Reformasi in Trouble in Indonesia

Reformasi in Indonesia appears to be disappearing at a quickening pace.

  • Last week, the National Police said they won't investigate claims that companies owned by coal tycoon Aburizal Bakrie, the head of the Golkar Party, paid bribes to avoid taxes.

  • President Susilo Bambang Yudhoyono's reformist pick as central bank governor is in trouble and in Golkar's sights.

  • The Attorney General is being criticized for attempting to use a legal subterfuge to move forward with a discredited case accusing two members of the Corruption Eradication Commission (KPK) of extortion and abusing their authority in attempting to investigate corrupt police officers.

In all the events add up to a continuing impression that Yudhoyono's government is rudderless in the face of Bakrie's growing influence after the departure at the end of May of Sri Mulyani Indrawati, the former finance minister. Bakrie capped off his week by announcing that a controversial joint secretariat that he was appointed to head in late May is backing a proposal to grant each of the 560 members of the House of Representatives a Rp15 billion ($1.6 million) fund for their constituencies. The Golkar Party is backing the pork barrel fund "as a way for legislators to give back to their constituents," a party spokesman said.

Political analyst Burhanuddin Muhtadi, from the Indonesian Survey Institute, denounced the idea as unconstitutional, telling local media that those backing it were supporting "an evil plot to steal public money."

A similar program in the Philippines, he said, was only a ploy to pacify parties in exchange for not disrupting government policies.

The ignored charges of tax bribery by Bakrie companies came in an earlier confession by Gayus Tambunan, a former tax official who was arrested after it was discovered that he had an unexplained Rp28 billion (US$3.02) million in his bank accounts. The interim director of intelligence and investigation for the tax office, Pontas Pane, told local media last Friday that three Bakrie companies still owed a 400 percent fine on Rp 2.17 trillion ($236.5 million) in back taxes from 2007 that had been repaid.

Over the past 10 days Indonesia's Supreme Court ordered that a case involving PT Kaltim Prima Coal, a Bakrie-owned company, be dropped. Three Bakrie group companies, including Bumi Resources, were accused of evading a total of Rp 2.1 trillion (US$227 million) in taxes during the 2007 tax year. The Supreme Court's ruling was followed almost immediately by a call in the House of Representatives to remove three top officials of the Directorate General of Taxation. In short order, Golkar, the political party that Bakrie heads, was said to be considering legislation to abolish the directorate altogether.

Although National Police chief detective Cmdr Gen Ito Sumardi was quoted by several news outlets as saying on Thursday that police planned to question representatives of the Bakrie companies that Gayus claimed had bribed him, on Friday another police official said Ito denied saying anything of the sort.

Tambunan also told a member of the Judicial Mafia Eradication Task Force when he surrendered in Singa­pore in March that "the majority of his wealth came from Bakrie ... [We] made him promise that he would tell police what he had told us." A Bakrie family spokesman said the accusations were "baseless and untrue."

Golkar also demonstrated its sway Friday by aligning with the Prosperous Justice Party to seek to block the appointment of Darmin Nasution as Central Bank governor. The position has been vacant since last year when Boediono, then the bank governor, resigned to become Yudhoyono's vice presidential candidate. Nasution, who was a commissioner of Indonesia's Deposit Insurance Agency and later head of the Tax Directorate General, was considered to be one of the strongest reformers on the economics team headed by Sri Mulyani.

However, as with Sri Mulyani and Boediono, members of the House of Representatives, considered to be one of Indonesia's most corrupt bodies, are seeking to block his appointment because of his connections to the Bank Century scandal, in which finance officials poured US$710 million into the failing and corrupt bank in order, they said, to keep Indonesia's financial system from collapsing outright.

"Because he has a link with the Century case, it's better for the government to reconsider his nomination," a Prosperous Justice Party official said. "The government must really rethink this decision."

Bambang Soesatyo of the Golkar Party also suggested that Nasution's track record at the tax directorate was marred by a series of high-profile scandals at the tax office although most observers pointed to the fact that Sri Mulyani and Nasution had been committed to rooting out the scandals and making them public.

Tjahjo Kumolo, chairman of the Indonesian Democratic Party of Struggle (PDI-P), said PKS and Golkar had it wrong. He called Darmin an academically fit career official in the Finance Ministry who is "clean" and has the experience to handle the job.

Finally, on Friday Indonesia's Supreme Court stepped in to criticize the attorney general's office for not using proper legal methods and thus helping to attempt to resurrect what were regarded as bogus extortion charges against Chandra M Hamzah and Bibit Samad Rianto, two Corruption Eradication Commission commissioners who came under fire last year after they wiretapped police officers involved in corruption.

The issue of the arrest of the two became a national obsession last November when hundreds of thousands of people joined a Facebook protest over their incarceration. Watchdog groups, politicians, religious leaders and reform activists of all stripes poured out their outrage over what appeared to be tape recordings of a plot involving the police and the attorney general's office to cook up charges against two.

Ultimately, the chief of detectives for the National Police, Susno Duadji, who was behind the charges against the KPK officials and was also the target of a corruption probe, resigned, as did a deputy attorney general named on tape recordings.

The Jakarta High Court last Thursday annulled the attorney general's decision to stop investigating the two officials, leaving both to face the possibility of being suspended from the KPK and tried. The attorney general, legal scholars said, should have used the principle of "deponering" left over from the Dutch colonial legal system, which allows prosecutors to drop a case in the public interest. Using the wrong legal maneuver raised the suspicion that the attorney general didn't want to drop the case at all.

The Jakarta High Court's decision was based on a lawsuit filed by a corruption suspect who challenged the attorney general's judgment to drop all charges against the two KPK deputies. The AGO's withdrawal of the case last year came amid strong suspicion that elements inside the office and the National Police, as well as Anggodo, had fabricated the case to bring down the pair.

Denny Indrayana, a presidential adviser for legal affairs, said President Yudhoyono is considering several options to resolve the case out of court.

"The case against Bibit and Chandra is full of holes," said Taufik Basari, the lawyer for the two accused KPK officials "The Attorney general should not proceed because it would tarnish its reputation."