The Asia-Pacific Journal | Japan Focus Volume 6 | Issue 3 | Article ID 2680 | Mar 03, 2008

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"Corruption Ruins Everything": Gridlock over Suharto'sLegacy in Indonesia (Part II)

Peter King

“Corruption Ruins Everything”: Gridlockover Suharto’s Legacy in Indonesia (PartII)

Peter King

P a r t I c a n b e r e a d h e r e(http://japanfocus.org/products/details/2679).

Gridlock over KKN

The examples above suggest governmentalparalysis in the face of a pervasive corruptionwhich impacts severely upon every importantpolicy and institution in the republic. ThePresident takes initiatives but hesitates fatallyto follow through, and compromises his ownreputation and effectiveness in the process.Most government ministries, for whom tacticalfunds and off-budget budgets are the stuff oflife,[50] do not even have a reform plan in frontof them which would permit them to parlaytheir own essential income-boosting blackfunds (civil service pay being universallyinadequate) against budgetary reform and a bigboost to salaries.

In this context, however, there has been onepromising development. At the Ministry ofFinance Sri Mulyani Indrawati, a formerExecutive Director of the IMF and the mostpowerful woman in the Yudhoyono ministry,has launched a cleanup in the ministry itselfand especially its Directorate General ofCustoms and Excise, reputedly the mostcorrupt government authority in Indonesia

along with the taxation office. The entirecustoms staff of 1350 at Jakarta’s main port,Tanjung Priok, was moved out and replaced by840 newcomers; salaries were doubled, andgoods throughput and customs revenue havereportedly soared. The reforms are slated to beextended by this “islands of integrity” methodto the courts and the most KKN-pronegovernment agencies, but both internal andexternal resistance have surfaced already,especially in parliament. The Speaker of theDPR (Dewan Perwakilan Rakyat--People'sRepresentative Council), Agung Laksono,argues that spectacular targeted salaryincreases are unfair and may lead to…“jealousy” (!).[51] It remains to be seenwhether the islands of integrity will be washedaway by the storms of self-seeking.

Perhaps the greatest irony of the KKN sagasurrounding the Presidency is that the post-Suharto President with the most imposingcredentials for reform (including even KKNreform), reconciliation and democraticdealing—Gus Dur-- was impeached and sackedby the MPR (Majelis Permusyawaratan Rakyat–People’s Consultative Assembly) in 2001 for acomparative bagatelle of corruption. This wasRp35billion spirited from Bulog by his masseur,and US$2 million in aid money received fromthe Sultan of Brunei and unaccounted for. Hisdabbling in KKN was a transparent pretext forhis political rivals and military spoilers to be ridof someone who was seeking to construct anaction government in the wake of frustratedefforts at military reform and peacemakingwith Papua.[52]

The Failure of Institutional Reform

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While the prospect of serious reform actioninduces Presidential paralysis, parliament isnot immune from the syndrome either. Quiteapart from politicians’ own addiction to moneypolitics there has been failure since 1999 tofollow through and make effective thepromising institutional innovations of theperiod—a Corruption Eradication Commissionand Anti-Corruption Court (PengadilanTipikor); a Judicial Commission (KomisiYudicial) to monitor the mafia in the courtsystem; a proactive Supreme Audit Agency(Badan Pemeriksa Keuangan--BPK), and, lessimpressive, a Komisi Ombudsman Nasional.The failure can be seen in documentedkickbacks to potentially inquisitive politiciansin KKN cases, [53] and brokerage (forsubstantial fees) by MPs and their agents of therelease of disaster relief funds controlled by theparliament to regional governments.[54] Thelone party in the DPR enjoying serious reformcredentials, the Muslim-based ProsperousJustice Party (Partai Keadilan Sejahtera--PKS),which received 7 per cent of the vote in the2004 national election, may be losing thosecredentials.[55]

Paralysis is evident in the sham or half-heartedreforms, sham political battles, sham legalactions and other merry-go-rounds of thecurrent Presidential war against KKN. Despitea very great deal of huffing and puffing almostno big players in the major corruptioncases—the BLBI liquidity fund and other bankscandals, illegal logging and log export, andfuel smuggling (and theft)-- have beenprosecuted successfully. The performances ofthe Attorney General’s Office (AGO) and thePresident’s anti-corruption team (Tim TaskTipikor) have been woeful.[56] Corrupt courtsand prosecution; bureaucracy still rife with off-budget budgets fed by private sector “clients”outstripping official ones (and actually settingthe real income of many public sectoremployees well above what they could expectin the private sector[57]); officials at stateenterprises indulging in kickbacks, theft and

smuggling; banks revitalised at public expenseas cash spigots for corrupt cronies; military andpolice presiding over extensive protectionrackets and illegal resource extraction—thestory is not an elevating one. Indonesia in 2007continued to bump along near the bottom(143rd of 179) of Transparency International’sCorruption Perception Index. A detailedcalculation of the multi-billion dollar “costs” ofcorruption, which are of course the purest kindof effortless profit for many, would suggest thatKKN really is among the largest and mostsuccessful industries in the land.

