A Tale of Two Regions: Anticorruption Trends in Southeast Asia and Latin America

OK, “best of times” and “worst of times” would be a gross exaggeration. But still, when I consider recent developments in the fight against corruption in Latin American and Southeast Asia, it seems that these two regions are moving in quite different directions. And the directions are a bit surprising, at least to me.

If you’d asked me two years ago (say, in the summer of 2014) which of these two regions provoked more optimism, I would have said Southeast Asia. After all, Southeast Asia was home to two jurisdictions with “model” anticorruption agencies (ACAs)—Singapore and Hong Kong—and other countries in the regions, including Malaysia and especially Indonesia, had established their own ACAs, which had developed good reputations for independence and effectiveness. Thailand and the Philippines were more of a mixed bag, with revelations of severe high-level corruption scandals (the rice pledging fiasco in Thailand and the pork barrel scam in the Philippines), but there were signs of progress in both of those countries too. More controversially, in Thailand the 2014 military coup was welcomed by many in the anticorruption community, who thought that the military would clean up the systemic corruption associated with the populist administrations of Thaksin Shinawatra and his successor (and sister) Yingluck Shinawatra—and then turn power back over to the civilian government, as the military had done in the past. And in the Philippines, public outrage at the brazenness of the pork barrel scam, stoked by social media, and public support for the Philippines’ increasingly aggressive ACA (the Office of the Ombudsman), was cause for hope that public opinion was finally turning more decisively against the pervasive mix of patronage and corruption that had long afflicted Philippine democracy. True, the region was still home to some of the countries were corruption remained pervasive and signs of progress were scant (such as Vietnam, Laos, Cambodia, and Myanmar), but overall, the region-wide story seemed fairly positive—especially compared to Latin America where, aside from the usual bright spots (Chile, Uruguay, and to a somewhat lesser extent Costa Rica), there seemed to be precious little for anticorruption advocates to celebrate.

But now, in the summer of 2016, things look quite a bit different. In Southeast Asia, the optimism I felt two years ago has turned to worry bordering on despair, while in Latin America, things are actually starting to look up, at least in some countries. I don’t want to over-generalize: Every country’s situation is unique, and too complicated to reduce to a simple better/worse assessment. I’m also well aware that “regional trends” are often artificial constructs with limited usefulness for serious analysis. But still, I thought it might be worthwhile to step back and compare these two regions, and explain why I’m so depressed about Southeast Asia and so cautiously optimistic about Latin America at the moment.

I’ll start with the sources of my Southeast Asian pessimism, highlighting the jurisdictions that have me most worried: Continue reading

The Culture of Corruption and the Corruption of Culture in Indonesia

With over 300 ethnic groups scattered across more than 17,000 of its islands, Indonesia is justly proud of its extremely diverse cultural heritage. But Indonesia is certainly not proud of a different aspect of its culture: a ”culture of corruption” so pervasive that it is not merely associated with grand corruption in the central government, but also infects the daily lives of the citizens through petty corruption, as well as daily harassment by local officials and governmental departments.

When trying to diagnose the root cause of such pervasive corruption, a common knee-jerk response is to focus on the legal system and law enforcement institutions. Yet Indonesia seems to do fairly well on these dimensions: A well-regarded independent anticorruption agency, the KPK, in cooperation with the police and prosecution spearheads enforcement of a comprehensive Anticorruption Law that both considers domestic needs and incorporates principles enshrined in international materials such as the United Nations Convention Against Corruption. Still, corruption persists. Why?

To answer this question, one must look at not only the legal system, but also the society—the people whose conduct the laws are supposed to regulate. Such observation reveals that the “culture of corruption”— society’s permissive, tolerant, and even accepting attitude toward corruption – is perhaps the main culprit responsible for Indonesia’s incurable corruption.

