in local elections. But as of late 2005, the kpk had audited less than
1% of all the reports received. And it had not announced the results of audits done of
senior officials in prior six administrations (from 1999 to 2004)—even though the media
reported that several officials had significant increases in their wealth during their term
in the office.80 The kpk now has 16 people working on wealth report audits and expects
to audit a significantly higher percentage of reports in 2006.
In September 2006 the kpk announced it was beginning probes of what it consid-
ers to be mismatches between the data given by 80 state officials in their wealth reports
and the findings of audits conducted by kpk investigators. The investigations would also
take into account reports from the public about state officials' suspicious wealth.81
Preventing corruption in State institutions by recommending changes in rules and
procedures Another way that the kpk seeks to prevent corruption is by recommending
reforms to corruption-prone State institutions. To date, the kpk has done this in only a
few instances:
∫ The kpk has taken a leading role in advocating civil service reform, particularly with
regard to the judiciary.
∫ The kpk has provided recommendations to the dpr on how to make the tax col-
lection system less prone to corruption.
∫ The kpk also has worked with Governors and Bupatis in Riau, West Sumatra and
Kalimantan to develop “islands of integrity” in their administrations.
∫ According to media reports, the kpk is providing recommendations for institutional
reforms with the kpu.
Informing and educating the public The kpk has yet to play a major role in informing
or educating the public about corruption and how to fight it. According to the kpk, dur-
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ing 2004 and 2005 it focused primarily on educating senior officials in the civil service about
their wealth reports and corruption prevention. It has done some relatively small scale media
activities and has started to engage with the Ministries of Education and Religious Affairs
in order to get them to develop anti-corruption messages. As part of this effort, the kpk
has conducted anti-corruption workshops within various middle (smp) and high (sma)
schools. The kpk has said that it will expand its public information activities in 2007.
Responding to public reports of corruption As of the end of 2005, the kpk had
received about 10,000 reports of alleged corruption from the public. (Many of which
concern allegations of small scale corruption or mistreatment.) About 1,300 of these were
deemed substantive enough to be forwarded to the Police or ago. The Commission rec-
ognizes that it needs to develop a better system for managing and responding to these
reports so that the public doesn’t come to see the kpk as disingenuous or incompetent.
ORGANIZATIONAL DEVELOPMENT
The kpk is a relatively new organization with an exceedingly broad and challenging man-
date that requires it to interact effectively with a wide range of government agencies as well
as the general public. As such, the kpk has had to build itself as an organization almost from
scratch—and relatively quickly. It appears the management of the kpk is approaching the
issue of organizational development with considerable professionalism and with the goal
of making the kpk a model for performance-based management in the public sector.
51
TABLE 4: WEALTH REPORTS OF STATE OFF ICIALS AS OF JUNE 11, 2006
Amount % Amount % Amount %
Executive 61,231 31,441 49 23,297 74 8,144 26
Legislative 24,297 16,553 68 16,006 97 547 3
Judiciary 18,566 8,101 44 6,842 84 1,259 15.5
State/Region-owned 7,141 4,987 70 4,721 95 266 5
Enterprises
TOTAL 111,235 61,6082 55 50,866 83 10,216 17
Source: Material for hearing between KPK and commission III of DPR on June 20, 2006
In the Process
of Being Included
in the Additional
State Gazette
Wealth Reports
That Have Been
Included in Additional
State Gazette
Officials Who
Have Reported
Total Amount
of OfficialsSector
Corruption output 11/28/06 2:42 PM Page 51
Staffing Currently the kpk has about 221 professional staff, of which about 15 are audi-
tors seconded from the bpkp, 43 are investigators from the Police, and 19 are prosecutors
from the ago. The professional staff is supported by 84 administrative staff. The salary
structure for the kpk, which is higher than the civil service structure, was finally imple-
mented in late 2005.
According to the kpk, the biggest staffing challenge it faces is finding the right peo-
ple. The Prevention Department, for example, has only about one quarter of the staff it
requires. In mid-2005 the kpk hired and began training its first batch of 32 inductees.
Under Law 30/2002, kpk investigators and prosecutors are lent from the ago and
police, two institutions with history of corrupt practices all the way from their recruit-
ment process. Independent recruitment would guarantee employees whose loyalty is to
kpk not to other institutions. This also would help reduce the institutional “zero-sum
game” between the kpk and the ago and police, wherein the kpk draw staff resources
away from those two organizations.
Budget and funding The kpk’s budget was Rp 109 billion (about $11 million) in fy2004,
Rp 170 billion (about US$18 million) in fy2005 and Rp 224 billion (about US$23 million)
in fy2006. Additionally, the kpk had spent about Rp 9.82 billion (about US$940.000) of
donor funding in 2005.
Links to other organizations The kpk faces a difficult challenge balancing its independ-
ence from the ago and the Police with the need to work with the two law enforcement agen-
cies. Its effectiveness will be reduced if either it is too independent or it becomes too close.
The kpk has entered into MoUs with the ago, polri, MenPAN, and kppu. It also
has working relationships with bpk, ppatk and the MoF. It has done joint training with
the ago, polri and bpk. As noted, it also engages with the Ministries of Education and
Religious Affairs. The kpk also has relationships with local governments in Riau, West
Sumatra and Kalimantan.
THE SPECIAL COURT FOR CORRUPTION
The kpk’s success with prosecutions is dependent upon the integrity and competency of
the Special Court for Corruption. All anti-corruption cases initiated or taken over by the
kpk are tried by the Special Court.82
The Special Court of Corruption is established under Law 30/2002, the same law
that mandated the creation of the kpk. The Court is domiciled in the District Court of
Central Jakarta, but has jurisdiction over all of Indonesia. The law does not appear to
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allow for the establishment of more than one Corruption Court. Recently, however, the
kpk has urged the Supreme Court to establish anti-corruption courts in every province,
beginning with East and Central Java and North Sumatra.83
The Special Court is composed of a mix of career District Court judges (appointed
by the Chief Justice) and “ad hoc” judges (appointed by the president, with the counsel
of the Supreme Court). Cases are tried by teams of two District Court judges and three
“ad hoc” judges. Decisions can be appealed to an appellate court and then to the Supreme
Court. According to the Jakarta Post: “The Anticorruption Court, with no defendants
so far having escaped punishment, is seen as firmer in trying corruption cases than the
other courts. A defendant appealing his sentence also faces the strong possibility of it
being increased instead of dismissed.”84
The start up of the Special Court has been marred by insufficient or delayed fund-
ing. The most serious problem has been the non-payment of judges’ salaries. The judges
are supposed to receive Rp 10 million/mo. at the District Court level, Rp 12 million at
the appeals court level, and Rp 14 million at the Supreme Court level. Although a kep-
pres was issued, as of late 2005 SekNeg had not approved payment of the judges’ salaries.
As of late 2005, the judges were surviving on Rp 1.2 million per month given them by
the Supreme Court. Housing for the judges has also been a problem.
To ensure the integrity and competence of the Special Court, in addition to receiving
their salaries, the judges also need to receive training in finance and accounting so that they
can understand the complex financial transactions that often are central to corruption cases.
ASSESSMENT OF THE KPK
The kpk is a young organization operating in the context of a relatively new govern-
mental emphasis on fighting corruption. The initial signs are very encouraging, at least
with regard to the kpk’s commitment, the quality of its staff and its initial success with
investigations and prosecutions.
Accomplishments to date The selection and appointment of the kpk’s Commission-
ers wasn’t completed until late December 2003. During the remainder of the Megawati
administration, the kpk was preoccupied with getting organized, staffed and funded.
Over the last year, with the support of the sby government, the kpk has become
much more active. The kpk’s major accomplishments include:
∫ Initiating a growing number of investigations and prosecutions: In 2005 there were
20 pre-investigations, 30 investigations, and 18 prosecutions (which resulted in the con-
victions of former Aceh Governor Puteh and members of the kpk).
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∫ Better coordination and cooperation with other key agencies: The kpk has signed
MoUs with the ago, polri, ppatk, MenPAN, MoF, brr and the kppu.
∫ It has put pressure on other state organizations (including the police and ago) to inten-
sify their anti-corruption efforts.
∫ Establishing working relations with a number of local governments (and the brr in
Aceh/Nias) to support their efforts to implement practices that promote “good governance.”
∫ Continued organizational development, including recruiting and training its first
batch of professional staff.
Shortcomings and challenges At the same time, the kpk faces a number of potentially
serious issues:
∫ To date, the kpk has not demonstrated the capacity to follow up its prosecutions with
recommendations for institutional reforms. In discussions with kpk leadership, they have
recognized that, in practice, the kpk’s ability to push for institutional reforms is limited.
∫ There is a perception that the kpk’s investigations are not targeting “big fish” and
that political considerations sometimes have influenced the process of selecting who will
be investigated and prosecuted. kpk leadership rejects this criticism. They argue that (a)
the law, as they interpret it, doesn’t allow them to investigate alleged corruption before
1999 and (b) to a considerable extent the choices made regarding who to investigate are
based on the availability of evidence and the likelihood of success.
∫ It is too early to tell if there has been a significant improvement in cooperation and
coordination among the kpk, ago, polri, bpk, etc.
∫ To date, it appears the kpk has not aggressively collected or investigated the wealth
reports of senior government officials. However, the kpk has taken steps to make the sub-
mission of complete wealth reports easier, and kpk leadership assert that they are scruti-
nizing the wealth reports of a number of “high profile” officials and ex-officials.
∫ To date, the kpk has done relatively little in the area of corruption prevention.
∫ Although the kpk has formed partnerships with several provincial and kabupaten gov-
ernments, its reach outside of Jakarta still is very limited.
LOOKING AHEAD
Because the kpk is new and is still in the process of defining its role (and has become the
most prominent actor in the fight against corruption), it is important to be cognizant of
a number of potential issues. These include:
∫ First, there is the risk that the kpk will grow too quickly and spread itself too thinly.
In particular, there is a risk that if the kpk expands its efforts in the area of prevention
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too rapidly, it will diminish its focus on prosecutions. Attention must be paid to issues
such as the kpk ’s comparative advantage and absorptive capacity. Recognizing this, the
kpk isn’t planning a major expansion of its regional presence for several years.
∫ Second, there also is the possibility that the kpk will avoid pursuing politically-sen-
sitive cases. To date, the kpk has not taken action against any officials, politicians or gen-
erals currently in powerful positions in the government, the dpr or tni.
∫ Third, the kpk faces a difficult challenge balancing its independence from the ago
and the Police with the need to work with the law enforcement agencies. Its effective will
be reduced if it is too independent or becomes too close.
∫ Finally, it is important to bear in mind that the kpk’s success with prosecutions is
dependent upon the integrity and competency of the Special Court for Corruption.
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OTHER INDEPENDENT BODIES
In addition to the kpk, there are four other independent bodies that are playing, or have
the potential to play, important roles in the fight against corruption. The four—the
ppatk, kon, kppu and Judicial Commission—are described briefly below. All four share
two common characteristics: First, while their mandate might be broad, their authority
tends to be limited. And second, their capacity to carry out their mandate is reduced by
serious resource constraints.
INDONESIAN FINANCIAL TRANSACTION REPORTS AND ANALYSIS CENTER (PPATK)
The initial law on money laundering (Law 25/2002) was approved in April 2002 was
amended in October 2003. The law as amended criminalizes money laundering activi-
ties for the first time and requires financial services providers including non-banks to
report suspicious financial transactions.
The ppatk was established under law 25/2003, in large part in response to US and
international pressure on Indonesia to strengthen its anti-money laundering regime. Cur-
rently, the ppatk’s mandate is limited to analyzing reports of potential money launder-
ing and forwarding them to the police for further investigation. Persons in possession of
sums of Rp 10 million or more, when challenged in court, must prove that the money
was not illegally obtained.
