Joanna Macmillan, Reformasi and Public Corruption: Why Indonesia?s Anti-corruption Agency Strategy Should Be Reformed to Effectively Combat Public Corruption

• Citation: Vol. 25 No. 1
• Publication year: 2010

REFORMASI AND PUBLIC CORRUPTION: WHY INDONESIA’S ANTI-CORRUPTION AGENCY

STRATEGY SHOULD BE REFORMED TO EFFECTIVELY

COMBAT PUBLIC CORRUPTION

INTRODUCTION: INDONESIA’S SOLUTION TO PUBLIC CORRUPTION BY THE

ESTABLISHMENT OF A CENTRALIZED ANTI-CORRUPTION AGENCY

Indonesia was once at the “forefront of Asia’s economic miracle.”1 Under President Suharto, Indonesia experienced “impressive gains in overall economic growth.”2 However, poverty remained pervasive, and corruption had “grown along with the economy.”3 In 1998, Transparency International’s

Corruption Perceptions Index (“CPI”)4 ranked Indonesia as number eighty out of eighty-five countries,5 placing the nation as one of the most corrupt

countries in the world.6 Economic distortions caused by public corruption in

Indonesia were a major factor contributing to the Asian Financial Crisis of 1998, leading to massive riots7 and a “total meltdown of governance.”8

1. Asia’s Economic Flu, PBS (Jan. 9, 1998), http://www.pbs.org/newshour/bb/asia/jan-june98/ indonesia_1-9.html.

2. Donald K. Emmerson, No Miracle, No Mirage, WILSON Q., Spring 1981, at 125, 126.

3. Id.

4. The CPI “measures the perceived level of public-sector corruption in 180 countries and territories around the world. The CPI is a ‘survey of surveys,’ based on 13 different expert and business surveys.”

   Corruption Perceptions Index 2009, TRANSPARENCY INT’L, http://www.transparency.org/policy_research/ surveys_indices/cpi/2009 (last visited Jan. 29, 2011).

5. The Corruption Perceptions Index (1998), TRANSPARENCY INT’L, http://www.transparency.org/

   policy_research/surveys_indices/cpi/previous_cpi/1998 (last visited Jan. 29, 2011). The CPI rankings show how one country compares to the others. See id. The lower the numerical rank, the less perceived corruption takes place in that particular state. See id.

6. Fiona Robertson-Snape, Corruption, Collusion and Nepotism in Indonesia, 20 THIRD WORLD Q. 589,

   589 (1999).

7. Philip Shenon, THE SUHARTO BILLIONS: A Special Report; For Asian Nation’s First Family, Financial Empire Is in Peril, N.Y. TIMES (Jan. 16, 1998), http://www.nytimes.com/1998/01/16/business/ suharto-billions-special-report-for-asian-nation-s-first-family-financial-empire.html; Richard Robison, Corruption, Collusion and Nepotism After Suharto: Indonesia’s Past or Future?, IIAS NEWSL. (Int’l Inst. for

   Asian Stud., Leiden, Neth.), Spring 2006, at 13, 13.

8. Indonesia’s Riots, PBS: PUB. BROADCASTING SERVICE (May 14, 1998), http://www.pbs.org/newshour/ bb/asia/jan-june98/indonesia_5-14.html.

   After 1998, Indonesia launched into a period of reform, commonly referred to as Reformasi.9 Integral to the concept of Indonesia’s reform agenda is the eradication of corruption. In hopes of duplicating Hong Kong’s successful corruption-fighting strategy,10 Indonesia established the Komisi Permberantasan Korupsi (Corruption Eradication Commission—“KPK”), a centralized anti-corruption agency.11 Over a seven-year time span, this centralized anti-corruption agency has investigated, prosecuted, and achieved a 100% conviction rate in eighty-six cases of bribery and graft related to government procurements and budgets.12 The KPK has become internationally acclaimed—high-ranking businessmen, bureaucrats, bankers, governors, diplomats, lawmakers, prosecutors, police officials, and other previously “untouchable” members of Indonesian society have “been made to discover a phenomenon new to [Indonesia]: the perp walk.”13

   
   

   As of 2011, Indonesia stands at a critical juncture. Although the KPK has attained some high profile convictions,14 Indonesia’s problems with public corruption are still pervasive. For instance, the CPI ranked Indonesia 111 out of 180 countries, evidencing that Indonesia still has room for improvement.15 Curbing public corruption is imperative because it taxes the poor, increases macroeconomic risks, jeopardizes financial stability, compromises law and order,16 and deters foreign investment,17 which is critical for a poor developing country such as Indonesia. Although anti-corruption agencies like the KPK are

   
   

9. Reformasi means “reform” in Indonesia. MARY P. CALLAHAN, CTR. FOR CIVIL-MILITARY RELATIONS NAVAL POSTGRADUATE SCH., CIVIL MILITARY RELATIONS IN INDONESIA: REFORMASI AND BEYOND 5 (1999).

