10TH ASOSAI RESEARCH ON FRAUD & MONEY LAUNDERING

PART IITHE AUDIT BOARD OF

INDONESIA

THE RESEARCH1. Respondents 157 persons from 16 agencies : 8

government agencies, National Police Department, Attorney General Office, Commission for Corruption Eradication, Financial Intelligent Unit, 1 state-owned bank, 3 state owned companies

2. Time 3 weeks (March to April 2013) : distribution, collection, process

Results – FindingsCorruption1. Level of corruption

a. Respondents thought Corruption was intolerable, very serious, pervasive, and increasingly occurred in recent years;

b. Global Integrity Index and Corruption Perception Index fairly reflected the reality of Corruption in Indonesia ;

c. Corruptions were mostly predictable and It was most likely to happen within public entities.

 

Results – FindingsCorruption2. Types of Corruption

a. The most types of corruption based on prevalence were Grand corruption, petty corruption, and corruption at enterprise level.;

b. The most common types of corruption were Abuse of power and Bribery.

c. The highest probability were Petty Corruption and Grand Corruption while the parties most likely involved were employees, supervisors, and high-level management;

 

Results – FindingsCorruption

3. Sectors vulnerable to Corruptiona.Law enforcement agencies and tax

collections were considered the most vulnerable sectors;

b.At government level, areas possessing greatest possibility to occur were procurement contracts and revenue (tax) collection.

Results – FindingsCorruption

4. The use of corruption’s moneyThe monies gained from corruption were mostly used to purchase assets.

Results – FindingsCorruption

5.Causes of Corruption a. The causes of Corruptions

were the weak and lack of anti-corruption legal system;

b. The main cause of Grand Corruption was Patronage-Client System,.

Results – FindingsCorruption5.Causes of Corruption (cont’d)

c. Weak accounting practices, including lack of timely financial management;

d. Corruption during budget formulation is primarily grand or political corruption and is influenced by the distribution of budgetary powers between the executive and the legislature.

Results – FindingsCorruption

5.Causes of Corruption (contd)e. Unchecked and excessive

executive discretion in the budget process;

f. Public Financial Management System weakness during budget formulation.

Results – FindingsCorruption6.Anti corruption efforts

a. Steps taken by the government were considered weak;

b. The role of whistle blower was important in reporting corruption;

c. It was effective to lodge complaints of corruption.

 

Results – FindingsCorruption

7.Consequences of Corruption Corruption was considered to give serious impact to government’s budget as well as society.

Results – FindingsMoney Laundering1.The degree of seriousness of

money laundering in Indonesiaa. Currently money laundering is in its

serious condition.b. The prevalence rate of money

laundering tends to increase and getting more sophisticated over the years.

Results – FindingsMoney Laundering2.The main pattern of money

laundering in Indonesiaa. Money laundering occurs both in

public and private sectors. b. The most vulnerable sector for

money laundering is real estate.

Results – FindingsMoney Laundering2.The main pattern of money

laundering in Indonesia (contd)c. The wealth obtained from corruption is

the main source for money laundering, with approximate amount of more than USD 50M.

d. The most common method used for money laundering is by using real estate, business and cash transactions.

Results – FindingsMoney Laundering

3.Causes of money launderingThe main factors causing money laundering in Indonesia are Insufficient supervision/control system and the insufficient legal system for anti money laundering.

Results – FindingsMoney Laundering4. Negative consequences of money

laundering a. Increase the number of crime and

corruptionb. Reduce the amount of government’s tax

revenue and weaken the government’s control over the economy.

c. Very seriously impact economic and social condition, national security, Indonesia’s international reputation, and economic reform.

Thank You..