As of November 2005, the ppatk had referred 344 cases to the police and ago, result-
ing in one successful prosecution involving terrorism, 19 involving bank fraud and/or cor-
ruption, and two for money laundering. An additional 30 cases were in the process of being
prosecuted.85 As of October 2006, the ppatk had received over 3,200 reports of possible cor-
ruption and had handed over to law enforcers about 429 cases of suspicious transactions.86
Obviously, ppatk reports can play an important role in deterring and punishing cor-
ruption. Bank Indonesia and multiple government agencies are cooperating with the
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ppatk. However, unless the law is changed, it remains dependent upon the willingness
of other institutions to act. For example, according to Tempo, in July 2005 the ppatk gave
Police General Sutanto a list of 15 mid- and senior-level police officers who had been
assessed by the ppatk as having extraordinary bank accounts. According to Tempo,
Sutanto declined calls to turn an investigation of the 15 over to the kpk. Instead it is being
investigated by the Police.87
A possible revision of Law 25/2003 would give the ppatk power to take over inves-
tigations being done by the police as well as freezing assets and halting related financial
transactions.88
NATIONAL OMBUDSMAN COMMISSION OR KON (KOMISI OMBUDSMAN NASIONAL)
The Ombudsman Commission was established by a presidential decree (keppres
44/2000) issued by Abdurrahman Wahid. The 11 member Commission is authorized to
monitor and examine public complaints about state administration and the provision of
public services. The kon has no authority to compel government agencies to follow up
on its reports and recommendations. Theoretically, it has the authority to investigate
irregularities; but in practice is hasn’t had the staff or resources to play a proactive role.
The kon has suffered from chronic under funding.
Stephen Sherlock has observed, “At the heart of the kon’s problem of ineffectual
powers is its lack of legislative backing. The keppres was only designed as an interim
instrument. . . . The kon fulfilled its commitment tom present a bill to the Ministry of
Justice, but it was met with non-interest and obstruction from within the Ministry. The
bill was subsequently submitted directly to the dpr . . . ”89 As of early 2006, the bill to
formalize the kon is still with the dpr.
The future of the kon will depend on the passage of legislation to formalize it and
give it greater resources and authority. If it were empowered and given sufficient
resources, it could usefully partner with the kpk.
BUSINESS COMPETIT ION SUPERVISORY COMMISSION OR KPPU (KOMISI
PENGAWAS PERSAINGAN USAHA)
The kppu was set up following the passage in 1999 of the Law on Monopolies and Unfair
Business Competition (Law 5/1999). The purpose of the Commission is to ensure unre-
strained business competition. So while the kppu is not explicitly an anti-corruption body,
it is concerned with collusion, a principal form of corruption.
In early 2005 the kppu determined that a Pertamina sale of two large oil tankers vio-
lated the law. In late 2005 the Supreme Court upheld the finding, opening the door for
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the kpk to investigate allegations of the corruption.90 In September 2005, the kppu ruled
that six soes were involved in a tender conspiracy for a Rp 1.7 trillion road construction
project in Riau. The kppu handed down sanctions against the soes and asked the kpk to
investigate the Riau Housing and Infrastructure Department. The project also investi-
gated by pks members of the Riau dprd.91
THE JUDICIAL COMMISSION
The Judicial Commission was established under Law 21/2004. Under this law, the Com-
mission has the authority to a) nominate to the dpr a list of possible appointees to the
Supreme Court, and b) review the conduct of judges and, if deemed appropriate, rec-
ommend sanctions to the Supreme Court.
The members of the Judicial Commission were not appointed until August 2005.
But the Commission quickly demonstrated its potential influence on the judiciary
through its investigation of a controversial West Java High Court ruling on the dispute
of the election results for the mayoral election in Depok, adjacent to Jakarta. The Com-
mission tried, with less success, to have 49 Supreme Court judges face “re-selection.”
In early 2006 the Judicial Commission requested that the President issue a govern-
ment regulation in substitute of a law (perpu) that would give the Commission the power
by to review the competency of the sitting Supreme Court Justices. This proposal would
significantly broaden the mandate and authority of the Commission vis-à-vis the
Supreme Court and as a result is considered very controversial within legal circles. The
proposal triggered resistance from the Supreme Court, the dpr and the Constitutional
Court. In August 2006, the Constitutional Court removed the Judicial Commission's
mandate to monitor judges, claiming a conflict with the constitution.
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THE LEGAL FRAMEWORK FOR F IGHTING CORRUPTION
THE EXISTING LEGAL FRAMEWORK
As noted at the beginning of this report, since 1998 quite a few laws that address cor-
ruption have been passed. The principal existing laws that provide the legal framework
for addressing corruption are:
∫ Law 28/1999 on Clean Government Free from Corruption, Collusion and Nepo-
tism, which, inter alia, defines corruption as a criminal act and requires public officials
to report their wealth.
∫ Law 31/1999 on Eradication of Criminal Acts of Corruption, which establishes
tougher penalties for corruption—but continues to define corruption only as actions
that cause losses to the state—and calls for the establishment of a Corruption Eradica-
tion Commission.
∫ Law 5/1999 on Monopolies and Unfair Trade Practices, which makes collusion and
other efforts to restrict competition illegal and established the kppu.
∫ Law 20/2001 on Eradication of Criminal Acts of Corruption, which amends 31/1999
by expanding the definition of corruption and more clearly specifies acts of corruption.
In July 2006, the Constitutional Court issued a decision to narrow the definition of cor-
ruption contained in Law 31/1999. Imprudent conduct, or irresponsible management,
may no longer serve as grounds for a corruption investigation.92
∫ Law 30/2002 on the Commission for Eradication of Corruption, which establishes
the kpk and the special corruption court.
∫ Laws 15/2002 and 25/2003 on money laundering, which criminalize money laun-
dering and mandate the establishment of the ppatk.
∫ Law 13/ 2006 on Witness and Victim Protection, was approved by the dpr in July
2006. Because of the nature of corruption, many anti-corruption cases rely on the testi-
mony of individuals who were part of the corrupt system or network. For this reason, it
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is helpful to have a law that provides both inducements and protections for people who are
prepared “to talk.” In July 2006 a law was passed providing a comprehensive set of pro-
tections for witnesses who testify in criminal cases, including crimes of corruption. The
law includes both whistleblower and witness protection, albeit with more limited rights for
whistleblowers than witnesses. The law also mandates the establishment of a special com-
mission and secretariat to ensure implementation of the provisions of the bill. For the law
to be effective, the next year should see a properly resourced commission and secretariat.
Overall, most observers feel that this body of laws provides an adequate legal basis
for addressing corruption. More at issue is the willingness and ability of the various agen-
cies of the government to fully and effectively implement these laws.
That said, there are several ways the legal regime to fight corruption can be strength-
ened. First, the existing evidence code is out-of-date, overly narrow, and inconsistently
adhered to by judges. Second, the Indonesian legal system doesn’t offer any incentives—
such as immunity or plea bargaining—for cooperating with investigations and prosecu-
tions. Third, efforts to fight corruption would benefit from the passage or revision of a
number of laws. These are described in the next section.
ADDITIONS OR REVISIONS NEEDED
The following new or revised laws are needed to complete and improve the legal regime
for fighting corruption:
Amendment of Law 30/2002 establishing the kpk and the Special Court for Cor-
ruption The kpk’s independence and effectiveness can be enhanced by two amendments
to the existing law: 1) to allow for the kpk to hire its own investigators and prosecutors,
and 2) to allow for greater flexibility in starting and stopping investigations. Addition-
ally, an amendment could be made to mandate the establishment of special anti-cor-
ruption courts outside of Jakarta.
Passage of a freedom of information law foi laws are important both for repression
and prevention. foi laws make it easier for investigators to know what information exists
and to access it. They serve as a potentially important preventive function by imposing
greater transparency on public officials.
There is a draft Bill on the Freedom to Obtain Public Information which grants
rights to access and disseminate information from public institutions and makes it pos-
sible to sue in order to access info.93 It will be important that the National Security Law,
which gives the authority to government officials to determine what is considered a state
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secret, is not used by corrupt officials to undermine the intent of a Freedom of Infor-
mation Law. The status of draft law now is still being discussed in the parliament.
Passage of a law on government procurement Implementation of Procurement kep-
pres 80/2003 is gaining momentum, with solid evidence of unit cost reductions in pub-
lic procurement. There seems to be less of a momentum when it comes to the national
procurement law, which is still pending. Approval by the dpr of the new procurement
law is now expected towards the end of 2007 only.
Clarification of the tax law In the proposed new law for taxation, Article 36 A (1) stip-
ulates punishment for tax officials who deliberately make a “mistake” which causes state
losses. However, this Article needs to be clarified so that the “mistake” would not just be
punishable with an administrative sanction applied by the tax office but also could be
treated as a corrupt practice punishable under Law 20/2001. Clarifying this point would
reduce the likelihood of conspiracy among tax evaders, tax officials and the tax office.
Amendment of the Judicial Commission law Currently the authority of the Judicial
Commission is limited only to monitoring and investigating judges and making recom-
mendations. The Judicial Commission seeks to amend Law 22/2004 to empower it to:
a) investigate all aspects of judicial administration, b) to make its recommendations for
suspension or termination of judges binding.94 This is a controversial proposal and is
unlikely to be considered by the dpr any time soon.
Passage of a law establishing the National Ombudsman (KON) An empowered
Ombudsman can play an important role in identifying and rectifying systemic problems
with government, including corruption. For the kon to be effective, its status and
resources need to be affirmed by a law. A draft law prepared by the kon has been sub-
mitted to the dpr, but it does not appear likely that the parliament will consider it any
time soon.
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NON-GOVERNMENTAL PARTNERS IN THE F IGHT AGAINST CORRUPTION
“In combating corruption, the government will not be able to work on its own.
The action to eradicate corruption requires the support from all layers of the society.”
—President Yudhoyono95
The Yudhoyono government’s anti-corruption efforts can not and do not operate in iso-
lation of Indonesian society and politics. Indeed, for official efforts to be successful, they
require the active involvement of individual citizens, civic organizations and the media
as whistleblowers and watchdogs, as analysts and educators, and as critics and advocates.
Reflecting this, in TI Indonesia’s 2005 survey of 1305 business people in 21 regions and
cities, most respondents looked to the kpk, business associations, the media and other
ngos to fight corruption. Very few expected the police, religious leaders or politicians to
play a role.96
The overall “non-governmental” landscape for fighting corruption is a mixed one:
On the one hand, since the fall of Soeharto, there has been a dramatic expansion in the
number of civil society organizations. On the other hand, the capacity and influence of
most ngo’s tends to be limited, and there are relatively few ngos that are able to serve
as competent anti-corruption watchdogs.97 Muslim social organizations have large mem-
berships, but haven’t adopted fighting corruption as a major cause. The capacity and will-
ingness of the media to expose corruption—as opposed to merely report on it—is mixed
but generally limited. It does not appear that many universities and think tanks have
made corruption a major subject of research and analysis; and the student movements
that used to demonstrate against kkn seem to have lost their energy.
Increasingly elements of the business community profess an understanding of the
long term costs of corruption, but few individual businesses are prepared to forego cor-
rupt practices if it means losing business. Political parties, with the possible exception of
pks, have shown little interest in addressing the manifold problems associated with money
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politics. Finally, decentralization creates the potential for greater local-level transparency
and accountability; but in many parts of the country, the capacity of powerful local officials
and wealthy businesses to engage in corrupt practices is still much greater than the capac-
ity of individuals, local ngos and the media to detect and deter the corruption.
This section describes the non-governmental organizations that already are or might
serve as partners with the government and the kpk. It looks at issue-based ngos, the two
major Muslim social organizations, business groups, the mass media and universities and
think tanks.
ANTI-CORRUPTION NGOS
Since the fall of Soeharto civil society has flourished quite significantly, especially the
number of non-governmental organizations (ngos). In 2003, LP3ES, an Indonesian
research organization, determined that there are about 450 leading ngoS; but the total
number is probably in the thousands since there is no formal registration process that
can produce reliable records.98
There are now quite a few national- and local-level ngos that engage in issue advo-
cacy, the promotion of “good governance” and/or increasing public participation in pub-
lic affairs. In the course of pursuing their particular interests, many of these ngos also
promote greater transparency and accountability; and some (particularly environmental
and legal reform ngos) directly address the issue of corruption. At the local level, ngos
with an anti-corruption agenda tend to focus on land transactions, allegations of cor-
ruption and collusion by local officials, and local budget analysis.
The number of ngos that are explicitly or exclusively concerned with corruption is
relatively small, but not insignificant. In a 2001 description of anti-corruption ngos, Tim
Lindsey wrote that “many observers agree that leadership of the anti-corruption sector
is probably limited to around 50 or so key organizations . . . Masyarakat Transparansi
Indonesia (mti) has identified 43 ngos across Indonesia that are specifically concerned
with anti-corruption . . .”99 One national network, the National Anti-corruption Move-
ment Network (Jaringan Nasional Gerakan Antikorupsi or GeRAK), consisted of 27
ngos from across Indonesia active in anti-corruption, including icw, tmi, and Walhi.
The GeRAK network was principally to amplify its members’ advocacy and public aware-
ness efforts in support of strong anti-corruption measures by the government.
What follows are brief descriptions of the major anti-corruption ngos or ngo net-
works that operate at the national (or in the case of fitra, semi-national) level.
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BOX 6: MAJOR ANTI-CORRUPTION NGOS AND NGO NETWORKS IN INDONESIA
INDONESIA CORRUPTION WATCH (ICW) ICW was established in 1998 and focuses on investigating,
exposing and tracking big corruption cases. Under the leadership of Teten Masduki, ICW has played a
leading role in some of the major corruption cases, including the Bank Bali case, the Texmaco case and
the fall of then Attorney General, Andy Ghalib. ICW works closely with the media and also has good rela-
tions with certain government officials, including the Ministry of Forestry which has invited them to
monitor corruption in forest concessions. ICW also has studied the prosecution and rulings in corrup-
the Supreme Court, but the nation’s highest legal body has taken no action.”10
TRANSPARENCY INTERNATIONAL INDONESIA TI Indonesia is the Indonesian chapter of Transparency
International, which promotes greater transparency in government and business. TI Indonesia produces
Indonesia also vigorously uses the TI Corruption Perception Index and Global Corruption Barometer to
campaign for stronger anti-corruption measures in Indonesia. At the local level, TI Indonesia assisted
Kabupaten Solok with the development of its “integrity pact.”
FITRA FITRA is an NGO network consisting of 23 NGOs that are engaged in promoting budget analysis
and transparency. It carries out systematic budget analysis in seven provinces and is a member of the
International Budget Project Network. FITRA exposed the DPRD budget scandal in Southeast Sulawesi
that became a national story and resulted in the investigation of 12 DPRD members.
INDONESIA TRANSPARENCY SOCIETY (MASYARAKAT TRANSPARENSI INDONESIA OR MTI) MTI was
established by Indonesian reformers, including a number of people who have become important players
in the government or in other prominent institutions like Erry Ryana Hardjapamekas (KPK), Sudirman Said
(BRR), Marie Muhammad (Indonesia Red Cross) and one of Indonesia’s leading Muslim intellectuals, the
late Nurcholis Madjid. Most of their work is on public education by providing an anti-corruption training
to regional government officials.
INDONESIAN PROCUREMENT WATCH (IPW) IPW was established in 2002 and is led by one of Indone-
sia’s most prominent Islamic scholars, Prof. Dr. Komaruddin Hidayat. The focus of its work is on supervi-
sion of and public advocacy on the procurement of goods and services, especially in the public sector.
Their activities have included: a program on supervision and investigation of goods and services pro-
curement within the KPU; capacity building for civil society groups to supervise procurement activities
in two locations in West Sumatra (Solok and Tanah Datar); and a national conference that resulted in the
establishment of a national network for the supervision of public goods and services procurement.
THE PARTNERSHIP FOR GOVERNANCE REFORM The Partnership for Governance Reform is a collabo-
rative effort between international donors, the Indonesian government and Indonesian civil society to
promote and support governance reform. It was set up in 2001 by the major international donors, includ-
ing the World Bank, the ADB and UNDP. In 2002 the Partnership conducted a comprehensive “Diagnos-
tic Study of Indonesian Corruption” based on a nationwide survey on corruption for three groups of respon-
dents—households, business, and government officials. The Partnership also was an early supporter of
the KPK and continues to work closely with it. The Partnership also plays a role in coordinating donor
support for anti-corruption efforts.
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an Indonesia Corruption Perception Index, which is based on a survey of businessmen in 21 cities. TI
tion trials. According to the “ICW has already submitted 20 different legal case studies toJakarta Post,
100
1
102
103
MUSLIM SOCIAL ORGANIZATIONS
Indonesia’s two huge Muslim social organizations, Muhammadiyah and Nahdlatul
Ulama (nu), represent two potentially significant actors in the fight against corruption.
Each organization claims to have between 15 and 30 million followers. Each has strong
networks that reach to the local level, with Muhammadiyah mainly in Central Java and
parts of Sumatra and nu mainly in East Java.
The two organizations have many affiliated organizations (such as youth and
women’s organizations), and some of these have been active in monitoring elections since
1999. The groundbreaking event regarding their involvement in anti corruption was in
2003 when nu, Muhammadiyah and the Partnership for Governance Reform signed a
Memorandum of Understanding (MoU) to address corruption. Under the MoU, nu and
Muhammadiyah have done the following:
Nahdlatul Ulama has:
∫ Collaborated with Muhammadiyah to conduct pilot workshops on the analysis of
corruption and building an anti corruption movement in Kendal, Magelang, Blitar and
Probolinggo.
∫ Organized roundtable discussions to compile Islamic themes and interpretations to
support anti-corruption efforts.
∫ Created a website on anti corruption at nu on-line which includes a web-based “PO
Box 1926” for receiving complaints of corruption.
Muhammadiyah has:
∫ Held an event called “Halaqoh Tarjih” in August 2005 that was attended by 80
Muhammadiyah religious leaders from 19 provinces. The leaders formulated a compre-
hensive application of Islamic Law relating to corruption.
∫ Provided advocacy training and monitoring of local budgets in Lampung, Central
Java, Yogyakarta and West Sumatera.
∫ Published monthly a Friday sermon in the Anti-Corruption Supplement in Suara
Muhammadiyah magazine.
The potential impact of anti corruption drives carried out by the two organizations
is enormous. They have loyal and vast constituencies that can be mobilized. Unfortu-
nately, within the two organizations, and particularly within nu, there are disagreements
over the extent to which the organizations can and should address corruption. The dis-
agreement seems to be one of the differences between traditionalists and progressives in
nu. Traditionally, nu kyai and their pesantren have been beneficiaries of government
funds and the largesse of government officials. These payments by officials, which often
take the form of gifts or donations, are not easily differentiated from corruption. Hence,
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104
105
traditionalists are concerned about how nu comes to define corrupt practices, whereas
progressives think that such payments do in fact co-opt nu’s kyai and therefore should-
n’t be permitted. As for Muhammadiyah, the new chairman, Din Syamsuddin, appears
less interested in placing corruption high on his agenda. As a result, it seems unlikely
that nu and Muhammadiyah will undertake major anti-corruption initiatives in the fore-
seeable future.
BUSINESS ASSOCIATIONS
In Indonesia, especially during New Order era, business associations like Young Entre-
preneurs Association (hipmi) and the Indonesian Chambers of Commerce (kadin), have
been used as vehicles for acquiring government contracts for indigenous (as opposed to
Indonesian-Chinese) businessmen. hipmi, for example, was established in the 1970s
by young contractors of the state oil company, Pertamina. Thus historically the mem-
bers of these associations have been among the beneficiaries of corruption and collusion.
For this reason, it is difficult to be optimistic that Indonesian businesses, individually or
collectively, will take a leading role in fighting corruption.
However there is an encouraging sign by kadin. Its Good Corporate Governance
Standing Committee, working with TI Indonesia, has run an Anti Bribery Program for
its members. The program consists of “anti-bribery clinics” and the publication of anti-
bribery training modules, guide books and case studies. In the future kadin is planning
to set up similar program for “Good Corporate Governance,” consisting of a “clinic,”
trainings and publications.
MASS MEDIA
The freeing of the media following the fall of Soeharto resulted in a dramatic increase in
the quantity and variety of the media in Indonesia. However, the rapid expansion of the
media has created a very mixed picture in terms of quality and professionalism: some first-
rate newspapers, magazines and radio and television stations co-exist with many more of
much lower quality. Overall, most Indonesians get their media-sourced information
overwhelmingly from TV and radio, with newspapers and magazines following far behind.
The mass media potentially can play multiple roles in addressing the problem of
corruption. These include: 1) exposing corruption, 2) reporting on allegations and pros-
ecutions of corruption, 3) educating the public in ways that will help them fight cor-
ruption, and 4) providing a forum for airing grievances and debating issues pertaining
to corruption. The Indonesian media performs all of these functions to some extent, but
could do considerably more in each.
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106
107
The mass media in Indonesia, whether print and broadcast, have a mixed track
record with regard to exposing corruption. Only a few magazines and newspapers have
the capacity and the commitment to doing serious investigative reporting. The most
prominent one is the weekly newsmagazine, Tempo. As for most of the other weekly mag-
azines or daily newspapers, usually the corruption cases reported are based on the inves-
tigative work of ngos, legal and political experts, the kpk, Timtas Tipikor or the Police.
Rarely do they come up with stories based on the investigative work of their own jour-
nalists. A couple of mainstream newspapers—for example, Kompas and Media Indone-
sia—have their own research departments. However, they only occasionally conduct
public surveys or publish extensive analyses on corruption- related topics and cases. And
most radio and television stations (beside news channel Metro TV) often just recycle the
stories that have been reported in the print media.
On the local level only big local media such as the Jawa Pos group occasionally pub-
lish investigative reports. For instance, they helped to expose the budget misuse in Kabu-
paten Sidoarjo, East Java, which implicated the dprd chief and his deputies in 2004.
Even with the small number of media that provide investigative reports, they still
have to face a risk of being victims of the criminalization of journalistic works under the
current criminal code (kuhp). Court verdicts in media related legal cases are indica-
tors of the powerlessness of the Indonesian media in the face of libel law, especially when
wielded by politicians and well-connected, wealthy businessman. There were about 30
libel prosecutions and civil actions against the media over the last five years that were
coupled with significant claims for damages.
SCHOOLS, UNIVERSIT IES AND THINK TANKS
Through its preventive mandate kpk is currently conducting anti-corruption workshops
with Junior Secondary Schools (smp) and senior secondary schools (sma). The aim is to
socialize norms of integrity and anti-corruption in the youth. Up to now, only one Junior
Secondary High School (smp) has incorporated anti-corruption into the curriculum.
It is currently being debated whether it is more effective to make anti-corruption
values mandatory curriculum or just an extra-curricular activity. By making it manda-
tory there is a concern that it will increase the work load of students, who already have
a full curriculum. Another risk is that a mechanical preaching approach could result in
skepticism towards the issue, much like the fate of the “Moral Education according to
Pancasila” (pmp) course during the Soeharto period. Thus the Ministry of National
Education has not yet decided to make anti-corruption a mandatory curriculum topic.
At a more general level, academia and think tanks have devoted surprisingly lim-
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108
109
110
ited institutional resources to addressing corruption. A superficial survey of these insti-
tutions doesn’t reveal any major programs or publications that demonstrate a desire to
play a leading role in addressing corruption. The bulk of research and publishing being
done on corruption is being carried out by ngos such as mti, icw, TI Indonesia and the
Partnership for Governance Reform.
Although a small number of scholars have been involved in the public debate on
corruption cases/issues, for the most part they are involved as individuals rather than rep-
resenting their institutions. Only a small number of universities are actively involved in
addressing corruption. The Gadjah Mada University (ugm), through its Center for Pop-
ulation and Policy Studies (cpps) collaborated with the World Bank on conducting a
Governance and Decentralization Survey (gds). Besides the survey, the gds comprised
various activities such as workshop, seminars and policy discussions. At fhui, the newly-
established Center for Law and Good Governance Studies (clgs), with support from the
Partnership, is mapping the extent to which specific government ministries are achiev-
ing the targets set out under inpres 5 and ran-pk. In August 2006, the Syarif Hidayat-
ullah Islamic University (uin) began piloting an anti-corruption course at uin campuses
in Medan, Malang, Banjarmasin and Riau.
It would appear that there exists enormous potential for Indonesian universities that
have departments relevant to anti-corruption issues (criminology, sociology, anthropol-
ogy, and politics)—like UI, ugm, Airlangga, Diponegoro, etc.—to play more active roles
in studying corruption and evaluating the impact of anti-corruption programs.