Continue reading

Chill Out: Fine-Tuning Anticorruption Initiatives to Decrease Their Chilling Effect

Who is “harmed” by aggressive anticorruption crackdowns? The most obvious answer is corrupt bureaucrats, shady contractors, and those who benefit from illicit flows of money. And while there are concerns about political bias and other forms of discrimination in the selection of targets, in general most of us rightly shed few tears for corrupt public officials and those who benefit from their illicit acts. But aggressive anticorruption crackdowns may have an important indirect cost: they may have a chilling effect on legitimate, socially beneficial behavior, such as public and private investment in economically productive activities. Although chilling effects are often discussed in other areas, such as with First Amendment rights in the United States, there is little discussion of it in the anticorruption context. That should change.

For example, in Indonesia, recent efforts to crack down on corruption appear to have stunted simultaneous measures to grow the economy through fiscal stimulus. As this Reuters article relates, “Indonesian bureaucrats are holding off spending billions of dollars on everything from schools and clinics to garbage trucks and parking meters, fearful that any major expenditure could come under the scanner of fervent anti-corruption fighters.” Nor is Indonesia the only example. In April 2014, Bank of America estimated that China’s corruption crackdown would cost the Chinese economy approximately $100 billion that year. One can challenge that estimate (as Matthew has discussed with respect to other figures used in reports on the cost of China’s anticorruption drive), but the more general notion that aggressive anticorruption enforcement can have a chilling effect on both public and private investment, which in turn can have negative macroeconomic impacts, is harder to rebut.

Taking this chilling effect seriously does not imply the view that corruption is an “efficient grease” or otherwise economically beneficial. The point, rather, is that although corruption is bad, aggressive measures to punish corruption may deter not only corrupt activities (which we want to deter) but also legitimate activities that might entail corruption risks, or be misconstrued as corruption. So, if we think that corruption is bad but that anticorruption enforcement might have an undesirable chilling effect, what should we do? Continue reading

Don’t Blunt the Spearhead: Why the Proposed Revision of Indonesia’s KPK Law is a Bad Idea

Indonesia’s Corruption Eradication Commission (Komisi Pemberantasan Korupsi, or “KPK”) was established in the hope that an independent anti-graft agency would effectively and fearlessly combat endemic corruption in Indonesia. True to its purposes, the KPK, in collaboration with other actors, has become one of Indonesia’s few anticorruption success stories. Since its establishment in 2003, the KPK has successfully charged 82 legislators in the parliament for corruption—a remarkable achievement in a country that has been known for the impunity of its political elite. After the appointment of its newest team of commissioners in 2015, the KPK has furthered its success in catching corrupt public officials, one of which was again a member of Indonesia’s House of Representatives (Dewan Perwakilan Rakyat, or “DPR”). It is safe to say that the KPK can indeed be deemed the “spearhead” of Indonesia’s corruption eradication efforts.

Yet, as an Indonesian proverb has it, “The taller the tree stands, the stronger the wind blows”: Attempts to weaken the KPK have grown in direct proportion to the agency’s success in bringing cases against powerful individuals and institutions. One example of this is the ongoing “Gecko v. Crocodile” struggle between the KPK (the small “gecko” with limited resources and young age) and the Indonesian National Police Force (the fierce “crocodile” with abundant power and resources), in which every time the KPK brings corruption charges against members of the Police Force, their members retaliate with criminal charges or harassment against members of the KPK. More recently, and more troublingly, members of the national parliament are now also trying to do what they can to undermine the KPK: Six out of the ten member parties in the DPR have proposed a revision of the current KPK Law–despite protests from the remaining political parties, NGOs, academics, and even the general public. Those opposed to this amendment argue (correctly) that there is no article in the revision that would increase the performance of the KPK, but instead all of the proposed revisions would undermine the KPK’s power and independence. Despite being packaged as a set of procedural improvements, the revision seeks to render KPK impotent – a strategy both subtler and likely more effective than the ham-handed tactics of the police in the “Gecko v. Crocodile” conflict.