Broad-brush evidence for this as an enduringtruth of reformasi Indonesia comes with annualand undisputed official accountings of graft ingovernment. For instance:

"Procurement is one of the areas most prone tocorruption. Around 70 percent of the caseshandled by the Corruption EradicationCommiss ion (KPK) are mark-ups forp r o c u r e m e n t s , " K P K c h a i r m a nTaufiequrrachman Ruki told reporters at a[November 2007] media conference after theopening of a regional seminar on Fightingagainst Bribery in Public Procurement in NusaDua, Bali…The KPK has received 16,000reports of cases but it able to process only afew dozen, he said. Taufiequrrachman said thatthe government lost around Rp 36 trillion(US$3.9 bil l ion) each year because ofcorruption in public procurement.[58]

It is dismaying that Taufiequrrachman’ssuccessor at the KPK, Antasari Azhar, has anunprecedentedly bad reputation to occupy sucha position and appears to have been crownedby the House of Representatives LegalCommission III at the behest of the twopol it ical part ies which dominate theparliament, Vice President Kalla’s Golkar andex-President Megawati’s PDI-P, who evidentlyprefer to conduct their money politics in peace.Ironically the uproar against this appointmentwas led by none other than Adnan Buyung

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Nasution, whose own reputation as a humanrights lawyer, noted above, has suffered fromclose assocation with TNI generals, but who iscurrently serving on Yudhyono’s PresidentialAdvisory Council.[59]

And the President’s role? Yudhoyono endorsedall ten of the recommended KPK members putbefore him by the commission’s selectioncommittee, including two other notoriousfigures besides Antasari.[60] Even before thisdebacle the KPK had only managed to recoverRp50 billion (for an outlay on its own operationof Rp248 billion) in its first three years(2003-6).[61]

SBY congratulates Antasari SBY and Bagir Manan: allsmiles?

Infi ltration of corrupt personnel into

corruption-fighting bodies has already seenbribery reported at both the KPK and (asalready noted) the BPK—the Supreme AuditBoard. Even more insidious is the turf warfarethat has broken out between manifestly corruptbut ostensibly corruption fighting bodies suchas the Supreme Court and newer, less tainted,supervisory organs such as the JudicialCommission (established 2002), whoselegislative charter included supervision ofSupreme Court judges and which quicklybecame an outspoken critic of their behaviour.In August 2006, following a suit filed by theSupreme Court justices themselves, itssupervisory power was stripped by the newConstitutional Court (founded 2004), itselfstaffed by former judges and Ministry of Justicebureaucrats. The Constitutional Court followedup in December 2006 by ruling that the KPKitself would be abolished as unconstitutional inthree years time, along with the Anti-Corruption Court.

In response, according to Suara Pembaruan,Teten Masduki, head of Indonesia CorruptionWatch,

said that even though this wouldhappen in three years’ time, theConstitutional Court had ‘scored avictory for corruptors’. He [Teten]warmly praised the work of theCorruption Court which alwaysc a m e d o w n a g a i n s t t h ecorruptors…He warned that thethree-year grace period could beused by the Constitutional Court tointervene in pending cases such asthe recent high-profile case of analleged major corruptor [SupremeCourt Chief Justice] Bagir Manan.Furthermore, as is well known, theIndonesian parliament is also veryresistant to moves to combatcorruption.[62]

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The confusion and paralysis surrounding thesedecisions is guaranteed to continue. What is atstake is lucrative opportunities for spectacularextracurricular primitive accumulation on onehand and a small risk of a not very disablingdisgrace and an even smaller risk of a seriouslydisabling sanction on the other.[63]

Bagir Manan (central umbrella) on safariin Riau

Fuel on the KKN Fire

A nice illustration of elite rapacity and politicalparalysis at work can be gleaned from thevexed case of fuel subsidies as administered byPertamina. From the Suharto period to thepresent this state monopoly has been afavourite target for plunder by KKN adepts inthe company itself and in the government, thepolice and the military. Although the 2005 cutsin fuel subsidies under SBY were hailed as abreakthrough, fuel prices remain less than halfthe going world market price. With its run-down infrastructure and chronic FDI shortfall,Indonesia is unlikely to escape the status of netoil importer, which it attained in 2004 despitelarge untapped local reserves.

Fuel imports have persistently risen in recenttimes out of line with economic performance.This has been partly driven by the lucrativebusiness of illegal re-export (smuggling) of oiland oil products for sale in Singapore andelsewhere at a cost of at least a billion dollars

per annum. A large proportion of all importedfuel finds its way back to where it came from.In addition there has been outright theft on amassive scale from Pertamina storage facilitiesin East Kalimantan (US$500m worth in one 10-month opera t i on over 2004 -5 ) andelsewhere.[64] Although the fuel subsidyremains a potential budgetary black hole, thekerosene subsidy in particular is widely seen bythe poor as a direct benefit and a rare exampleof apparent government concern for them.

Daylight in Jakarta

Thus the fuel subsidy retains its politicalsensitivity. Suharto was after all brought downby the “Jakarta street” following withdrawal offuel and electricity subsidies, for all the goodthat has done the poor. SBY more than doubledkey fuel prices in October 2005, but thekerosene price was still around one third ofproduction cost at Rp 2,000 (19 US cents),while a litre of petrol was only Rp4,500. Withan estimated full-year saving of over US$2b,the subsidies were still set at Rp138 trillion(US$13.8 billion) for 2005 as the governmentcommitted to a cap on its deficit of Rp25trillion, with a compensating, but ratherderisory, subsidy to the very poor (15.5 millionfamilies—30 per cent of the total) of Rp4.8trillion—enough for monthly payments ofRp100,000 to each family for the rest of2005.[65] Two years later despite rising oilprices the government had managed to reducethe overall subsidy somewhat, partly through a

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switch from scarce kerosene to more bountifulsupplies of LNG, but $100 per barrel oil stillloomed large alongside endemic corruption anddecay at Pertamina.

Prospects for Radical Reform

Since the Indonesian elite is almost defined byopportunities for beneficial corruption, it willbe difficult to seriously tackle the problemwithout major political upheaval. MeanwhileIndonesian civil society is capable only ofinducing minor upheavals. Pro-transparencyNGOs have had considerable success inbringing corruption cases to light—for instancethe KPU (election commission) case.[66] And“specialist” anti-KKN NGOs such as IndonesiaPolice Watch have proliferated alongside themore celebrated “generalist” ones—theIndonesian Transparency Society (MasyarakatTransparansi Indonesia), ICW (IndonesiaCorruption Watch) and TransparencyInternational’s Indonesia Office. WALHI , theIndonesian Environmental Forum, an umbrellaNGO, plays a strong role in exposing thecorruption underlying environmentalvandalism.[67] Kontras (Komisi Untuk OrangHilang dan Korban Tindak Kekerasan--Commission for Disappearances and Victims ofViolence) under Munir and subsequently underUsman Hamid has played a key role in exposingthe military role in the violence which underliesso much large-scale corruption.

Munir (with poster of disappeared) Usman hamid andSuciwati (Munir’s widow)

Tremendous efforts have been made in theNGO sector, while street protest againstgovernment dilatoriness and dereliction haspersisted, together with indispensableexposure journalism in the liberal media

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(Tempo weekly in particular). But civil societyseems weaker overall now than at any timesince the onset of reformasi. There is a ratherbland if not blind optimism in some quartersabout the inevitable triumph of Indonesianreform in the long run under democraticconditions. But a more persuasive South EastAsian pattern is democratic failure followed byauthoritarian/military resurrection. Althoughthe Aceh peace agreement counts as aconsiderable success for reformasi there islittle sign of an advance to fair dealing inPapua. The military’s political comeback iscontinuing and with it popular resentment ofTNI. Disintegrasi in its twin connectedmanifestations—institutional and policy failureand social despair on one hand and furtherprovincial defection on the other—seemsdefinitely in the works. This at any rate is mytheme.

Theorising KKN

Although Indonesia has been deemed a failedor at least failing state in some quarters sincethe Asian meltdown, theory has not quite cometo terms with the peculiarities of reformasi’smost momentous failure. Two strands ofserious theorising call for our attention. FirstRoss McLeod’s persuasive depiction of Suharto-era corruption as highly akin to a familiarbusiness model—the franchise: “a better classof corruption”—as he calls it.[68] Better,perhaps, in two senses: it was closelycontrolled by one authoritative figure at theCentre and therefore less messy and pervasivethan the looser, more decentralised andcompetitive, corruption we have come to knowsince reformasi. It was also more dependableand less risky for the private sector insiders(conglomerates, large foreign firms and FirstFamily firms) and public sector insiders whobenefited directly from it. For McLeod thelatter insiders were legislatures and politicalparties, the judiciary and legal bureaucracy,the military and police, the governmentbureaucracy proper and other regulatory

agencies and the SOEs [state-ownedenterprises]:

Former President Soeharto mouldedIndonesia’s entire government sector into a‘franchise’ system that enabled companies ofhis family and cronies to extract enormouswealth from the economy. Lower levelgovernment officials were encouraged to mimicthis behaviour, and expected to pay for theprivilege… Soeharto relied on the bureaucracyto generate rents that could be harvested by‘insider’ firms and shared with the regime, andalso encouraged it to extort ‘outsider’ firms andindividuals. Continued success necessitatedincentives that would ensure strong loyalty tothe franchise and minimise internal oppositionto it. To this end, government entities were,somewhat paradoxically, provided withinsufficient funding from the budget to covertheir costs…Officials had to find ways togenerate off-budget cash inflows …[which]almost inevitably involved illegal activity ofsome kind… Any employee who tried to exposecorruption or otherwise oppose this systemcould expect, at best, to be restricted to…theoften pitifully low formal salary…The systemtherefore became strongly self-reinforcing.[69]

For the impeccably neo-classical economist,Ross McLeod, overcoming this debilitating and,by the mid-1990s, no longer “successful” (ingrowth terms) model and legacy requiresbetter policy, better law, better institutions,and better-educated and less interventionistbureaucrats. What he seems inclined tooverlook at times is the importance of Suharto-era type dr ivers of the post Suhartosystem—for instance in attributing the $50billion post-1997 losses to the government inthe banking system to “egregious policymistakes”.[70] This overlooks the powerful selfinterest of conglomerate cronies and bankofficials in the spectacular opportunities forself-enrichment provided by bank depositguarantees and a corrupt judiciary.

