Plague of Corruption Rises Anew in Indonesia
By JOE COCHRANE
Published: May 30, 2013
JAKARTA — Fifteen years ago, Indonesia took its first step toward democracy with the ouster of Suharto, the late authoritarian president. By the 2009 national elections, the country had one of the most open electoral systems in Asia, with direct ballots for president all the way down to district chiefs and mayors.
But the country's campaign-finance laws have not kept up with these changes, analysts say. As a result, Indonesian political parties are increasingly financing their operations through the same official corruption that symbolized the Suharto era.
"That's not a secret anymore," said T. Mulya Lubis, chairman of the executive board of Transparency International Indonesia. "It's public knowledge. This is the biggest kind of corruption now."
The most recent in a series of political scandals involves the Islamic-based Prosperous Justice Party, or P.K.S., the fourth-largest party in the House of Representatives and a member of President Susilo Bambang Yudhoyono's governing coalition. The party has been under fire since its chairman was arrested in January over allegations of accepting bribes in exchange for securing additional government quotas for a company that imports beef.
In the past month, other P.K.S. leaders have been implicated in the case, accused of orchestrating a payoff of more than $1 million intended for the party's 2014 legislative election campaign. Among them is Agriculture Minister Suswono, whose ministry allocates quotas to beef-import companies and who has been questioned by the independent Corruption Eradication Commission.
Separately, a corruption suspect has asserted that the P.K.S. planned to exploit its control of the ministries of Agriculture, Communications and Information Technology, and Social Affairs to amass a campaign war chest of 2 trillion rupiah, or $204 million. P.K.S. officials have denied those allegations as well as any party involvement in corruption.
Yet the scandal, dubbed "Beef-gate," has prompted calls for Mr. Yudhoyono's government and the legislature to enact sweeping campaign-finance overhauls before national elections next year. Proposals include public disclosure of political parties' expenditures and sources of income, limits on campaign spending, creating a new agency or reappointing the National Election Commission to exercise oversight, and prosecuting party officials for violations.
Titi Anggraeni, executive director of the Association for Elections and Democracy, a nongovernmental organization, said that current law requires that parties disclose donations, income and expenditures only in a single report endorsed by their own auditor, rather than make public their actual accounts. As a result, she said, it is easy to hide illegal contributions and income and the spending that results from both.
"We have free and fair elections in Indonesia, but not free and fair competition," she said. "Candidates use money as a shortcut to win elections."
Under current law, political parties may collect revenue only from member dues, capped donations from individuals and companies, and state subsidies for winning seats in the national and provincial legislatures.
However, Ms. Anggraeni said her organization's research found that these forms of legal income cover less than 15 percent of operating expenses for political parties, which, for example, must maintain offices in all 34 of Indonesia's provinces and in two-thirds of its 491 incorporated provincial districts in order to compete in elections.
"It's not in the Indonesian culture for persons or companies to make political contributions, because people don't trust political parties," she said. "This creates a situation where political parties seek illegal funds."
Effendi Gonzali, a political analyst at the University of Indonesia, said that most illegal funds flowing into political party coffers are generated through the House of Representatives' Budget Commission, whose members have extraordinary oversight, all the way down to line-item expenditures.
"They have very close ties with ministries and other state institutions, so they 'cook' the budgets of ministries and state institutions handled by ministers from coalition parties, and they also manage to get a kickback," he said.
On Tuesday, a former senior National Police officer testified in court that the Budget Commission received four boxes of cash in 2010 from a police general arrested last December in connection with a $20 million equipment procurement scandal, according to local news reports.
In the past five years, dozens of current and former members of the national legislature have been convicted on corruption charges, including Muhammad Nazaruddin, the former treasurer of Mr. Yudhoyono's Democratic Party. Mr. Muhammad was convicted of corruption and bribery last year for helping to rig tenders to build an athletes village for the 2011 Southeast Asian Games, which Indonesia hosted. In January, Angelina Sondakh, a former Miss Indonesia and Democratic Party lawmaker, was sentenced to four and a half years in prison for receiving kickbacks in the same case.
Mr. Muhammad asserted that Anas Urbaningrum, the Democratic Party chairman, had ordered him and other party legislators to rig the bidding to build a multimillion-dollar national sports complex in West Java Province. Mr. