Indonesia and Corruption
Based on “THE HISTORY OF CORRUPTION IN INDONESIA” by Muhammad Husni Thamrin


Pushed by the stronger demand of democracy and the recognition to human rights, as well as the public participation in public policies; the reform movement requires a clean government in order to have a good governance.

However, the problem is apparently the slow process of the settlement of KKN cases. The Attorney General even seems to be reluctant in probing the KKN cases that involve Soeharto and his cronies. None of the big scale cases that are handled by the Attorney General, namely the KKN cases of Soeharto and his family, Bank Bali, Andi Ghalib, Texmaco, BLBI, Goro, etc., has been completely settled by this legal institution.

It seems that corruption problems have to be perceived in the system framework. Corruption is the result of an economic and political system that is run by the centralized and repressive modern government mechanism.

Definition on Corruption

In June 1999, The Coordinating Minister of Supervision and Development defined KKN as the collusion and nepotism practices among officials and the private sectors that contain the corruption element or privileges. Whilst the operational limit of KKN was defined as the disbursement of facilities or privileges by the government official and State or Regional Owned Company to an economic unit/legal body owned by the respective officials, their families and friends.

How is corruption taken into practice?

Onghokham said that there are two dimensions where corruption works. The first one happens at the higher level, involving the authority or government officials and includes vast amount of money. The other dimension generally happens at the middle and lower levels, usually deals with the public interest. The complicated process of getting licenses, ID cards, driving licenses, immigration documents, or even illegal fees collected by bad police officers are some of the examples.

Corruption in the Dimension of Indonesian History

In 1799 the Dutch trade association VOC (Verenigde Oost Indische Compagnie) cynically reworded as Verhaan Onder Corruptie collapsed due to corruption. Naturally, a trading company like VOC prohibited their workers to involve in trading. But with the excuse of small pay, it was common if some VOC officials had a side business with the Portuguese, Indian, or French traders.

This corruption matter did not end when the Dutch Indies replaced VOC. The bureaucracy system of Dutch Indies that recognized dual system, namely Bestuurs Beambten (BB) and Pangreh Praja (Civil Servants), triggered another kind of the corruption.

During the Forced Labor period, 1830-1870, the native residents were obliged to plant several kinds of crops that were popular in the European market on one third of their land. However, some community leaders such as village chief and regent in charge of the Forced Labor compelled the farmers to plant the crops on 2/3 of their lands.

Forced Labor was abolished in 1870 and replaced with a liberal economic system, where the capitalists were allowed to own lands, and able to rent properties from the local people or the government. Communal paddy fields were starting to be rented out by the village chiefs, where they could make profit. On the other hand, salary earned by the civil servants remained to be low. At the same time, being part of the Dutch Indies government and traditional bureaucracy system, those civil servants ought to maintain their high profile lifestyle. They were alleged to receiving many kinds of levies from the people to support their living.

The period of Japanese invasion was believed to be the time when corruption ran high. The Japanese occupational government exploited Indonesia and its resources for the interest of the Ad Nippon warriors. It was difficult to get staple food and/or clothing back then. But if anyone were willing to be the Japanese propagator, it would be “a bit easier”.

The effort to nationalize foreign companies in 1951 brought a new problem into existence. Before that decree was enacted in 1958, the military, the army in particular, had seized those companies by force. On December 13, 1957 Major General A.H. Nasution (the Army Head of Staff at that time) issued a restriction on occupying Dutch companies without the consent of the military and put those seized companies under the military supervision.

Before that decree on nationalization came to existence, Politik Benteng (Fortress Politic) policy was implemented. Based on this policy, the native businessmen were given loans and facilities, a license to import goods were one of them. They were hopeful that profit earned from the sale of imported goods could be used as a capital for business expansion. On the contrary, what came into existence were the collusion, corruption, and nepotism (KKN) practices. License was only issued for the businessmen closed to the government and dominant political power.

Controlled democracy that was then exercised by Soekarno failed to deal with disintegration of the state administration. The state apparatus did not work well and corruption was even more rampant.

The New Order regime, the economic growth was the main target of the New Order regime. Leaking or corruption matters were secondary.

Soeharto era was colored by three interesting phenomena. Firstly, the cooperation between military leaders and businessmen of the Chinese descends. Secondly, the competition between indigenous and non-indigenous businessmen. Thirdly, the influence of state owned companies under the control of military versus the technocrats who supported the liberalization and Western intervention.

Agreements made with administrative bureaucracy became subject to the approval of the army officials. Military held a crucial role in the issuing of contracts license, decision on projects, etc. The economic resources they obtained from the increase oil price and from the state owned companies, as well as their cooperation with non-indigenous/Chinese businessmen supported the absolute military power when the New Order just resumed to power. Although in 1966 Indonesia had been widely open for foreign investment, the overflowing proceeds from petroleum in early 1970 generated enough fund for the New Order to finance its development and political programs.

Pertamina was the primary supporter of Soeharto and New Order. Under the management of Ibnu Sutowo, Pertamina operation was kept secret and its annual financial report was never published. Soeharto and the army had very big interest over Pertamina. As what Richard Robison said that Pertamina had become a channel where money flowed for the government to finance its political expenses.

In January 1970 some Indonesian student organizations protested against corruption in the government body, the corruption practices still went on and got even worst. The government controlling body, such as the House of Representatives, Auditors, or the Attorney General and State Apparatus Controlling Body, and the legal instrument installed to fight against corruption, Decree No.3/1971 on abolishment of corruption, were not functioning as expected.

In early 1980-s the forestry sector, became the new arena of looting for Soeharto and his cronies. In early 1980-2 we knew of the terminology “Green Gold”.

Based on the survey conducted by a US researcher named David W. Brown, up to the end of 1995, the forestry plantation in Indonesia amounted to 62 millions hectares and there were five big companies holding HPH concession. Those five HPH concession holders controlled the total area of 18 million hectares. That size meant that 30 percent of the total existing HPH were managed by 585 concession holder companies. Based on that research, two of HPH concession holders surrendered their shares and management to Soeharto’s family. The two companies are Barito Pacific group and Bob Hasan group.


Conclusion

Indeed KKN practices dethroned Soeharto in 1998. The economic crisis that arrived in 1997 was a manifestation of the New Order economic policies that were weighed down by KKN and its dependent on foreign capital and foreign economic aid.

The eradicating of corruption, collusion, and nepotism (KKN) was one of the agenda fought for by the 1997- reform movement. This abolishment is intended for the probing of KKN practices committed by Soeharto and his cronies in the New Order era.

Some legal instruments that regulate the abolishment of corruption and creating a clean government was soon installed by Habibie when he resumed to power in Soeharto’s position. The instruments are as follows:

1. MPR Decree No. XI/MPR/1998 about the running of a clean government.

2. Decree No. 28/1999 about the running of a KKN free government.

3. President Instruction No.30/1998 about the forming of commission for inspection of the official wealth.

4. Idea of forming a Commission on Eradicating Corruption.

Based on MPR Decree No.XI/MPR/1998 in fact Habibie received a mandate to eradicate corruption and to probe into Soeharto KKN cases as soon as possible. However, it was not clear as to why no evidence was found to bring Soeharto to court.

Therefore, the withdrawal of the warrant letter to investigate and to probe on Soeharto (SP3) by Marzoeki Darusman, the new Attorney General, shed a light to the hope of probing and abolishing corruption in Indonesia. Government ability to settle this case on Soeharto will become the point of no return, to prove that this new regime has the will power to eradicate corruption.