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Commenting on the fact that the new bankinglegislation on a Deposit Guarantee Institution,passed in 2004 and purporting to address thisproblem, utterly fai ls to insulate thegovernment and the public from the “hazard”of another 1997-8 style meltdown, McLeodfinds it “astonishing…that so little has beenlearned from the recent banking collapse”.[71]What Bank Indonesia officials really learnt fromthat collapse was that they could safely pocketmillions of dollars in kickbacks by conniving atillegal lending in the billions of dollars tocorrupt conglomerates and their crony banks.If there is going to be another meltdown, whichthe new law makes very possible if not likely,they are ready to do it all over again. We mightnote here that these officials have been caughtusing bank funds to pay off members of theparliament’s Fiscal Commission and ensuretheir own control over banking legislation.[72]

Ross McLeod of course acknowledges thevalidity of the “rent-seeking”, or “rentharvesting”, as he prefers to call it, approach tograsping the KKN problem in the Suhartoperiod. Its outstanding practitioners in thepost-Suharto era are two seasoned politicaleconomists with a Marxising bent, RichardRobison and Vedi Hadiz. [73] These authors dotend, however, in my view, to blame what Iwould call the neo-authoritarian state,including the military, rather too little for thefailure of reform since Suharto, and are undulydismissive of post-Suharto civil society-- weakas it has proved to be so far.

Civil society unchained [they say] provedneither to be uniformly middle class, norprogress i ve , nor c i v i l…. [wh ich i s ]understandable in the context of the pervasiveapparatus of repressive, corporatist, andideological controls applied so successfully bythe [previous?] regime to every facet of socialand political life…That no [sic] progressive civilsociety emerged in post Soeharto Indonesiamay be seen, ironically, as the consequence ofauthoritarian rule being replaced with an

increasingly fragmented, ineffective and diffuseform of government unable to guarantee civilrights.[74]

The repressive controls of the old New Orderare far from being fully relaxed, as Papuans,Acehnese and many other victims of TNI andpolice brutality (and corruption) will attest.Indeed one kind of KKN, TNI’s, is completelyoff-limits for the potentially reforming, semi-democratised and largely but far from whollycivilianised post-Suharto state. It is alreadyclear that TNI’s law-mandated shedding of itsbisnis and (closely related) territorial functionis going to be a sham.[75] The problem for thewider reform effort is that civilian corruptorsand reformers alike face the prospect of findingthemselves in a weaker (and poorer!) politicalposition vis a vis the army as a consequence ofreform which excludes the TNI business,enforcement and corruption empire, of whichthe Suharto billions are an important buttress.Acquiescing in military immunity from reformand impunity from legal sanction preemptivelysabotages the reform effort .

As for civil society, state violence andintimidation have the same potency as beforeunder Suharto to tame a civil society, whichextends well beyond that neo-liberal reformingmiddle class which Robison and Hadiz perhapsrightly regard as a feeble force. Thegovernment and parliament in Jakarta and thepolice, judiciary and legal bureaucracy are farfrom having any straightforward commitmentto upholding civil rights or even elementaryhonesty in state operations.[76] “Fragmented,diffuse and ineffective” government in certainareas is exactly what upholds the current KKNregime as it continues to divert and consolidatethe diversion of bi l l ions of dol lars toundeserving pockets. Those of the bulgingpockets are all too aware that reformasi withfocus and teeth is a step into a dangerousunknown. Reformasi is not beyond their ability,just in conflict with their interests—in the shortto medium term at least.[77]

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What, then, is to be done? A semi-bankrupt andpolitically ailing Indonesia remains subject topowerful tendencies for disintegrasi, bothseparatis and koruptor driven, and boosted ifanything for the long run by the nationalist andmilitarist turn of the political class since theyear 2000. Indonesia remains peculiarlyvulnerable to international economic andpolitical forces and pressure, for good or ill.[78]But it’s not clear that reform will be served onbalance by these pressures, especially since theUnited States resumed full relations with TNIon transparently false assumptions in 2005-6and Australia, which has followed suit,continues to indulge military impunity andrepression on TNI’s last open frontier in Papua,especially.[79] Nevertheless, internationalcampaigns and policies designed to bringIndonesia’s grand foreign corporate corruptorsin the resource sector to heel, extraditeindicted cronies who have fled abroad, restraingovernmental and consumer collusion in theillegal log trade and bring untouchable criminalgenerals before international tribunals all havea place in the struggle with Indo KKN.

Meanwhile a last word in justification of mytitle: KKN ruins everything?Here is a check list for assessing ongoingsocial, political, economic and environmentaldamage from corruption in Indonesia:

People’s wellbeing

Despite 5 per cent growth Indonesian povertycontinues to climb faster than population onmany estimates. In 2006 after the fuel priceshock official Indonesia had it at 18 per cent ofthe population. But according to TheEconomist, supporting dissident opinions incivil society, it was double this (80 millionpeople) if a per capita income of less than $1per day is used as the criterion.[80]

Democratic politics

Reform politics and government action on KKN

have been comprehensively trumped by moneypolitics and associated “transactions”. Perhapsthe leading exponent of transactionism ingovernment (and now, at $5.4 bill ion,Indonesia’s richest man and first pribumi[native Indonesian] to be so) is Aburizal Bakrie,Yudhoyono’s Coordinating Minister for People’sWelfare. Bakrie, national avatar of governmentby confl ict of interest, has not let hisconglomerate’s windfall from escalating coalprices endanger the parsimony of Bakrie &Brothers payouts to the victims of thecatastrophic mudflow triggered after carelessdrilling by a Bakrie natural gas explorationsubsidiary in Sidoarjo, East Java, on 28 May2006. Nearly two years on, with damageestimated at $4.9 billion and counting, Bakriethe conglomerate remains in charge of allpayouts to victims; the government is usingstate funds to restore infrastructure, and ‘thestate agency now overseeing the disaster isborrowing emergency funds managed by theCoordinating Minister for People’s Welfare,Aburizal Bakrie.’ [81]

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Aburizal Bakrie, and…

his mudflow: Sidorarjo

Government budgets and developmentplanning

Interest and capital repayment on “criminaldebt” continue to eclipse health, education andinfrastructure spending.