It is ironic that university students, who were so incensed by Soeharto-era kkn, seem
to have lost their interest in actively addressing corruption. Regrettably, it appears that
the student movement today lacks the unity and the intensity of purpose to once again
play a leading role. However, there is at least one recent example of student activism
regarding anti-corruption. In August 2005 the Student Executive Body at ugm estab-
lished an “Anti-Corruption School” for university juniors. The curriculum covers the
dynamics of corruption, judicial corruption, corruption in political institutions and the
bureaucracy, corruption in budgeting and how to investigate and monitor corruption.
The ultimate objective of the school is to create a future generation of Indonesian lead-
ers who will reject corruption.
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111
112
Corruption output 11/28/06 2:42 PM Page 72
MEASURING POLIT ICAL WILL AND PROGRESS
Before concluding, it is necessary to address two related questions: First, looking to the
future, how can we gauge the national government’s “political will” and ability to com-
bat corruption? And second, how can we determine the extent to which progress is actu-
ally being made in reducing corruption? This section addresses both of these questions.
INDICATORS OF POLIT ICAL WILL AND ABIL ITY TO COMBAT CORRUPTION
The government’s political will can be measured by its willingness to take steps that are
intended to prevent and/or punish corruption. However, a government may have the
will, but not the ability—which is a function of authority, knowledge, competency and
resources—to effectively address corruption. Thus, both will and ability are needed. The
actions that would indicate continuing political will and ability on the part of the Indone-
sian government include the following:
∫ The appointment of a senior minister, adviser or coordinator for anti-corruption.
∫ Develop a national anti-corruption strategy that is focused, identifies priorities and
commits resources.
∫ Ensuring that special bodies including the kpk, Special Court for Corruption, ppatk,
kppu and kon have the staff and financial resources they need to be effective.
∫ Passing or amending laws that will help prevent or punish corruption as outlined
in Section VIII of this report (per item 11, no 5 in inpres 5/2004).
∫ Providing the resources and regulatory framework needed to produce meaningful
and lasting reforms in the ago and police.
∫ The continued increase in the number of corruption cases investigated and suc-
cessfully prosecuted by the ago and Timtas Tipikor (per item 11 no 9, inpres 5/2004).
∫ The acceleration of civil service reform (per items 3-5 in inpres 5/2004).
∫ The continued increase in the number and quality of audits as well as the rational-
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ization of auditing functions at both the national and sub-national levels.
∫ The acceleration of procurement reform per keppres 80/2003 (item 6 in inpres
5/2004).
∫ Accelerate efforts to reduce corruption in tax and customs administration (per item
11 no 2 in inpres 5/2004).
∫ Setting a deadline and impose sanctions for officials who haven’t submitted wealth
reports to the kpk (in support of items 1 and 2 in inpres 5/2004).
∫ Supporting efforts to (a) increase the transparency of political party financing, (b)
increase public campaign finance (in conjunction with enforcement of limits on private
funding), and (c) reduce the propensity for money politics in the dpr and dprds.
MEASURING PROGRESS IN REDUCING CORRUPTION
How will we know what impact the government’s anti-corruption efforts are having on
corruption? It is, of course, exceptionally difficult to accurately measure corruption or
changes in the level of corruption. The tools applied up to now in Indonesia for this task
include:
Surveys of public perceptions. TI Indonesia does at least one survey a year; other
organizations, such as the Partnership for Governance Reform undertook a diagnostic
of corruption based on the World Bank methodology surveying businesses, households
and public servants.
Sector specific surveys such as the World Bank’s investment climate surveys, the
surveys by Regional Autonomy Watch (kppod) and the Bank’s ongoing rural investment
climate survey. It would be useful to conduct additional surveys or focus group discus-
sions to see if attitudes and practices are changing within the bureaucracy, police and
judiciary.
Monitoring and analysis by independent agencies such as the kpk, ppatk, kppu,
kon and the Judicial Commission.
Monitoring and analysis by NGOs, academics and the media. ngos like icw
and TI Indonesia are beginning to produce some solid trends analysis. This needs to be
bolstered with more and better monitoring and analysis by local ngos and by academ-
eral, factual questions on corruption.
Tracking trends in the audit findings of the BPK and BPKP. Tracking audit
findings that point to corruption might provide a way to identify changes in the most
prevalent types of corrupt practices.
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ics and the media. The Institute of Economic and Social Research (LPEM) at the Uni-
versity of Indonesia undertook a major governance survey in 2001–2002, which also in-
cluded sev
Monitoring and evaluation of corruption in large-scale donor-funded devel-
opment projects. If well-designed, the monitoring and evaluation systems of large-scale
development projects like the kdp, education and roads projects provide significant
insights into the extent and character of corruption in government projects.
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CONCLUSION
To conclude, as of mid-2006, the anti-corruption track record of the Yudhoyono gov-
ernment and the kpk is positive and encouraging in some respects, but disappointing
and worrisome in other respects. The mixed record is, to a considerable extent, a reflec-
tion of the severity and complexity of the problem of corruption in Indonesia. But it also
is a consequence of shortcomings inherent in some of the Yudhoyono administration’s
approaches to addressing corruption.
THE CHALLENGE OF TRANSLATING PRESIDENTIAL COMMITMENT
INTO BUREAUCRATIC ACTION
It is important to begin by acknowledging that the President is genuinely committed to
fighting corruption, and he is supported in this effort by a small but significant constel-
lation of reform-minded actors inside and outside the government who have the poten-
tial to make a difference. Moreover, his comprehensive approach, with its emphasis on
both punitive and preventive measures, has considerable promise.
However, there exist real political and bureaucratic constraints on the pace and scope
of reform. Because the president’s cabinet is essentially a coalition government, his abil-
ity to push (or punish) his Ministers and other senior officials is limited. And because
the government’s anti-corruption agenda involves action by many parts of the govern-
ment, it requires continual and active leadership. It doesn’t appear that the office of the
president has the capacity to continually press the anti-corruption agenda. By way of
example, the government’s “National Action Plan for the Eradication of Corruption”
(ran-pk) is in danger of becoming nothing more than the bureaucracy’s way of doing
the minimum required to show the president that it is complying with inpres 5.
As a result, the President’s most significant action to improve governance has not
been the introduction of institutional reforms; but rather clamping down on standard
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practices such as cronyism in appointments, political favoritism in commercial and reg-
ulatory decisions, and political intervention in independent commissions and oversight
bodies. The President has been less proactive in developing and implementing a strategy
of institutional reforms to reduce the incentives and opportunities to engage in corruption.
THE IMPORTANCE—AND L IMITS—OF PUNITIVE MEASURES
To date, the most pronounced change has been in the area of punishing corruption.
There are a number of significant, and in some respects unprecedented, steps being taken
to uncover and punish corruption—such as the invigoration of audits, investigations and
prosecutions, and the pressure being applied to reform the ago, the police and the courts.
These punitive measures are important because they are sending a message that engag-
ing in corruption is no longer risk-free. But given the still limited capacity in Indonesia
for exposing and prosecuting corruption relative to the pervasiveness of the problem, it
is unlikely that by themselves, these measures will fundamentally change the risk-reward
calculation.
The kpk has posted some important successes with its investigations and prosecu-
tions, and it has helped to energize other anti-corruption efforts. However, it has been
less successful promoting preventive reforms, and its effort to collect and investigate
wealth reports of government officials appears lack luster. Even if the kpk excels in pros-
ecuting corruption, its overall impact will be limited if there aren’t significant and sus-
tained reforms in the ago, police, judiciary, auditing and procurement. As Stephen
Sherlock has observed, “. . . an anti-corruption body will be effective only to the extent
that it operates within a framework of accountable and transparent judicial, bureaucratic
and legislative institutions.”
MANAGING EXPECTATIONS AND FEARS
It appears there are high public expectations regarding the government and kpk’s anti-
corruption efforts. The 2005 Transparency International Global Corruption Barometer
indicates that Indonesians believe there has been a decline in corruption over the last
three years and are optimistic that it will decline even more over the next three years. It
is important that the government and kpk manage expectations, deliver on their prom-
ises, and communicate their priorities and progress to the public.
There is a risk that the government and kpk’s anti-corruption initiatives will pro-
voke a political backlash and/or public disappointment. Potential problems include:
∫ The credibility of anti-corruption efforts could be undermined by the appearance
of partisanship and/or selectivity.
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113
∫ Efforts to impose reforms on the judiciary could be seen as undermining the inde-
pendence of the judiciary.
∫ The failure of anti-corruption efforts to punish “big fish” or to improve the avail-
ability or quality of public services could fuel public frustration and cynicism.
Finally, the possibility also exists that a heavy emphasis on repressive measures could
cause risk-averse bureaucrats from making any decisions, thereby further slowing down
the functioning of national and local governments. In early 2006 Minister of Finance
Sri Mulyani warned: “Deterrence is good, but too much deterrence makes everyone freeze.
They do not want to make any decisions because they are afraid.” It seems premature
to worry very much about the possible negative consequences of an anti-corruption drive
that, to date, has had only limited impact. However, the concern does highlight what
ultimately is involved in effectively addressing bureaucratic corruption in Indonesia,
namely significantly changing the existing system of bureaucratic decision-making, which
is based principally on patronage, discretion and rent-seeking. But if the existing system
is changed, there needs to be a new system to replace it. This points to the urgency of
implementing meaningful civil service reform—including reforms that clarify adminis-
trative procedures and responsibilities—so that honest civil servants can perform their
significant and lasting decline in the level of corruption in Indonesia, there needs to be
further progress in a number of areas. These include:
First, for ran-pk to be meaningful, it should be used by the government as the start-
ing point for creating a genuine anti-corruption strategy that establishes priorities, rec-
ognizes the need for sequencing, and provides resources, incentives and sanctions. The
development of this strategy could be used to generate more meaningful participation
of the business community and civil society.
Second, there must be no let up in the ongoing effort being made to increase the
integrity and capacity of the ago, the Police and the courts, including the Special Court
for Corruption.
Third, it is critical that the kpk and other independent oversight and accountabil-
ity agencies have the authority and resources they need to carry out their mandates.
Fourth, the government must take meaningful steps to increase transparency and
disclosure in budgeting, procurement and project implementation. In effect, this involves
introducing a new culture and incentive structure within the bureaucracy, and especially
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For the Yudhoyono government and other anti-corruption agencies to produce a
jobs with some measure of confidence that they’ll be rewarded rather than punished.
THE ROAD AHEAD
114
in Echelons 1 and 2.
Fifth, governments at the national and sub-national levels must increase the scope,
quality and integrity of internal and external auditing.
Sixth, with regard to combating corruption at the local level, one of the most impor-
tant things the national government can do is hasten and broaden the reform of law
enforcement, including the police, ago and judiciary.
Seventh, civil society can play a larger and more important role than is currently the
case. The sectors of civil society where it appears there is the most upside potential include
universities, students, the media and professional associations.
Finally, given Indonesia’s status as a new democracy, serious attention needs to be
paid to addressing the corrupting and corrosive influence of “money politics” on politi-
cal parties, elections and legislatures.
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APPENDIX 1
EXAMPLES OF MAJOR CORRUPTION INVESTIGATIONS AND PROSECUTIONS
Major corruption cases recently prosecuted or currently being prosecuted:
∫ Aceh Governor Abdullah Puteh convicted; several other Governors and Bupatis have
also been prosecuted.
∫ Chairman and members of the kpu have been convicted.
∫ Former Minister of Religious Affairs convicted for the misuse of Haj funds.
∫ Trial of former Bank Mandiri ceo and two ex-directors for the alleged misuse of
Bank loans.
∫ More than 100 dprd members have been charged with corruption. 43 dprd mem-
bers in West Sumatra were convicted of graft in 2005, but most were still free as of Jan-
uary 2006.115
∫ Former Chairman on Investment Coordinating Board has been convicted for mis-
appropriating Rupiah 30 billion of state funds.
∫ A former kpk investigator has been convicted for extortion.
∫ Former Head of polri’s Criminal Investigation Unit has been convicted for receiv-
ing bribes in the bni case.