The proposed law includes four main points of revision that proponents claim will improve the KPK’s performance. In fact, all four pose threats to the KPK’s independence and effectiveness:

Continue reading

Anti-Corruption Education versus Pro-Corruption Culture

For Indonesia, the eradication of systemic corruption is one of the country’s biggest challenges. A central part of Indonesia’s anticorruption strategy has been strengthening the country’s anticorruption institutions, most notably through the establishment of the Indonesian Corruption Commission (Komisi Pemberantasan Korupsi/, or  ”KPK”) in 2002. The KPK has been quite successful over the past decade, yet Indonesia is still perceived as corrupt. One reason for this may be Indonesia’s own pro-corruption culture. Public officials are not ashamed to ask for bribes, and the public and investors are not reluctant to pay them. Indeed, some Indonesian public servants do not even recognize their corrupt acts as illegal or wrongful. For example, when Indonesia’s Minister of Religion Suryadharma Ali was named as a suspect for embezzling money from the Hajj fund, he testified before the KPK that he did not know that his action was corrupt. The same line of argument was advanced by Jero Wacik, another minister named as a suspect in a corruption case by the KPK. These claims may seem absurd, but a person who lived in Indonesia can easily say that a lot of Indonesian people may indeed not know that certain wrongful behavior is (illegal) corruption. For example, giving petty cash to a public official as “gratitude” for expediting the issuance of a national identification card would not be considered as corrupt behavior by many Indonesians.

That a culture of corruption is embedded in Indonesia is not surprising. After all, it was only recently, under the reign of President Susilo Bambang Yudhoyono, that the government began to take significant steps to eradicate corruption. If Indonesia’s pro-corruption culture is part of the problem, as it seems to be, more steps have to be taken beyond “mere” legal reform, institutional reform, and more aggressive law enforcement. Indonesia needs to establish a new strategy and approach in eradicating the endemic corruption, one that takes culture into consideration and implements anticorruption education programs to change this culture. What kind of anticorruption education might effectively change Indonesia’s pro-corruption culture in the long run? Here are three proposals the Indonesian government might consider: Continue reading

Gecko v. Crocodile, Round Three: Indonesia’s Ongoing Fight between the Police and the KPK

In recent years, Indonesia has made substantial progress in fighting corruption. Many observers, both inside and outside the country, attribute much of this success to Indonesia’s anticorruption commission, the KPK. Since its establishment in 2002, the KPK has imprisoned hundreds of tainted businessmen, politicians, and government officials. Thus, it is not surprising that the KPK has made many enemies who are continually trying to weaken, and even dissolve, the KPK as an institution. Some of the fiercest resistance to the KPK has come from the Indonesian National Police Force. Unfortunately, for six years now there has been a simmering conflict between the police and the KPK, which has occasionally erupted into dramatic confrontations. Although the KPK has generally prevailed in these conflicts, the most recent confrontation may be the most challenging yet. The history of this conflict suggests some possible lessons for how to manage the tensions that an aggressive anticorruption agency can sometimes produce. Continue reading

Should Anticorruption Agencies Be Able to Veto Cabinet Appointments?: The Case of the Indonesian KPK

Independent anticorruption agencies (ACAs) have become a vital component for many countries in combating corruption. Generally, these ACAs function like independent police or prosecutors, taking on one or both of those roles in settings where the ordinary law enforcement apparatus cannot be relied on to investigate, arrest, and prosecute corrupt officials. In addition to these prosecutorial responsibilities, ACAs sometimes oversee asset disclosures, and may also perform a public education function. But for the most part, ACAs do not play a direct role in selecting or vetting senior political officials. Should they?

This question is not merely hypothetical: Indonesia recently elected as its new president Joko Widodo, a reform-minded candidate who promised “zero-tolerance towards corruption” during his campaign (see a previous post discussing his election here). Last month, President-Elect Widodo took the unprecedented step of submitting his list of proposed nominees for cabinet positions to Indonesia’s powerful Corruption Eradication Commission (Komisi Pemberantasan Korupsi or “KPK”) for evaluation–and approval–before the list of nominees was finally made public. The KPK rejected eight of his submissions, with the result that President Widodo delayed the announcement of his cabinet compositions until he replaced these eight candidates with other nominees approved by KPK. Four days later, Widodo announced his cabinet composition, which presumably did not include the eight individuals to whom the KPK objected.

While the decision to give the KPK a de facto veto over cabinet appointments is in some ways an encouraging development–one that many Indonesians might appreciate as brave, progressive move, which enlarges the power of the popular KPK–it is troubling in certain respects, and should prompt more careful scrutiny and regulation. Continue reading