Economic resilience and investmentprospects

Banking “reform” almost guarantees a re-run ofthe 1997-8 fiscal collapse in troubled times.Infrastructure continues to decay and crumblefor lack of corruption-averse foreign anddomestic investment.

Government bureaucracy and SOEs

Boasting a bureaucracy which thrives on andvia black budgets, used among other things forsystematic bribery of politicians, a seriousreform effort to challenge KKN has barelybegun after 10 years of reformasi. State OwnedEnterprises (SOEs), including Pertamina (oiland gas production and distribution), PLN (thestate electricity monopoly), Bulog (the statelogistics agency—monopolising the rice trade)remain cash cows for their own executives, forpoliticians and political parties and forcorruptors (and thieves) in the private sector.Garuda is the state airline on which it is unsafenot only to fly but to eat lunch and which isbarred from landing in Europe. Corruption--anddomination by the state intel l igenceorganizat ion —is a t the hear t o f i t sproblems.[82]

Decentralisation

Decentralisation of government powers andbudgeting to provinces and regencies has seena new class of prosperous public and privatesector corruptors appear at the local level. InPapua any political hopes that specialautonomy (2001) would bring health, educationand infrastructure benefits to the people andappease the independence movement havefaded fast. Representative tribal andcommunity organisations are calling for the“return” of otsus (otonomi khusus) to Jakarta asspecial autonomy revenues are systematicallyplundered by corrupt provincial governors andbupati bupati and local military commands.[83]

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The justice sector (including its dedicatedcorruption-fighting instrumentalities)The corrupted justice sector generates at leastone or two major national scandals everyyear—most often involving Tommy Suharto.None seems capable of reversing the drift to“democratised” kleptocracy. As I go to pressAdelin Lis, perhaps the most notorious ofIndonesia’s timber barons (for, among otherthings, years of logging inside a national parkin North Sumatra) and extradited from China in2006, has recently disappeared again.Following a trial fiasco in Medan and a“bungled” (capably bungled?) police attempt tore-arrest him, the Supreme Court, the JudicialCommission, the Anti-Corruption Commission,the Attorney General’s Office and the police setoff on a panicky wild goose chase to find out (orperhaps cover up) what or who wentwrong.[84]

The environment

Adelin Lis, as a prime symbol of Indonesia’spermanently out-of-control logging andplantation sectors and dysfunctional justicesector, can be congratulated for Indonesia’sunique and already disastrous contribution toplanetary warming. The relentless drying outand burning of Indonesia’s vast peat forestsunder the logging and oil palm onslaught hascatapulted the country to Number 3 worldranking in greenhouse emissions, just behindChina and the US.[85] And people in Sumatraand Java face a rising incidence of devastatingfloods and landslides from catchment areasdenuded by illegal land development andlogging.

Military professionalism and civiliancontrol

As a bastion of corruption and impunity whichhas failed over two generations to construct anexternal defence capacity, TNI continues toprepare principally for internal repression andto practice in addition bisnis and extortion on a

massive and virtually unregulated scale. Theoften-serving current civilian defence ministerand former University of Indonesia professor,Juwono Sudarsono, never hesitates to offerapologetics for the permanent scandal that thisentails. Companies operating within TNI“foundations”, which should be in private orgovernment hands and make no contribution toTNI ’s own defence capacity or soldiers’welfare, remain unprofitable cash cows bywhich general officers enrich themselves.[86]The close TNI links to the former First Familyare politically deplorable and dangerous forIndonesia’s future, as is an inadequate officialdefence budget subject to arbitrary weaponand supply purchasing arrangements and ahigh incidence of kickbacks to the upperechelons of TNI.[87]

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Adelin Lis

Sumatra: Logging—Before…

and After

Conclusion

The main burden of the struggle againstcorruption must lie with Indonesia’s insultedand injured and their intellectual andconscience-driven supporters. The handful ofgenuine and the much larger number of fairweather reformers inside the elite who can bepropelled into action by effective strugglesemanating from civil society and the street willplay a role. It looks like a very long haul, withnational politics, parties and electioncampaigns seemingly impotent to initiate realreform. But there have in fact been littlevictories along the path of net failure so far.The array of new anti-KKN legislation and

institutions is impressive and available for agenuine reform movement, albeit largelynullified so far by the judicial-legal-policemafia. Moreover the setbacks for the military inEast Timor (1999) and Aceh (2005)—andpotentially in Papua—should also be noted.