∫ Case against South Jakarta District Court Judge for extorting money from one of
the key witnesses in the jamsostek case.
Ongoing corruption investigations or cases:
∫ Investigation of the misappropriation of pt jamsostek funds by its President.
∫ Investigation of corruption in the State Secretariat.
∫ Investigation of pt pertamina oil smuggling.
∫ Misappropriation of pln funds by directors and commissioners.
∫ Former head of ibra, for collusion in the sale of ibra assets.
∫ Former Police Chief and other senior police officials involved with bni investigation.
∫ Ministry of Defense helicopter procurement.
∫ Investigation of misuse of forest concessions.
∫ Misappropriation of blbi funds: a number of bank owners remain abroad; some
have been convicted. Absence of an extradition treaty with Singapore a problem. ago
has vowed to prosecute seven bank owners in absencia.116
∫ Investigations of dpr members, dprd members, Governors/Deputy Governors,
Bupatis, and Mayors.
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APPENDIX 2
CASES HANDLED BY T IMTAS T IPIKOR SINCE ITS ESTABLISHMENT IN 2005
82
1
2
3
4
5
6
The Ministry of Religious Affairs
suspects:
Prof. Dr. Said Agil Munawar, former
Minister of Religious Affairs; and
Drs. Taufik Kamil, former Director
General of Islam Society and Haj
Management
State Owned Insurance Company
JAMSOSTEK suspects:
Achmad Djunaidi, former President
Director; and
Andy R. Alamsyah, former Director
of Investment
State Owned Oil Company
PERTAMINA
Suspects:
ZA, Vice President Administration
and Finance Petral; and
D.B.G
State Secretary
Senayan Sport Center
Ministry of Defense
Violations of Haj fund
disbursement
Violations of Medium
Term Notes Purchasing
Fund
Violation on Petral’s
fund allocation in Credit
Suisse Singapore (CSS)
without approval of the
Board
Violations of State
Finance on Procurement
system of the Asia Africa
Summit 2005
Violation of law on
extension of land using
right no. 26 and 27
Indobuildco Hotel Hilton
Violations of State
finance on procurement
of M 17 helicopter series
Rp 732.65
Billion
Rp. 311
billion and
Rp. 411
billion
About US$9
million
About Rp
600 million
Waiting for
BPKP
appraisal
Waiting for
BPKP
appraisal
Appeal to
high court
Appeal to
high court
Investigation
Investigation
Investigation
Investigation
No Cases Violations State Loss Stage in legal
Process
Corruption output 11/28/06 2:42 PM Page 82
83
7
8
9
10
State Owned Enterprise Pelindo
State Owned Enterprise PT. Pupuk
Kaltim
State Owned Enterprise PT.
Angkasa Pura
Case of State Owned Enterprise PT.
Telkom
Violations of
subordinated bonds
offering, which is not in
line with the regulation
and the privatization
program of PT. Pelindo
Subsidiary (PT. JICT)
a) Violation of office
facilities (house and car
allowances) for top
management;
b) Violation of regulation
on export facilities
Violation of land right
guarantee over 18 Ha
land at Soekarno Hatta
airport area without
approval of PT. Angkasa
Pura
Violation of regulation
regarding cooperation
with third party
Waiting for
BPKP
appraisal
Waiting for
BPKP
appraisal
Waiting for
BPKP
appraisal
In appraisal
process by
Telkom
internal
auditor
Investigation
Investigation
Pre-
Investigation
Investigation
No Cases Violations State Loss Stage in legal
Process
Sources: “Attorney General Office Agenda in Combating Corruption”, Presentation Material by
Attorney General, Abdul Rahman Saleh in JFCC Forum, January 11, 2006; The Attorney General Office’s
Performance Assessment Report, September 5, 2006.
Corruption output 11/28/06 2:42 PM Page 83
APPENDIX 3
BREAKDOWN OF CASES HANDLED BY THE KPK BETWEEN 2004–2006
84
No Description Subtotal Total
1 Total Pre-Investigative Cases Handled in 2005 31
Pre-Investigated Cases from 2004 continued in 2005 2
Pre-Investigative Cases started in 2005 29
2 Total Cases Continued to Investigative Level in 2005 19
Investigative Cases from 2004 continued in 2005 0
Investigative Cases started in 2005 19
3 Total Cases Continued to Prosecution Level in 2005 19
Prosecutions Begun in 2004 continued to 2005 2
Cases at Prosecution Level started in 2005 17
4 Total Cases Continued to Sentencing Level in 2005 5
Execution from 2004 continued to 2005 0
Cases at Sentencing Level started in 2005 5
5 Status of Cases at Prosecution Level in 2005 19
At Anti Corruption Court 9
Being Appealed 5
Cassation 0
Final Ruling (including 2 cases from 2004) 5
6 Cases continued to 2006 (until May) 41
Pre-investigation level 14
Investigation level 7
Prosecution level 20
At Anti Corruption Court 10
Being Appealed 8
Cassation 2
Note: At the pre-investigative level, the unit of measurement is cases. At the investigative level, the
unit of measurement is the File Case. As an investigation progresses, one File case can be divided into
multiple cases.
Sources: Suara Pembaruan, January 12, 2006; Material for hearing between KPK and commission III
of DPR on June 20, 2006.
Corruption output 11/28/06 2:42 PM Page 84
APPENDIX 4
CASES THAT ARE BEING PROCESSED IN SPECIAL COURT FOR CORRUPTION
JANUARY—OCTOBER 2006
85
1
2
3
4
5
6
The Supreme Court defendants:
Sudi Achmad, former Supreme
Court staff;
H. Suhartoyono, former Supreme
Court Staff;
R.A. Harini, lawyer and former judge
Malem Pagi Sanuhaj, former
Supreme Court Staff;
Sriyadi, former Supreme Court Staff;
Pono Waluyo, former Supreme
Court Staff
Indonesia’s Investment Coordinat-
ing Board
Defendant: Theo Timeon/ former
Chairman
National Election Commission
(KPU) defendants:
Daan Dimara, former member of
KPU;
Untung Sastra Wijaya, former
member of KPU
Corruption Eradication Commission
(KPK) defendants: Suparman,
former Investigator
Indonesia Consulate General in
Penang, Malaysia defendants :
Erick Hikmat Setiawan, former
Consul General;
Muhammad Khusnul Yakin Payopo,
former head sub-directorate
immigration
National Indonesia Radio Station
(RRI) defendants:
Suratno, former Director of Finance
Fahrani Suhaimi, President Director
of Budi Jaya Corp.
Try to bribe judge in
Supreme Court related
to prominent business-
man Probosutedjo’s
misusing Reforestation
fund Case
Implementation of
Indonesia Investment
Year Project year
2003–2004
Direct appointment of
P.T. Royal Standard for
Ballot Seal printing in
2004 Legislative
Election
Extorsion and bribe
Charging illegal fee for
Passport processing
Procurement of trans-
mitting equipment
Rp 30 billion
Rp 3.5 billion
Rp 513
million
Rp 20 billion
Sentenced
Sentenced
Sentenced
Sentenced
Sentenced
(Ercik
Setiawan)
Prosecuted
(Muhammad
Payopo)
Appeal to
high court
No Cases Violations Estimated Stage on
State Loss Court
Corruption output 11/28/06 2:42 PM Page 85
86
7
8
9
10
11
National Election Commission
(KPU) defendants:
Bambang Budiarto, former member;
Safder Yussac, former member;
and others
State Owned Enterprise P.T.
Sandang Nusantara suspects:
Kuntjoro Hendrartono, former
President Director;
Liem Kian Yin, Supplier
National Election Commission
(KPU) defendants:
Rusadi Kantraprawira, former
member;
Achmad Rojadi, former member
National Election Commission
(KPU) defendant:
Nazaruddin Sjamsuddin, former
chairman;
Hamdani Amin, former Head of
Finance Bureau
Directorate Budget in Ministry
of Finance:
Raden Soedji Darmono, former
Director;
Ishak Harahap, former head of
Sub-directorate
Procurement of Books
and other print materials
for election 2004
Asset Sales misappropri-
ation
Procurement for Ink in
2004 legislative election
Procurement for Insur-
ance Service for KPU
employee and bribe
from suppliers
Receiving bribe related
to National Election
Commission (KPU)
Rp 20 billion
Rp 70 billion
Rp 1.382
billion
Rp 5.032
billion
Appeal to
high court
Appeal to
high court
Appeal to
high court
Permanent
ruling
Cassation
No Cases Violations Estimated Stage on
State Loss Court
APPENDIX 4 (CONTINUED)
Source: from various Indonesia national newspapers.
Corruption output 11/28/06 2:42 PM Page 86
SOURCES OF INFORMATION
LAWS AND REGULATIONS
Law 28/ 1999 on Clean Government Free from Corruption, Collusion and Nepotism
Law 31/ 1999 on Eradication of Criminal Corruption Acts of Corruption
Law 16/ 2000 on General Taxation Arrangements and Procedures
Law 17/ 2000 on Income Tax
Law 18/ 2000 on Value-added Tax (VAT) on Good & Services and Luxury Sales Tax
Law 20/ 2001 on Amendment to Law 31/ 1999 on Eradication of Criminal Acts of Corruption
Law 15/ 2002 on Anti-money Laundering
Law 30/ 2002 on the Commission for Eradication of Corruption in Indonesia
Law 17/ 2003 on State Finance
Law 1/ 2004 on State Treasury
Law 15/ 2004 on State Financial Audit
Law 22/ 2004 on Judicial Commission
Presidential Decree (keppres) 18/ 2000 on Guidelines on Government Procurement
Presidential Decree (keppres) 80/ 2003 on Public Procurement
Presidential Decree (keppres) 17/ 2004 on National Police Commission
Presidential Decree (keppres) 18/ 2004 on National Attorney General Commission
Presidential Decree (keppres) 11/ 2005 Criminal Corruption Act Eradication Team (Timtas Tipikor)
Presidential Instruction (inpres) 5/ 2005 on Expedite Corruption Eradication Effort
Presidential Regulation (PERPRES) 7/ 2005 on Middle Term Development Plan Year 2004–2009
Menko Polhukam Decree Kep—54/MENKO/POLHUKAM/12/2004 on Interdepartmental Team forHunting People Convicted of Criminal Corruption
Menko Polhukam Decree Kep—21/MENKO/POLHUKAM/4/2005 on Interdepartmental Team forHunting People Accused and Convicted of Criminal Corruption
State Minister for Development Planning/Head of bappenas Kep. 219/M.PPN/12/2004 on Creation ofTeam for Drafting ran pk 2004–2009
MenPAN Decree Kep/94/M. PAN/8/2005 on Coordination, Monitoring, Evaluation of INPRES 5 Imple-mentation
87
Corruption output 11/28/06 2:42 PM Page 87
88
INDONESIA STATE INSTITUTIONS PUBLICATION, REPORTS, SPEECH, PRESEN-
TATION MATERIAL AND LETTER
Attorney General (2006). Attorney General Office Agenda in Combating Corruption. Presentation materialin JFCC forum, Jakarta, Indonesia, January 11, 2006.
Jaksa Agung Republik Indonesia (2005). Bahan Jaksa Agung Republik Indonesia Pada Rapat Kerja KomisiIII DPR R.I. dengan Jaksa Agung R.I. Jakarta: Jaksa Agung R.I.
Kejaksaan Republik Indonesia (2006?) The Attorney General Office’s Performance Assessment report (Sum-mary). Jakarta: Office of the Attorney General.
Kementerian Perencanaan Pembangunan Nasional/bappenas (2005). Rencana Aksi Nasional Pemberan-tasan Korupsi (RAN-PK) 2004–2009. Jakarta: Kementerian Perencanaan PembangunanNasional/bappenas.
Kementerian Perencanaan Pembangunan Nasional/bappenas (2005). Agenda 100 hari Pertama KabinetIndonesia Bersatu: Dalam Kerangka Pembangunan Jangka Menengah (2004–2009). Jakarta: Kementer-ian Perencanaan Pembangunan Nasional/BAPPENAS.
