Indonesia’s Retail Corruption

Ever since Susilo Bambang Yudhoyono was elected president of Indonesia in 2004 on a pledge to root out corruption, the country has been waiting for him to do it. But despite the strenuous efforts of the country’s boldly named Corruption Eradication Commission, local officials still seem to dance around the issue as if it were some sort of comic opera. And occasionally they get caught.

Hardly a day goes by without a front-page story in the Jakarta Post, the country’s English-language daily, implicating a raft of officials, businessmen, military figures and others in graft so pervasive that it is a way of life. Lawmakers seem almost cheerful to take to the stand at the corruption commission and own up to massive swag snagging.

This old story was made new on July 13 when Yudhoyono kicked off his campaign for reelection in May 2009 with another pledge to fight corruption. In some polls, he is running slightly behind Megawati Sukarnoputri, the daughter of the country’s founding president, Sukarno, and the woman he ousted as president, so there is a race.

The government points to a World Bank study, Governance Matters 2008, that shows substantial improvement in government accountability and effectiveness, stability, rule of law and battling corruption, although the improvement is relative. In taking on corruption, Indonesia ranks just above the 25th percentile among 212 countries.

On Tuesday, just to pick a day, testimony by Golkar Party lawmaker Hamka Yandhu before the commission implicated two cabinet ministers for accepting Rp1 billion (US$109,913) and Rp300 million respectively as part of Rp31.5 billon that Hamka amassed from the head of Bank Indonesia’s communications bureau in 2003. He acknowledged that he then distributed the money to 50 members of the House of Representatives to sway judgment on a Bank Indonesia corruption case.

In another case that is representative of the rock that Yudhono must roll uphill every day in his battle against graft, last week Regional Secretary Afifuddin Lubis in the north Sumatra city of Medan, the country’s third largest, told the corruption commission that his fellow officials had stolen at least Rp50 billion from government coffers through an expense swindle that seemingly involved virtually every agency of the local government. Both the mayor, Abdillah, and the vice mayor, Ramli Lubis, have been suspended, leaving the city leaderless since January.

Not only were government and local assembly officials involved but members of the military and the police also appeared to be helping themselves to public funds as fast as they could in what has been described by the commission as one of the most corrupt provinces in Indonesia.

Abdillah and Ramli Lubis, according to the testimony, then channeled ad hoc payments to assembly members and covered them up with the help of government auditors

In a country famous for its corruption – ranking 143d of 179 countries on the Transparency International Index North Sumatra is famous as one of the country’s most corrupt provinces. Nearly 30,000 of the cases reported to the corruption commission since 2004, or 9 percent of the total, originated in North Sumatra, officials said. Only 438 cases were followed up, however, most of them small, by the North Sumatra Provincial Prosecutor’s Office. The North Sumatran Police, the commission said, have largely ignored corruption cases, as has the Provincial Prosecutor’s Office, whose probes are mainly on hold.

The commission has warned the prosecutor’s office repeatedly to speed up the investigation process. By law, the commission can take over a continuing investigation from local police or prosecutors if the case is on hold without substantial reason.

“Local Assembly members would come up to the mayor and ask for allowances that were previously unbudgeted,” Afifudin told the court last week. He added that the mayor would then instruct him to issue the allowance and mark up existing expenditures or add fictitious contingency expenses.

Despite these bogus claims, Afifudin said, Medan’s yearly financial reports regularly passed with flying colors when reviewed by the local Assembly, whose members were also involved, he said.

To pass budgetary scrutiny, Afifudin’s office would issue receipts with the amounts left blank so that officials could fill in the amounts as they wished, keeping the excess. Chief prosecutor Muhibuddin accused both Abdillah and Ramli of abusing the system and enriching themselves, bribing other officials including local Assembly members, police and National Audit Agency inspectors.

Abdillah and Ramli are also charged with accepting Rp1 billion in bribes to buy the city’s fire trucks without tenders in 2005. If convicted, both could face jail sentences up to 20 years.

Yudhoyono, it seems, has a long way to go.