Disintegrasi by provincial defection is viewedas a calamity by definition for the most part inJakarta, but the impulse for defection arisesfrom unconscionable and (in Papua’s case)continuing misrule, mainly by the military. Thesolution for it is not more repression but self-determination. Indonesia as a polity, not tomention its international reputation, is betteroff with East Timor independent and the GAMin Aceh able to vie for power peacefully. Withmilitarism and corruption rampant in Papuaand special autonomy comprehensivelydiscredited, there is now an Indonesian as wellas a Papuan case for independence:disintegrasi propinsi could paradoxically helpmitigate disintegrasi sosial in the republic as awhole.[88]) Any turn of the political wheel orreform which pushes back the TNI empire ofimpunity in business, extortion and repressionmust be accounted a plus for the anti-corruption struggle. This struggle in turn is thekey to the full civilianizing and, ultimately,civilizing of Indonesian politics.

The death of Suharto after a lingering illnesswhich ended on 27 January 2008 and transfixedthe (partly Suharto-owned) Indonesiantelevision channels for a month beforehand,was a moment of truth for the Indonesianpolitical class and especially its President.Yudhoyono, scheduled to officiate at a week-long United Nations Convention AgainstCorruption conference in Bali, chose instead topreside over Suharto’s funeral in Solo.Indonesia has signed up to the UN/World BankStolen Asset Recovery (StAR) Initiative, buthere was its “anti-corruption President”jettisoning a conference to give teeth to theinitiative and, instead, not only celebratingIndonesia’s, and the world’s, biggest corruptor

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($15-35 billion by Transparency International’sestimate) as a national hero, but forcing theBali conference to observe a minute’s silencefor the fallen grand larcenist and executioner ofhis people.[89] As I have asked elsewhere:

Should we sympathise with the ex LieutenantGeneral President? He himself served in[occupied] East Timor and is married to thedaughter of the most notorious armyexecutioner in [Suharto’s] “anti-communist”massacres of 1965-66, Colonel, later General,Sarwo Edhie Wibowo.[90]

Evidently, generational change is one key for aserious approach to the KKN problem and itsdeep structures.[91]

Peter King is a research associate inGovernment and International Relations andconvener of the West Papua Project in theCentre for Peace and Confict Studies(http://www.arts.usyd.edu.au/centres/cpacs/wpp.htm) (CPACS) at the University of Sydney.His recent publications include West Papua andIndonesia since Suharto: Independence,A u t o n o m y o r C h a o s ?(http://www.amazon.com/West-Papua-Indonesia- S i n c e -Suharto/dp/0868406767/ref=sr_1_1?ie=UTF8&s=books&qid=1204556619&sr=8-1) (UNSWPress, 2004) and (with John Wing) Genocide inWest Papua? (CPACS and ELSHAM Jayapura,August 2005). Research began while the authorwas an affiliated fellow at IIAS (InternationalInstitute for Asian Studies), Leiden, in 2005.

This article, an expanded, updated and recastversion of ‘Korupsi dan Disintegrasi inIndonesia’ in Peter King and Lily ZubaidahRahim, eds, Asia This Century: ContestedPolities and Mentalities: a Special Issue ofPolicy and Society, Vol 25, No 4, December2006 is written for Japan Focus. Posted atJapan Focus on March 3, 2008.

Notes

[50] ‘Sharing Windfalls from the Sea’, Tempo,12 December 2006.In Tempo’s words: ‘Non-budgetary funds[based partly on a 1 per cent “levy” on regularfunding] from the Department of MaritimeAffairs flowed [in 2002-4] to many namesincluding ministers, political parties, and evenpresidential hopefuls.’[51] ‘The March from Banteng Square’, Tempo,21-27 August 2007.[52] This seems an appropriate place to lamentthe apparent failure of the jeering classes inJakarta to complete Gus Dur’s favouritereformasi joke about the Presidency:

The first president (Sukarno) wasmad about women (gila wanita)Suharto was mad about money(gila harta)Habibie was plain mad (gila saja)Gus Dur made everybody mad(membuat orang lain gila)I propose (for discussion):Megawati was mad about generals(except Susilo)Susilo is mad about generalities

[53] Tulus Wijanarko, et al, ‘Far reaching KPUKickbacks’, Antara, No 37, V, 17 May 2005, inAsiaviews, 21 May 2005.[54] ‘Budget Brokers Uncovered in Senayan’,Tempo, 20 September 2005.[55] Imam Cahyono, ‘Does the PKS stand forjustice and prosperity?’, Jakarta Post, 16November 2005; Santi W.E. Soekanto, ‘TheWestern media and Prosperous Justice Party’,Jakarta Post, 24 June 2005.[56] High-profile convicts in Cipinang gaol,Jakarta, include former chief of the statelogistics agency (Bulog), Beddu Amang, formerMinister of Trade and Industry, RahardiRamelan, business tycoon Probosutedjo (half-brother of Suharto), and former Aceh governorAbdullah Puteh (for a kickback of severalhundred thousand dollars in the purchase of a