Komisi Pemberantasan Korupsi (2006). Bahan KPK Pada Rapat Kerja Komisi III DPR R.I. dengan KPK:27 Februari 2006. Jakarta: KPK
MenPAN circular letter number SE/03/M.PAN/01/2005 on State Officials Wealth Report
MenPAN circular letter number B/345/M.PAN/2/2005 on Reporting for INPRES 5 Implementation
MenPAN circular letter number SE/14/M.PAN/8/2005 on follow up of INPRES 5
President of Republic of Indonesia (2005). State Address of the Republic Of Indonesia And GovernmentStatement on the Bill on the State Budget for the 2006 Fiscal Year and Its Financial Note before DPR ofRepublic of Indonesia on August 16, 2005. (http://www.thejakartapost.com/sby_speech_2005.asp)
ARTICLES, BOOKS AND REPORTS
Asian Development Bank (2004). Country Governance Assessment Report: Indonesia. Manila: Asian Devel-opment Bank.
Astraatmadja, Atmakusumah (2005). Text remarks given in conference by usindo, George WashingtonUniversity and Asia Society Washington Centre “Indonesia Media and the Freedom of Expression,”Washington D.C., USA, September 8, 2005.
Bhargava, Vinay and Emil Bolongaita (2004). Challenging Corruption in Asia: Case Studies and a Frame-work for Action. Washington D.C.: World Bank
Clark, John (2005). Overview of Indonesia Civil Society. World Bank, Indonesia Country office Jakarta.Unpublished.
Corruption Eradication Commission (2004). Bring Indonesia Free from Corruption: Annual Report 2004.Jakarta: Komisi Pemberantasan Korupsi (KPK)
Defense Media Center Website. Dua Kriteria Kelompok Bisnis TNI: Yang Menggunakan Aset Negara danyang Dilakukan Anggota/Pensiunan TNI. October 19, 2000
(http://www.dmc.dephan.go.id/html/kesra/2005/oktober/191005%20bisnis.htm)
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Elegant, Simon and Jason Tedjasukmana. “We Need Shock Therapy.” Time Asia
Magazine Volume 164, No. 19. November 8, 2004. http://www.time.com/time/asia/magazine/arti-cle/0,13673,501041108-749480,00.html
Febiana, Fenny. Panglima TNI: Inventarisasi Bisnis TNI Sudah Selesai. Tempo Interaktif, October 3, 2005.(http://www.tempointeraktif.com/hg/nasional/2005/10/03/brk,20051003-67459,id.html)
Hafild, Emmy (2004). Corruption Eradication in Indonesia a Case Study, first draft paper presented inmeeting “New Governments, New Anti-Corruption Governments: The Challenge of Delivery,”Nairobi, Kenya, October 11–13, 2004.
Hafild, Emmy and Hani Yulianto (2004). Hasil Assessment Penerapan Pakta Integritas Kabupaten paperpresented in workshop “Mewujudkan Sistem Pengadaan Barang Dan Jasa yang Efisien and BebasKKN,” Jakarta, Indonesia, August 25, 2005.
Human Rights Watch Asia (2006). Too High a Price: The Human Rights Cost of the Indonesian Military’sEconomic Activities. New York: Human Rights Watch.
IFES (2004). Reporting and Public Disclosure of Financial Activity of Political Parties and Electoral Partici-pants. Jakarta: IFES.
Indonesia Corruption Watch (2005). Evaluasi Setahun Pemerintah sby—Kalla: Komitmen Tanpa Dukun-gan. Jakarta: Indonesia Corruption Watch
Indriastuti, Dewi. Sekolah Antikoupsi: Belajar Berantas Korupsi. Kompas, February, 24, 2006.
Juwono, Vishnu (2006). “kpk brief background; Partners in Fight against Corruption;
INPRES 5 and RAN PK,” Notes prepared for A Survey and Assessment of The Government of Indonesia’sAnti-Corruption Initiatives. Jakarta. World Bank
Lindsey, Tim (2002).”Anti Corruption and ngos in Indonesia” in Richard Holloway, ed., Stealing fromthe People: 16 Studies on Corruption in Indonesia. Book 4, The Clampdown: In Search of New Para-digms. Jakarta: Aksara Foundation for Partnership for Governance Reform in Indonesia.
Mietzner, Marcus (2006): The Politics of Military Reform in Post-Suharto Indonesia. Washington, DC: TheEast West Center.
O’Rourke, Kevin (2002). Reformasi: The Struggle for Power in Post-Soeharto Indonesia. Australia: Allen &Unwind.
Partnership for Governance Reform in Indonesia (2001). A Diagnostic Study of Corruption in Indonesia.Jakarta: Partnership for Governance Reform.
Partnership for Governance Reform in Indonesia (2005). MoU Signing Between NU-Muhammadiyah-Part-nership. Unpublished.
Robinson, Richard and Vedi Hadiz (2004). Reorganizing Power in Indonesia: The Politics of Oligarchy in anAge of Markets. London: Routledge Cruzon.
Said, Sudirman and Nizar Suhendra (2002). “Corruption and Indonesian Society” in Richard Holloway,ed., Stealing from the People: 16 Studies on Corruption in Indonesia. Book 1, Corruption—From Topto Bottom. Jakarta: Aksara Foundation for Partnership for Governance Reform in Indonesia.
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Santosa, Mas Achmad (2004). “Reform Developments in the Attorney General’s Office of Indonesia.” InReport from the ADB Symposium on Challenges in Implementing Access to Justice Reforms. Manila:Asian Development Bank.
Sasdi, Ardimas. Ethical reactive journalism creates us vs. them media. Jakarta Post, May 12, 2005.
Sherlock, Stephen (2002). “Combating Corruption in Indonesia? The Ombudsman and the Assets Audit-ing Commission.” Bulletin Indonesia Economic Studies Vol. 38 No. 3 December 2002. Canberra:Australian National University
Transparency International (2005) Global Corruption Barometer 2005. Berlin: Transparency International
Transparency International Indonesia (2005). Indonesian Corruption Perception Index 2004. Jakarta: Trans-parency International Indonesia
Tupai, Roy. President Proposes Pay Increases for Supreme Court Chief. Paras Indonesia, December 21, 2005 athttp://www.laksamana.net/read.php?gid=150.
usindo (2005). Transparency and Anti-Corruption Challenges in Indonesia.
http://www.usindo.org/Briefs/2005/Corruption%20Conference%2010-12-05.htm
World Bank (2003). Indonesia Country Assistance Strategy FY 2004–2007. Jakarta: World Bank Office Jakarta
World Bank (2003). Combating Corruption in Indonesia: Enhancing Accountability for Development.Jakarta: World Bank Office Jakarta
World Bank (2005) A Financial Sector Agenda for Indonesia. Jakarta: World Bank Office Jakarta. Availableat http://www.worldbank.or.id.
World Bank, Justice for the Poor Program (2006). Local Government Corruption Study —WB Collabora-tion Capacity Building of Anti-Corruption NGO at Local Level. Idea Note. September, 2006.
World Bank, Justice for the Poor Program (2006). Temuan Awal Penelitian “Korupsi di Tingkat Lokal.”Power Point Presentation, October 12, 2006
PERIODICALS
Jakarta PostKompasMedia IndonesiaSuara PembaruanTempo Weekly Magazine, Indonesian and English editions
ON-LINE PERIODICALS
Detikcom (http://www.detik.com/)The Jakarta Post.com (http://www.thejakartapost.com/headlines.asp)Kompas Cyber Media (http://www.kompas.com/)Paras Indonesia (http://www.laksamana.net/)Tempo Interaktif (http://www.tempointeraktif.com/)Suara Karya Online (http://www.suarakarya-online.com)President Republic of Indonesia (http://www.presidensby.info/)
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ENDNOTES
1. The term “government” is used throughout this report as short hand for the executive branch of thenational government. The term “government” suggests an entity in which leadership issues a coherent setof policies that then are implemented by their subordinants, including the bureaucracy. It is important tonote that the authors of this report do not assume a unity of purpose within the Indonesian government,especially with regard to implementing the bureaucratic reforms central to combating corruption.
2. It is important to note that a number of agencies that are key to fighting corruption in Indonesia (suchas the kpk, bpk, ppatk, kppu and Judicial Commission) are, in fact, independent agencies and not part ofthe executive branch.
3. The leaders of some political parties assert that many of these cases are the result of unclear and chang-ing government regulations and therefore should be dropped.
4. Tempo, October 26–November 1, 2004.
5. The World Bank, Combating Corruption in Indonesia, pgs. 48‒49.
6. See www.transparency.org/policy_research/surveys_indices/cpi.
7. Kaufmann D., A. Kraay, and M. Mastruzzi 2006: Governance Matters V: Governance Indicators for1996‒2005.
8. See Henderson & Kuncoro: “Sick of Local Government Corruption? Vote Islamic,” nber Working Paper,March 2006.
9. The term “government” is used throughout this report as short hand for the executive branch of thenational government. The term “government” suggests an entity in which leadership issues a coherent setof policies that then are implemented by their subordinants, including the bureaucracy. It is important tonote that the authors of this report do not assume a unity of purpose within the Indonesian government,especially with regard to implementing the bureaucratic reforms central to combating corruption.
10. It is important to bear in mind that a number of agencies that are key to fighting corruption in Indone-sia (such as the kpk, bpk, ppatk, kppu and Judicial Commission) are, in fact, independent agencies and notpart of the executive branch.
11. There are a number of important elements of the fight against corruption that are not included underinpres 5 and ran-pk. These are also discussed in this report.
12. See Combating Corruption in Indonesia, Stealing From the People, Challenging Corruption in Asia….
13. The Partnership is supporting a study of ministries’ performance vis-à-vis the ran-pk.
14. Vedi Hadiz, in Challenging Corruption in Asia, pg. 228.
15. Said and Suhendra, in Stealing From the People, Book 1, pg. 109.
16. Additionally, Indonesia’s two largest providers of development financing, the Asian Development Bankand the World Bank, which have been criticized for turning a blind eye to corruption and profligacy dur-ing the Soeharto era, initiated efforts to reduce corruption in development projects. According to the WorldBank, it “revisited its entire strategy toward Indonesia, agreeing with the government to cut lending to athird of past levels, speaking out on issues of corruption, and shifting it focus toward governance, anti-cor-ruption and community development programs.” (See Combating Corruption in Indonesia, pgs. 188‒200.)
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92
17. Emmy Hafild, Corruption Eradication in Indonesia: A Case Study (2004).
18. According to Combating Corruption in Indonesia: “The state finance law moves to a unified budget (com-bining development and recurring spending) with a performance orientation requiring line agencies to sub-mit performance indicators and reports to Parliament and a medium-term framework. The law brings moreclarity to the roles and responsibilities in the budget process and to its organization and introduces a keyaccountability mechanism by making the treasurer personally responsible for losses to the state.” pg. 67.
19. Said and Suhendra, in Stealing From the People, Book 1, pg. 109.
20. See www.transparency.org.
21. State Address on the Bill on the State Budget for the 2006 Fiscal Year and its Financial Note before thePlenary Session of the House of Representative on August 16, 2005.
22. “Agenda of the First 100 Days of President SBY’s United Indonesia Cabinet.”
23. Quoted in Tempo, February 1‒7 2005.
24. http://www.presidensby.info/index.php/fokus/2006/10/03/1090.html.
25. Time Asia edition, November 8, 2004.
26. Fifth article of keppres 11⁄2005.
27. Three of inpres 5’s instructions are not addressed in this report: 1) introducing “good governance” prin-ciples in soes, 2) injecting anti-corruption education into school curricula, and 3) carrying out an anti-cor-ruption public information campaigns.
28. Stephen Sherlock, “Combating Corruption in Indonesia?” bies, pg. 381.
29. See “Reform Developments in the Attorney General’s Office of Indonesia,” Mas Achmad Santosa, Reportfrom the ADB Symposium on Challenges in Implementing Assess to Justice Reforms, Asian DevelopmentBank, Manila, (2005), pgs. 72‒73.
30. See “The Attorney General Office’s Performance Assessment Report (Summary),” Kejaksaan RepublikIndonesia (undated), pg. 5.