   The era of Reformasi refers to the time after Suharto’s reign, and it is still ongoing. See Stephen Coates, 12 Years On, How Sick Is Indonesia’s Reformasi?, JAKARTA GLOBE (May 22, 2010), http://www.thejakartaglobe. com/home/12-years-on-how-sick-is-indonesias-Reformasi/376453. See generally WORLD BANK, COMBATING CORRUPTION IN INDONESIA: ENHANCING ACCOUNTABILITY FOR DEVELOPMENT (2003), available at http://

   siteresources.worldbank.org/INTINDONESIA/Resources/Publication/03-Publication/Combating+Corruption+ in+Indonesia-Oct15.pdf (discussing accountability as a means of challenging corruption in Indonesia).

10. See JOHN R. HEILBRUNN, ANTI-CORRUPTION COMMISSIONS, PANACEA OR REAL MEDICINE TO FIGHT

    CORRUPTION 3–5 (2004), available at http://siteresources.worldbank.org/WBI/Resources/wbi37234Heilbrunn. pdf.

11. See infra text accompanying note 123; KPK: The Corruption Eradication Commission of Indonesia,

    HONG KONG ICAC, http://www.icac.org.hk/newsl/issue22eng/button3.htm (last visited Jan. 29, 2011).

12. Norimitsu Onishi, Corruption Fighters Rouse Resistance in Indonesia, N.Y. TIMES (July 25, 2009), http://www.nytimes.com/2009/07/26/world/asia/26indo.html.

13. Id.

14. Id.

15. Corruption Perceptions Index 2009, supra note 4.

16. WORLD BANK, supra note 9, at ii.

17. See Christopher J. Robertson & Andrew Watson, Corruption and Change: The Impact of Foreign Direct Investment, 25 STRATEGIC MGMT. J. 385, 385 (2004) (analyzing the relationship between corruption and foreign investment).

    
    

    theoretically an “efficient tool”18 for combating corruption, research has shown that they fail to “reduce public sector venality in all but a few special circumstances.”19 They are also expensive to implement.20 Because an anti- corruption agency inherently carries a high probability of failure, financially

    strained countries like Indonesia should proceed with much caution when implementing this strategy.

    
    

    Because of Indonesia’s ratification of the United Nations Convention Against Corruption (“UNCAC”), Indonesia is required to have some sort of anti-corruption agency strategy.21 Although anti-corruption agencies carry a high risk of failure, countries can increase the anti-corruption agency’s

    possibility of success by solidifying corruption laws, strengthening its political will, and improving cross-agency cooperation.22 Additionally, there are different types of anti-corruption agency strategies, and these strategies are not created equal.23 Some anti-corruption agencies focus solely on preventive activities, whereas others encompass some combination of preventive, prosecutorial, and investigative activities.24 This Comment evaluates the KPK’s current strategy and determines that the agency’s framework needs to be revised to improve Indonesia’s possibility of successful corruption reform.

    
    

    Part I examines Indonesia’s historical problems with corruption and establishes why eradicating corruption is imperative to Indonesia’s continued economic growth and political stability. It also establishes that Indonesia’s traditional framework failed to curb public corruption, evidencing a need for a coordinating body entrusted with the sole function of curbing public corruption. Part II discusses anti-corruption agencies, with particular focus on two different anti-corruption agency strategies—the centralized and multi- agency approach—in the context of two countries: the United States and Hong Kong. Afterwards, the KPK’s approach is discussed in further detail. Part III identifies areas Indonesia needs to improve upon, regardless of whether a multi-agency or centralized strategy is adopted, to increase the probability of its anti-corruption agency’s success. Part IV establishes that the KPK should

    
    

18. U.N. Office for Drug Control and Crime Prevention, Global Programme Against Corruption: An Outline for Action 9 (Feb. 1999), http://www.uncjin.org/CICP/Corrupti_e.pdf.

19. HEILBRUNN, supra note 10, at 2.

20. Id. at 10.

21. United Nations Convention Against Corruption, G.A. Res. 58/4, A/RES/58/4 (Oct. 31, 2003) [hereinafter UNCAC].

22. HEILBRUNN, supra note 10, at 14–15.

23. Id.

24. Id.

    move away from its current centralized approach and adopt the multi-agency approach with an emphasis on preventive activities to achieve meaningful, long-term corruption reform.

    
    

    1. A HISTORY OF PUBLIC CORRUPTION IN INDONESIA

       
       

       Indonesia has a deep-rooted history with public corruption, and its detrimental effects necessitate an effective solution to curb this endemic problem. Public corruption is defined as the “abuse of public power for private gain.”25 Indonesia’s problem with public corruption is significant because it is

       “‘a tragic form of regressive taxation. The poor pay higher prices because of all the monopolies, and they have to pay off government officials for everything they need.’”26 Apart from the economic costs, public corruption has a damaging social cost. As the United Nations (“UN”) states, public corruption “undermin[es] the institutions and values of democracy, ethical values and justice, and jeopardize[s] sustainable development and the rule of law.”27

       
       

       This Part examines the detrimental effects of public corruption in Indonesia and establishes why Indonesia’s traditional institutional framework failed to curb the endemic problem. First, this Part explores how an Indonesian leader’s acts of public corruption caused Indonesia to experience severe political and economic instability. Second, this Part considers that, although Indonesia is now relatively stable, corruption reform is needed for continued economic and political stability and increased foreign investment. Third, this Part covers Indonesia’s traditional institutional framework for combating corruption, obviating a need for a coordinating agency that is solely entrusted with curbing public corruption.

       
       

       1. Indonesia’s Meltdown in Governance Because of...