Graft Probe Claims Indonesian Energy Czar

One of Indonesia’s best connected and most powerful officials was named a bribery suspect Wednesday by the Corruption Eradication Commission (KPK), setting off shock waves in a spreading scandal that has implicated numerous officials and badly tarnished the ruling political party of outgoing President Susilo Bambang Yudhoyono.

Energy and Mineral Resources Minister Jero Wacik is to be formally charged with taking kickbacks from oil and gas companies. He immediately offered to resign and the Democratic Party apologized for his behavior.

Jero is alleged to have taken Rp 9.9 billion [US$853,000] in bribes and is the highest-ranking official to be charged by the KPK since it came into existence in 2003. His wife, Triesna Wacik, has also been questioned.

On Tuesday, KPK chairman Abraham Samad said Jero had a “lust for lavish living” that drove him to corruption.

The arrest set off a torrent of text messages and phone calls among political insiders who had been expecting Jero to fall. The arrest confirmed suspicions that the current round of KPK investigations into the government is unlikely to stop any time soon. Numerous other cabinet officials are also felt to be under threat.

Jero, a Balinese political leader, is a top figure in Yudhoyono’s Democratic Party. He is believed to have played an integral role in funding the party’s operations.

The arrest confirms longstanding suspicions that Jero was a target of the KPK. A wide-ranging bribery scandal that blew up last year in the Upstream Oil and Gas Regulatory Task Force (SKKMigas) has already ensnared numerous ministry officials and triggered the probe into Jero.

That scandal revolved around illegal payments made in exchange for licenses to import oil into the country. Indonesia imports about $150 million a day in refined oil, mostly through Singapore-based trading companies. This system, known locally as the “oil mafia,” is widely believed to be a source of funds for political parties and powerful officials.

Much of the oil is subsequently sold as subsidized fuel, which costs the government as much as $35 billion a year, a figure economists say is a major drag on the economy. A substantial portion of the subsidized fuel is widely believed to be diverted by well-connected smugglers.

Incoming president Joko Widodo, who takes office in October, has said the oil mafia will be a target of his administration as it seeks to clean up corruption and maximize oil production.

Jero is only the third serving minister in the country’s history to be charged with corruption. The others are former sports minister Andi Mallarangeng — a member of the Democratic Party — and former religious affairs minister Suryadharma Ali, who also served in President Yudhoyono’s coalition cabinet. However, a wide range of other Democratic Party officials have been arrested and convicted.

Currently, Anas Urbaningrum, the former party chairman, is on trial for corruption in connection with the construction of a massive sports complex. The KPK investigation has virtually destroyed the party, which was forced to go into the 2014 general election in a weakened state as a coalition partner with Gerindra, headed by former General Prabowo Subianto.

With the announcement that Daniel Sparingga, Yudhoyono's political communications advisor, is also under investigation, it is growing clear that various investigation are touching many people close to the president, but it is felt unlikely that Yudhoyono himself is at risk.

Last week, a former close aide to Anas testified in court that Edhie Baskoro Yudhoyono, the president’s youngest son, took a US$200,000 bribe in relation to a number of what were described as “dirty projects” that the party chairman had handled. Edhie, who at the time was secretary general of the Democratic Party, has previously denied any wrongdoing in connection with any of the projects.

It is difficult to know how deep the KPK will drill into Indonesia’s murky oil and gas industry. This week, Karen Agustiawan, the president and CEO of the state-owned energy company Pertamina, abruptly resigned her position. It isn’t known if her resignation is related to the affair involving Jero.

A KPK spokesman said Wednesday that any information about Agustiawan would be contained in a detailed indictment, which will be released soon. She testified recently in the Anti-Corruption court trial involving Rudi Rubiandini, the former chief of SKKMigas, who was convicted and sentenced to seven years in prison for his role in the bribery scandal.

At the time of Rudi’s arrest, the KPK said it was investigating reports that the bribes were actually intended to finance the Democratic Party’s nominating convention last year to name a candidate to succeed Yudhoyono in the polls.

The future looks bleak for the remnants of Yudhoyono’s party, which was born as a reform party when he became president. The KPK has a 100 percent conviction record, having put 86 individuals in jail for bribery and graft relating to government procurements and budgets.

The president himself has reportedly been seeking future protection for his family since well before the election, a factor that is said to have led to his decision to side with the losing coalition led by Prabowo.