31. Ibid, pg. 7.
32. Ibid, pgs. 9‒10.
33. ADB, Country Governance Assessment, Indonesia, pg. 101.
34. ADB Country Governance Assessment, Indonesia, pg. 94.
35. There was a hope in early 2005 for an overhaul in the tax system when kadin was asked to jointly drafttax law amendments by Ministry of Finance’s Directorate General of Taxation. The revisions included LawNo. 16⁄ 2000 on general taxation arrangements and procedures, law no 17⁄ 2000 on income tax and Law no18⁄ 2000 on Value-added tax (vat) on good and services and luxury sales tax.
36. However, the amendments, which were initially hailed as business friendly, were later found to containunfavorable articles, which granted more authority to tax officials, who are prone to power abuse. The amend-ments contained changes altered unilaterally by the tax officials when they were about to be submitted to thePresident. With intensified opposition from the public, the government eventually agreed to accommodatethe request for a more friendly tax regime during deliberation, especially under the new finance minister. Still,it has caused the delay for the government to overhaul the tax regime from this year into early 2007.
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93
37. Jakarta Post, 24 January 2006, pg. 1.
38. Indonesia Corruption Watch. 2005. “Evaluasi Setahun Pemerintah SBY-Kalla: Komitmen Tanpa Dukun-gan.” ICW: Jakarta, pg. 20.
39. See the ADB’s Country Governance Assessment, Indonesia, pg. 47.
40. See the ADB’s Country Governance Assessment, Indonesia, pgs. 49‒50.
41. Within the team there were three working groups: 1) on corruption prevention, 2) on corruption caseprosecution and law enforcement system improvement and 3) on monitoring and evaluation. Each work-ing group was composed of first and second echelon officials from 18 ministries, 14 high ranking officialsfrom Non Ministry Institutions, heads of universities, kpk officials, members of the National OmbudsmanCommission, ppatk officials and ngos.
42. “Rencana Aksi Nasional Pemberantasan Korupsi 2004‒2009,” State Minister of Development Plan-ning/bappenas.
43. Ibid.
44. See Chapter 11 (Penghormatan, Pengakuan dan Penegakkan atas Hukum dan Hak Asasi Manusia) inPeraturan Presiden Republik Indonesia Nomor 7 Tahun 2005 Tentang Rencana Pembangunan Jangka Pan-jang Tahun 2004‒2009.
45. It is notable that Menkopolhukum wasn’t given a role in coordinating ran-pk.
46. According to the ADB’s Country Governance Assessment, Indonesia: “MenPAN has during recent yearsproduced annual policy statements followed by ministerial decrees intent on converting the bureaucracyinto a responsive, efficient, and professional civil service based on new public management theories. How-ever, these initiatives have only marginal impact on the administration, including on MenPAN itself.”
47. Agustina, Widiarsi and Bandelan Amiruddin. “Saat Siswa Bicara Korupsi.” Tempo Magazine, July 3‒9,
2006.
48. Jakarta Post, 8 March 2006, pg. 4.
49. Hafild, Emmy and Hanu Yulianto. 2004. “Hasil Assesement Penerapan Pakta Integritas KabupatenSolok” paper presented by TI Indonesia in workshop “Mewujudkan Sistem Pengadaan Barang dan Jasa yangEfisien dan bebas kkn,” Jakarta, August 25, 2005. pg. 4.
50. Interview with the Vice Mayor of Surabaya and his team on January 6, 2006.
51. See the Jakarta Post, 11 October 2006, pg. 1 and Kompas, 11 October 2006, pg. 1. The investigation ofdprd members requires permission from the Governor of the province. The investigation of sub-nationalexecutive officials (Governors, Vice Governors, Walikotas, Vice Walikotas, Bupatis and Vice Bupatis) requirespermission from the President.
52. Aceh is rich in oil and natural gas and historically it has been considered one of Indonesia’s more cor-ruption-prone provinces. Not coincidentally, until a peace accord was signed in August 2005, it also washome to a long running armed separatist struggle.
53. In fy2006, the BRR oversaw about $1.6 billion in reconstruction funds.
54. Jakarta Post, 8 November 2006, pg. 3.
55. Jakarta Post, 8 November 2006, pg. 3.
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94
56. Jakarta Post, 9 November 2006, pg. 2.
57. The Executive branch has some influence over other branches of the government through its control ofthe civil service and budgets.
58. It is noteworthy that despite the problem of money politics and the recent corruption scandal withinthe kpu, the credibility of Indonesia’s elections since the fall of Soeharto has not been seriously underminedby widespread corruption or collusion.
59. TI Indonesia Survey, 2005, pg. 13.
60. For an overview of justice sector reform issues, see the ADB’s Country Governance Assessment, Indonesia,pgs. 107‒120.
61. The kpk arrested the lawyer of Probosutedjo and five Supreme Court (MA) officials who were involved intransaction of money gifts worth Rp 6 billion. The kpk also began an investigation of the three Supreme Courtjudges hearing the Probosutedjo case, including the Chief Justice, who initially refused to be questioned.
62. Tupai, Roy. “President Proposes Pay Increases for Supreme Court Chief,” Paras Indonesia, December21, 2005 at (http://www.laksamana.net/read.php?gid=150)
63. See “A Financial Sector Agenda for Indonesia,” World Bank Indonesia (January 2005), available atwww.worldbank.or.id.
64. Richard Robinson and Vedi Hadiz, Reorganising Power in Indonesia: The Politics of Oligarchy in an Ageof Markets, pgs. 219.
65. An amendment to Law 23⁄1999 passed in December 2003 requires that a single supervisory agency beestablished no later than December 2010.
66. Vedi Hadiz, in Challenging Corruption in Asia, pg. 227.
67. According to the World Bank, in 2003, weak internal controls in state owned banks cost the govern-
of transparency and disclosure, weak management information systems and poor corporate governance.”See “A Financial Sector Agenda for Indonesia.”
68. “Report of the Joint Monitoring Team for September 2003–May 2004,” dated May 31, 2004, pg. iv.
69. “A Financial Sector Agenda for Indonesia,” pgs. 2‒3.
70. “Reporting and Public Disclosure of Financial Activity of Political Parties and Electoral Participants,”ifes Indonesia, November 2004, pg. 3.
71. See Emmy Hafild, “Corruption Eradication in Indonesia, A Case Study,” a draft paper, prepared forOctober 2004 meeting in Kenya on “New Governments, New Anti-Corruption Governments: The Chal-lenge of Delivery.”
72. Vedi Hadiz, in Challenging Corruption in Asia, pg. 216.
73. While 30% may be high, 5% seems very low. If it is only 5%, then there would have to have been eithera significant increase in the military budget—which hasn’t been the case—or a significant decline in off-budget funding, or some combination of the two.
74. “Too High a Price: The Human Rights Cost of the Indonesian Military’s Economic Activities,” HumanRights Watch Asia, available at www.hrw.org/reports/2006/indonesia0606/5, (no pagination).
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ment about $300 million. The Bank also notes that Indonesia’s state run pension funds “suffer from a lack
95
75. Tempo English edition, 13 February 2006, pgs. 23‒25.
76. Marcus Mietzner, “The Politics of Military Reform in Post-Suharto Indonesia,” East West Center Wash-ington, 2006; available online at www.eastwestcenterwashington.org/publications; pg. 53.
77. Ibid, pg. 55.
60. Lisa Misol, Jakarta Post, 7 October, 2005, pg. 5.
78. Defense Media Center Website. “ Dua Kriteria Kelompok Bisnis TNI: Yang Menggunakan Aset Negaradan yang Dilakukan Anggota/Pensiunan TNI,” October 19, 2000 (http://www.dmc.dephan.go.id/html/kesra/2005/oktober/191005%20bisnis.htm).
79. Stephen Sherlock, “Combating Corruption in Indonesia?,” bies, pg. 377.
80. For example, an article in Kompas on February 25, 2005 reported that the wealth of the soe Ministerunder Megawati presidency had increased by Rp 16 billion.
81. Jakarta Post, 13 September, 2006, pg. 1.
82. All corruption cases prosecuted by the ago currently are tried in regular courts, although there is a pos-sibility that this may eventually change.
83. Jakarta Post, 6 March 2006, pg. 4.
84. Jakarta Post, 6 March 2006, pg. 4.
85. According to the head of ppatk, Yunus Husein, as reported in usindo report http://www.usindo.org/Briefs/2005/Corruption%20Conference%2010-12-05.htm.
86. Jakarta Post, 9 November 2006, pg. 9.
87. Tempo English edition, 3 October 2005, pg. 15.
88. Jakarta Post, 30 January 2006, pg. 1.
89. Stephen Sherlock, “Combating Corruption in Indonesia?” Bulletin Indonesia Economic Studies, pg. 371.
90. The kppu and the kpk entered into a MoU to cooperate in February 2006.
91. Tempo English edition, 19 December, 2005, pgs. 46‒49.
92. Up to now, investigators could cite imprudence as grounds for suspicion of corruption, but now inves-tigators must cite acts that violate specific laws. The ago and other law enforcement officials indicated thatthe decision will complicate their efforts to establish suspects and make arrests. (See Jakarta Post, August 27,2006.)
93. Tempo English edition, 21 November 2005, pg. 38.
94. Tempo English edition, 14 November 2005, pgs. 50‒51.
95. State Address Op Cit.
96. TI Indonesia 2005 Survey, pg. 13.
97. The density and capacity of ngos varies greatly across the archipelago from “many and strong” in cen-tral and eastern Java to “few and weak” in places like ntt.
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96
98. Tim Lindsey, “Anti-corruption and NGOs in Indonesia,” in Stealing from the People: The Clamp Down:in Search of New Paradigms, Book 4, pgs. 35‒42.
99. Ibid.
100. John Clark, “Overview of Indonesia Civil Society” (unpublished paper), The World Bank Jakarta, 2005.
101. Jakarta Post, 14 January 2006, pg. 4.
102. John Clark, Op Cit.
103. “Jaringan Nasional Pengawas Barang Terbentuk,” Kompas, February 12, 2006 at (http://www.kom-pas.co.id/kompas-cetak/0602/13/Politikhukum/2436174.htm)
104. Unpublished report on MoU signing among NU, Muhammadiyah and the Partnership for governanceReform, by the Partnership for Governance Reform, 2005.
105. Arabic term for discussion on Islamic Law
106. See Richard Robinson and Vedi Hadiz, Op cit. pgs. 62, 132.
107. Like virtually every other sector of Indonesian society, the Indonesian media is not immune to cor-ruption. The professionalism and credibility of the media are undermined by the Soeharto-era practice of“envelope journalism:” paying journalists to report on a story a certain way—or to not report on a story.
108. Text of remarks given by Dr. Atmakusumah Astraatmadja, of the Dr. Soetomo Press Institute, at usindo
conference “Indonesian Media and the Freedom of Expression,” September 8, 2005.
109. Sasdi, A.,“Ethical Reactive Journalism Creates Us vs. Them Media,” Jakarta Post, May 12, 2005, pg. 7.
110. Agustina, Widiarsi and Bandelan Amiruddin. “Saat Siswa Bicara Korupsi.” Tempo Magazine EditionJuly 3–July 9, 2006.
111. Suara Karya online, August 30, 2006.
112. See Indriastuti, D. “Sekolah Antikorupsi: Belajar Berantas Korupsi,” Kompas, 24 February 2006, pg. 5.
113. Stephen Sherlock, “Combating Corruption in Indonesia?,” bies, pg. 378.
114. Jakarta Post, 24 February 2006, pg. 13.
115. As of early February 2006, none of the 43 had gone to jail, even though the order to execute the sen-tences of 33 of the councilors was given in December 2005.