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Russian helicopter for tsunami relief.) ThePresident’s Tim Task Tipikor had a target toresolve 16 graft cases at ministries and state-owned companies, but after a year the teamonly managed to resolve one. This involved hajfunds and a mere Rp700 billion skimmed byofficials at the Ministry of Religious Affairs.The AGO’s 6000 prosecutors claimed to resolve450 corruption cases in the first 10 months of2006, with 15 suspended due to lack ofevidence. But the cases, mostly in regionaladministration, were petty, apart from a badloan case at the state-controlled Bank Mandiri,with state losses of a derisory Rp19 million.‘Mixed results in government’s anticorruptioncampaign’, Indonesia Corruption Watch, Berita,6 June 2006.[57] ‘Country Governance Assessment Report:Republic of Indonesia’, Asian DevelopmentBank, Manila, 2004, p 66. The World Bankstudy, Combating Corruption in Indonesia, hasa revealing section on careers for sale in thepolice, with the resulting market driven by therelative “wetness” of job openings. The Bank’spoverty reduction experts suggest that, as withTNI, the official police budget covers onlyabout 30 per cent of actual expenditure.(p 85)Unfortunately the Bank team decided to leavethe military role in corruption for another day(p iv)—rather like doing Hamlet without thePrince.[58] ‘Procurement bribery costs the countryRp36t yearly’, Jakarta Post, 13 November 2007.[59] ‘Adnan Buyung Nasution: KPK LeaderElection Backed by Corruptors’, Tempo, 7December 2007Antasari as Deputy Attorney General forGeneral Crimes was notorious for prosecutionfailings in cases against Suharto pere and forinvolvement in the prison escape of Suhartofils, Tommy, when charged with a judge’smurder. The Gadjah Mada University Anti-corruption Study Center lowered its flag to halfmast on news of the appointment, while DennyIndrayana of GM said that the KPK underAntasari “will make the public hopeless”.Ridwan Max Sijabat, ‘Controversial prosecutor

selected as KPK chief’, Jakarta Post, 6December 2007.[60] According to Tempo, Antasari asprosecutor also allegedly did deals in the BankIndonesia Liquidity Assistance case and withteak thieves when posted in Sulawesi--androutinely bribed reporters. He was evensuspected of bribing a PDI-P official to securethe anti-corruption commission (KPK) job. Thecandidacy of Amien Sunaryadi, vice chairmanand commissioner of the KPK and civil society’sunanimous choice for the chairmanship, wasswamped by Golkar/PDI-P bloc voting inCommision III of the parliament. The heavyrepresentat ion of former pol ice andprosecutors in the new KPK was promptlydeplored by Teten Masduki of IndonesianCorruption Watch. ‘Antasari Takes CenterStage’, Tempo, 11-17 December 2007. Tempohad already chosen Amien as Indonesia’s“public figure of 2007”: ‘The Select Seven’,Tempo, 25-31 December 2007.[61] ‘Will the Passionate Please Apply?’,Tempo, 3-9 July 2007.[62] Suara Pembaruan [Voice of Reform], 21December 2006.[63] For a case study of the standoff at thejudicial commanding heights, see Simon Butt,‘The Constitutional Court’s Decision in theDispute between the Supreme Court and theJudicial Commission: Banishing JudicialAccountability?’ in Ross H. McLeod andAndrew J. MacIntyre, Indonesia: Democracyand the Promise of Good Governance, Instituteof Southeast Asian Studies, Singapore, 2007.[64] Bill Guerin, ‘Subsidy cut to fuel the fire inIndonesia’, Asia Times Online, 28 September2005. See also ‘Indonesia's president summonsPertamina officials over fuel smuggling’,Agence France Press, 9 September 2005.[65] Guerin, ibid; Shawn Donnan, ‘Indonesiagives oil price shock’, Financial Times, 3October 2005[66] A coalition of NGOs blew the whistle onKPU kickbacks just before the election of 2004.They have continued to criticise the KPK(Corruption Eradication Commission) for failing

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to charge all the KPU commissioners in thecase. See chronology in ‘The Heat is On’,Tempo, 2 May 2005.[67] For instance, the Malaysian Chineseplantation companies which orchestrate manyof the perennial asphyxiating forest and peatfires associated with new palm oil development(and illegal logging) in Sumatra apparentlyenjoy complete legal impunity. See ‘IsIndonesia the third largest greenhouse gaspolluter? Burning of peatlands fuels globalwarming’, mongabay.com, 3 November 2006.[68] Ross H McLeod, ‘Soeharto’s Indonesia: aBetter Class of Corruption’, Agenda, Vol 7, No2, 2000[69] Ross H. McLeod, ‘Buying Support forCorruption with Inadequate Budgets and LowSalaries’, Paper presented in Panel 9: The Stateand Illegality in Indonesia, EUROSEASConference, Naples, 12-15 September 2007, p1[70] Ibid, p 24. Ross McLeod responds (email,11 January 2008): Elsewhere I have referred tothis episode [failure to repay conglomeratedebt] as one of "grand larceny":

‘Interestingly enough, if thegovernment were to move muchmore aggressively to force therepayment o f debts by theconglomerates, this would alsohelp it to overcome resistance tothe removal of subsidies. Much ofthis resistance is understandable,given the fact that members of thegeneral public are well aware thatthey are having to bear a heavyfinancial burden as a result offailure of the banking system…andyet the biggest defaulters seemh a r d l y t o b e s u f f e r i n g a tall...[M]any…seem to have gottenaway with grand larceny… Untilnow…no bank owner or managerhas been punished for violating theregulations on excessive lending toaffiliated companies, so there is

little pressure to repay loans, evenwhen the financial capacity to doso exists.’ (Unpublished McLeodreport, 2001).

