Guest Post: Indonesian Anticorruption Institutions at Risk, Part 2: Legislative Amendments Spell Disaster for the KPK

GAB is pleased to welcome Simon Butt, Professor of Indonesian Law and Director of the Centre for Asian and Pacific Law, the University of Sydney, to contribute a two-part series on recent developments in Indonesia. Today’s post, the second of the two, is a revised and expanded version of an article that Professor Butt originally published on Indonesia at Melbourne.

As I discussed in yesterday’s post, Indonesia’s anticorruption commission (the Komisi Pemberantasan Korupsi, or KPK) has found itself under serious attack since it began to pursue powerful political figures. Members of the national parliament, many of whom have found themselves in the KPK’s sights, have long threatened to use their legislative power to weaken the KPK and undermine its independence. For many years the KPK has managed to stave off such threats, thanks mainly to strong leadership and public support. But the KPK has found itself in a weakened state in recent months. It lost its first case in its 17-year history, and more significantly, the KPK’s leadership team has been replaced with a new group of problematic commissioners, whose terms commence next year. And last month, on September 17th, the parliament took advantage of this vulnerability and finally made good on its threat to amend the 2002 statute that established the KPK. These amendments, which attack the very institutional features and powers the KPK has used to build its impressive track record, are disastrous for the KPK and Indonesia’s fight against corruption. Continue reading

Guest Post: Indonesian Anticorruption Institutions at Risk, Part 1: The Significance of the KPK’s First Acquittal

GAB is pleased to welcome Simon Butt, Professor of Indonesian Law and Director of the Centre for Asian and Pacific Law, the University of Sydney, to contribute a two-part series on recent developments in Indonesia. Today’s post, the first of the two, is a revised and expanded version of an article that Professor Butt originally published on the East Asia Forum.)

Over the past decade or so, Indonesia’s anticorruption commission (the Komisi Pemberantasan Korupsi, or KPK) had managed to deflect numerous efforts of powerful politicians and senior law enforcement figures to reduce its independence and effectiveness. However, last month Indonesia’s national parliament appears to have successfully hobbled the Commission, with the support of President Joko Widodo. The effort to weaken the Commission began with the appointment of a new batch of commissioners, widely condemned as being sympathetic to the regime or likely to be ineffective. This was followed by amendments to the Commission’s founding statute that are clearly designed to render the Commission ineffective in investigating and prosecuting corruption.

An important precursor to these events was the KPK’s first loss in court. Until this past July, the KPK had not, since its establishment in 2003, lost any of the hundreds of cases it had brought to full trial. This was a remarkable achievement in a country renowned for deeply entrenched and widespread corruption at the highest levels, particularly in government institutions and the courts.

But on July 11, 2019, the KPK’s perfect record was broken when a divided three-judge Supreme Court panel voted to acquit Syafruddin Arsyad Temenggung, the former chair of the Indonesian Bank Restructuring Agency. Temenggung had been convicted at trial (in one of Indonesia’s specialized anticorruption courts) for a scheme in which a businessman, Sjamsul Nursalim, overstated the value of assets used to repay government assistance funds he had received after the 1997 Asian Economic Crisis. According to the prosecution, by improperly approving the discharge of Nursalim’s debt, Temenggung caused the Indonesian state to lose 4.5 trillion rupiah (well over USD 300 million). Temenggung’s lawyers argued, among other things, that there was no proof that their client had obtained any benefit from Nursalim in exchange for discharging the debt, and that their client was simply doing his job and had not committed any crime. The trial court rejected these defences, convicted Temenggung, and sentenced him to 12 years’ imprisonment. On the first appeal, the Jakarta High Provincial Court affirmed the conviction and increased the prison sentence to 15 years. But Temenggung then appealed to the Supreme Court, and there he prevailed. At time of writing, the Supreme Court judgment acquitting Temenggung has not yet been made publicly available. Nevertheless, according to media reports, two of the three judges on the panel voted to acquit Temenggung, though for somewhat different reasons, while the third judge would have affirmed the conviction.

Given that the KPK probably lacks a legal basis for asking the Supreme Court to reconsider its decision, the KPK appears to have now suffered its first defeat in its 15-year history. The loss of this case is a major blow on its own terms, because it was the KPK’s largest-ever case in monetary terms, involving over twice the alleged state loss than its previous largest case. But the significance of this acquittal may be much broader, and raises a number of questions about the future of corruption eradication efforts in Indonesia. Continue reading

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