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116. English edition, 10 October 2005, pg 43.Tempo
GLOSSARY
ADB Asian Development Bank
AGO Attorney General Office
BAWASDA (Badan Pengawas Daerah) Regional Supervision Agency
BAPEPAM (Badan Pengawas Pasar Modal) Capital Market Supervisory
BAPPENAS (Badan Perencanaan Pembangunan National Development Planning BoardNasional)
BLBI (Bantuan Likuiditas Bank Indonesia) Liquidity Assistance from Central Bank of Indonesia
BKPM (Badan Koordinasi Penanaman Modal) Investment Coordinating Board
BPK (Badan Pemeriksa Keuangan) Supreme Audit Institutions
BPKP (Badan Pengawas Keuangan dan Pembangunan) Comptroller of Finance and Development
BRR (Badan Rehabilitasi dan Rekonstruksi) Rehabilitation and Reconstruction Agencyfor Aceh and Nias
Bupati Head of District
CIMU Central Independent Monitoring Unit
DPD (Dewan Perwakilan Daerah) House of Representatives of Regions
DPR (Dewan Perwakilan Rakyat) House of Representative
DPRD (Dewan Perwakilan Rakyat Daerah) Regional Representative Council
Fiqih Islamic Law Compilation
FOI Freedom of Information
FORUM 2004 (Forum Pemantau Pemberantasan Forum for Corruption EradicationKorupsi) Monitoring
GAM (Gerakan Aceh Merdeka) Free Aceh Movement
GBHN (Garis—garis Besar Haluan Negara) General Outline of State Policy
GDP Gross Domestic Product
GeRAK (Gerakan Rakyat Anti Korupsi) People’s Movement for Anti Corruption
Golkar (Golongan Karya) The State party during the New Order;now holds the largest number of seats in the DPR
Halaqoh Tarjih Discussion on Islamic Law
HIPMI (Himpunan Pengusaha Muda Indonesia) Indonesia Young Entrepreneur Association
IBRA Indonesia Bank Restructuring Agency
97
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98
ICW Indonesia Corruption Watch
IFI
INPRES (Instruksi Presiden) Presidential Instruction
JAMSOSTEK (Jaminan Sosial Tenaga Kerja) Employee Social Welfare Insurance SOE
Kabupaten District
Kecamatan Sub-District
KADIN (Kamar Dagang Indonesia) Indonesia Chamber of Commerce
KDP Kecamatan Development Program
KKN (Korupsi Kolusi Nepotisme) Corruption, Collusion and Nepotism
KON (Komisi Ombudsman Nasional) National Ombudsman Commission
Kormonev (Koordinasi Monitoring Evaluasi) Coordination, Monitoring and EvaluationTeam
Kota City District
KPK (Komisi Pemberantasan Korupsi) Corruption Eradication Commission
KPKPN (Komisi Pemantau Kekayaan Commission to Audit the Wealth ReportPenyelenggara Negara) of State Officials
KPPOD (Komisi Pemantau Pelaksanaan Commission on Supervision of theOtonomi Daerah) Decentralization Implementation
KEPPRES (Keputusan Presiden) Presidential Decree
KPPU (Komisi Pengawas Persaingan Usaha) Business Competition SupervisoryCommission
KPU (Komisi Pemilihan Umum) General Elections Commission
KUHP (Kitab Undang—Undang Hukum Pidana) Criminal Code Law
LSM (Lembaga Swadaya Masyarakat) Non Governmental Organization
Menko Polhukam (Menteri Koordinator Politik, Coordinating Minister for Hukum Dan Keamanan) Political, Legal and Security Affairs
MenPAN (Menteri Negara Pendayagunaan Aparatur State Minister for the Empowerment(Negara) State Apparatus
MoD Ministry of Defense
MoF Ministry of Finance
MoU Memorandum of Understanding
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International Financial Institution
LPPI (Lembaga Pengawas Pengaduan Independen) Independent Body for ComplaintSupervision
LPEM (Lembaga Penyelidikan Ekonomi Masyarakat) The Institute of Economic andSocial Research
99
MPR (Majelis Permusyawaratan Rakyat) People’s Consultative Assembly
Muhammadiyah Organization representing Islamicmodernism in Indonesia
Nahdlatul Ulama (NU) Literally, ‘Revival of the Religious Scholar’Organization Representing Islamictraditionalism in Indonesia
New Order The period of Soeharto’s presidency(1966–98)
Pancasila State Ideology based on five principles
PELINDO (Pelabuhan Indonesia) State Owned Sea Port
PMP (Pendidikan Moral Pancasila) Moral Education of Pancasila Course
Pengadilan Tindak Pidana Korupsi (TIPIKOR) Corruption Criminal Court
Perpu (Peraturan Pemerintah Pengganti Government Regulation in SubstituteUndang–Undang) of Law
PERTAMINA (Perusahaan Pertambangan Minyak National Oil and Gas CompanyNasional)
PKS (Partai Keadilan dan Sejahtera) Justice and Welfare Party
PLN (Perusahaan Listrik Negara) State Electricity Company
POLRI (Polisi Republik Indonesia) Indonesian National Police
PPN (Perencanaan Pembangunan Nasional) National Development Planning
PPATK (Pusat Pelaporan Analisa Transaksi Indonesian Financial Transaction and dan Keuangan) Analysis Centre
National Action Plan for Eradication
Reformasi Literally ’Reform’; often used to refer to the period following Soeharto’s fall
R.I. (Republik Indonesia) Republic of Indonesia
Rupiah/Rp Basic unit of Indonesia currency
SAI Supreme Audit Institutions
SBY (Susilo Bambang Yudhoyono) President Yudhoyono’s nickname
SekNeg (Sekretariat Negara) State Secretariat
SOE State Owned Enterprise
Telkom (Telekomunikasi) Telecommunication Provider SOE
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RAN-PK (Rencana Aksi Nasional Pemberantasan korupsi)
100
Timtas Tipikor (Tim Pemberantasan Tindak Pidana Criminal Corruption Act Eradication
Korupsi) Team
TNI (Tentara Nasional Indonesia) Indonesia Military Forces
UGM (Universitas Gadjah Mada) Gadjah Mada University
UI (Universitas Indonesia) University of Indonesia
UNDP United Nations Development Programme
USAID United States Agency for InternationalDevelopment
WALHI (Wahana Lingkungan Hidup Indonesia) Indonesia Forum for Environment
Yayasan Foundation; organization intended as charities but often used for politicalfunding and Investment
Corruption output 11/28/06 2:42 PM Page 100
TGPTPK (Tim Gabungan Pemberantasan Tindak Joint Team for the for the EradicationPidana Korupsi) of the Criminal Act of Corruption
TI Transparency International
CENTRE FOR STRATEGIC AND INTERNATIONAL STUDIES
(CSIS) is an independent, non-profit research organization,
established on September 1, 1971. CSIS’s main activities consist of
policy oriented studies on both domestic and international affairs.
The aim of this institution is to produce analysis for the benefit of
those who need them.
CSIS employs an interdisciplinary approach involving scholars in various fields of
study. In this way the complexity of the problem in hand may be dealt with adequately, yet
within the bounds required for scholarly analysis. To that extent CSIS researchers and analysts
work in an atmosphere and spirit of academic freedom.
CSIS dates back to the activities undertaken independently by two groups of young
Indonesian scholar in the early 1960s. One group consisted of Indonesian postgraduate student
abroad, especially in Western Europe. The other comprised Indonesian graduates who continued
to pursue their studies in the country. They realized that not enough attention had been paid
until then to strategic and international studies in Indonesia. It was intellectual contact between
those two groups that gave birth to the idea of establishing CSIS. This idea could come into
realization thanks to the full support of the late General Ali Moertopo and the late General
Soedjono Hoemardani, then personal assistants to the President, and the formation of the
Yayasan Proklamasi (Proclamation Foundation) in July 1971 to sponsor CSIS and its activities.
CSIS analysts undertake research on various international and domestic developments
and problems. Their findings are published in the Centre’s journals or in the form of
monographs and books. They may also be presented in various fora of discussion such as
seminars and conferences, at the national as well as international levels.
CSIS also organizes public lectures and provides lecturers for universities and various
other institutions of higher learning.
CSIS publications comprise:
1. Books, monographs, occasional papers, and collections of seminar and conference papers.
2.
3.
4. Dokumentasi, clippings of Indonesian newspapers on selected topics.
The Indonesian Quarterly, an English quarterly journal.
Analisis CSIS, a quarterly journal in Indonesian.
ABOUT THE UNITED STATES-INDONESIA SOCIETY
The United States-Indonesia Society (USINDO) is the preeminent organization whose
mission is to advance mutual understanding and good relations between the two countries.
It was founded in 1994 by prominent Americans and Indonesians in the belief that enhanced
understanding will promote a more effective relationship. Governed by a binational Board
of Trustees and incorporated in Washington DC as a 501(c)3 organization it conducts a wide
variety of programs in both countries in pursuit of this mission:
Open Forums, Conferences and Reports bring scholars, officials and other leaders from
the United States, Indonesia and other countries to examine current public affairs in Indonesia,
in the United States and in their international relationships. USINDO Briefs are reports
on these programs that reach up to 10,000 readers. Monographs explore certain topics at
greater length and are sent to key policymakers in both countries.
USINDO Summer Studies is an intensive 10-week language and culture program in Indonesia
for American college seniors and graduate students, designed to create a network of informed
young people at the start of their careers. Since 1996 130 students have participated, many of
whom have focused on Indonesia in their subsequent pursuits.
Congressional Relations. USINDO sponsors an annual orientation trip to Indonesia for
U.S. Congressional staff members to enable them to meet public and private leaders, visit a
variety of sites and see for themselves the size, complexity and importance of Indonesia. On
a continuing basis USINDO works closely with the Congressional Indonesia Caucus and
with the corresponding working group in the Indonesian House of Representatives to promote
inter-parliamentary dialogue.
Speakers’ Bureau. USINDO hosts a binational list of experts in various fields who are
available to speak to interested organizations in the United States and Indonesia.
The Factiva Indonesian edition is specially selected a daily summary of news on Indonesia
and U.S.-Indonesian relations from international sources sent to USINDO supporters via e-
Sumitro Fellowships are awarded to Indonesian and U.S. doctoral and post-doctoral scholars
for research and publication in the field of political economics.
USINDO Aceh School Project. In partnership with Syiah Kuala University (Unsyiah) in
Banda Aceh and with other Indonesian political and educational institutions, USINDO is
developing and funding a model high school to be built on the Unsyiah campus that can
lend themselves to replication all over Indonesia. This Lab School is USINDO’s contribution
to post-tsunami rehabilitation, made possible by generous donations from American students
and corporate employees whose contributions were matched by their companies.
Partnership for Higher Education. USINDO has spearheaded a joint effort with the
Indonesian Ministry of Higher Education and other organizations to develop a four-fold
plan to enhance higher education in Indonesia. The plan includes a Presidential Scholars
program to enable 100 or more Indonesians to pursue PhD studies abroad and return to staff
10 Centers of Excellence for designated fields of study. Also planned is an Indonesian
university Internet network, a program for teacher training institutions, and facilitation of
direct university-to-university contacts between Indonesian and U.S. institutions.
A Survey of National Policiesand Approaches
Soren Davidsen, Vishnu Juwono, and David G. Timberman
Centre for Strategic and International Studies
In September 2004 Susilo Bambang Yudhoyono was elected President of Indonesia in
large part because of his promises to improve governance and fight corruption. Over
the last two years, President Yudhoyono has been outspoken about the need to reduce
corruption, and his government has taken a number of steps in support of this goal.
Two years into the President's term, it is an appropriate time to examine what his gov-
ernment has done to fight corruption and to what effect. Recognizing that reducing
corruption is a difficult, long-term endeavor, this report offers a stocktaking of the
variety of anti-corruption initiatives begun or enhanced since 2004. A central concern
of this report is whether these initiatives will produce a significant and lasting decline
in the level of corruption in Indonesia.
This report describes and analyzes the range of anti-corruption initiatives that have
been undertaken by or with the support of the Yudhoyono government. It covers the
variety of measures included under Presidential Instruction 5 (INPRES 5/2004) and the
National Action Plan for the Eradication of Corruption (RAN-PK). It also includes an
examination of the Corruption Eradication Commission (KPK), which is an independent
agency, but has emerged as a leader in the government's anti-corruption campaign.
Finally, it also describes the larger context in which these efforts are playing out, includ-
ing the legal framework and the involvement of civil society.
This report is intended to provide policymakers, other stakeholders and interested
observers with a better understanding of the current status of the wide range of anti-
corruption initiatives being carried out by the government and by independent bodies
like the KPK. It is hoped that the information and analysis contained in the report will
contribute to more informed policymaking and policy dialogue, to greater public under-
standing of the strengths and weaknesses of the current efforts to address corruption
in Indonesia, and to academic efforts to understand the Indonesian political economy.
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The United States–Indonesia Society