[71] Ross H. McLeod, ‘Indonesia’s New DepositGuarantee Law’, Bulletin of IndonesianEconomic Studies, Vol. 42, No. 1, 2006. p 67.[72] ‘BI Deputy Governor Questioned by KPK’,Tempo, 29 October, 2007.[73] See Mushtaq H Khan and Jomo KwameSundaram (eds), Rents, Rent-Seeking andEconomic Development: Theory and Evidencein Asia, Cambridge University Press,Cambridge, 2000. The Indonesia chapter byAndrew McIntyre discusses off-budgetbehaviour under Suharto.[74] Richard Robison and Vedi Hadiz,Reorganising Power in Indonesia: The Politicsof Oligarchy in an Age of Markets, RoutledgeCurzon, New York, 2004, p 31[75] ‘Too High a Price: The Human Rights Costof the Indonesian Military’s EconomicActivities’, Human Rights Watch, Vol 18, No5(C), June 2006.[76] ‘Protest and Punishment: PoliticalPrisoners in Papua’, Human Rights Watch, Vol19, No 4 (C ), February 2007.[77] An outstanding short survey ofcontemporary KKN which brings out this pointis Gary Goodpaster, ‘Reflections on Corruptionin Indonesia’ in Tim Lindsey and Howard Dick(eds), Corruption in Asia: Rethinking theGovernance Paradigm, Federation Press,Sydney, nd [2001?].[78] Ross H. McLeod, ‘Indonesia’s vulnerabilityto a new balance of payments and bankingcrisis’, paper presented in Panel 16: Ten Yearsafter the Pacific Asia Crisis, EUROSEASConference, Naples, 12-15 September 2007.[79] Jim Elmslie with Peter King and JakeLynch, Blundering In? The Australia-Indonesiasecurity treaty and the humanitarian crisis inWest Papua, Centre for Peace and ConflictStudies, University of Sydney, March 2007.[80] ‘Poverty in Indonesia: Always with them’,The Economist, 14 September 2006. According

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to this article, ‘the government's definition ofpoverty—less money than is needed to afford adiet of 2,100 calories a day—is 152,847 rupiah($16.80) a month’—that is, about 50 cents aday. For a reading of the impact of fuel andother fluctuating prices on the actual poor ofreal Jakarta streets--including the braindevelopment (not to mention the education) ofchildren, see Allan Nairn, ‘Economic Indicator’,blogspot, 14 January 2008. Allan points out thata poor family can be quickly ruined financiallywhen a son’s jail sentence triggers peremptorydemands for bribes to ensure survival rationsand shelter for him. ‘Duduk - Duduk, Ngobrol -Ngobrol. Sitting Around Talking, in Indonesia’,blogspot,8 November 2007.[81] Jim Schiller, ‘Un-natural disaster’, InsideIndonesia, 91, January-March 2008[82] Ben Sandilands, ‘The Yogyakarta crash:Garuda, not the pilots, are to blame’,Crikey.com, 23 October 2007.[83] Agus A Alua, ‘Implementation of theSpecial Autonomy Law in West Papua,Indonesia’, Paper presented at the IndonesiaSolidarity/ West Papua Project Conference atSydney University, 9-10 August 2007 [availableonline]Agus is chairman of Papua’s new (and uniquein Indonesia) “upper house”, the all-PapuanMRP (Majelis Rakyat Papua) and generalsecretary (still) of the non-violent independencemovement ’s PDP (Pres id ium DewanPapua—Papua Council Presidium).[84] ‘A Comedy of Unforced Errors’, Tempo,November 26-December 3, 2007; ‘The TimberKing Escapes—Again’, Tempo, 20-26 November2007; ‘Verdict Loopholes’, Tempo, 13-19November 2007. Adelin was accused of causingRp32 trillion in state losses.[85] Stephen Fitzpatrick, ‘Smoke shrouds green

scheme’ and ‘The biofuel that spel lsannihilation for Indonesia's wilderness’, TheAustralian, 24 November, 2007.[86] ‘Indonesia Refuses To Have Timika andEast Timor Cases as a Condition of ResumingIndonesia-US Military Cooperation’, Tempo, 23November 2004. Sudarsono’s non-ministerialattitude to TNI can be gleaned from‘Things willnot improve unless we have a strongleadership', Address to the Indonesian BusinessForum of Shanghai, 19 November 2002[87] ‘Too High a Price: The Human Rights Costof the Indonesian Military’s EconomicActivities’, Part III[88] The disintegrative tendencies unhappilyapparent in East Timor since 1999 can beattributed not only to inexperienced leadershipand its Indonesian legacy but to Australia’sdeplorable post-liberation role as resource thiefand impatient, self-centered peace-keeper: inshort, regional Big Brother. See Paul Cleary,Shakedown: Australia's Grab For Timor Oil,Allen & Unwin, Sydney, 2007[89] Mark Forbes, ‘Suharto casts shadow overgraft meeting’, Sydney Morning Herald, 2February 2008[90] Peter King, West Papua and Indonesia inthe 21st Century: Resi l ient Minnow?Implacable Minotaur?’ Paper presented toPanel 34, Enduring Conflicts and EthnicResilience, EUROSEAS Conference, Naples,12-14 September 2007.[91] In the context of generational change it isperhaps a small consolation that the US$1.4billion civil case for misuse of funds inSuharto’s Supersemar “charitable” foundation,supposedly devoted to education programs butfreely available to family and cronies, will nowtarget the six Suharto children. See StephenFitzpatrick, ‘Suharto children's assets facingfreeze’, The Australian, 2 February 2008.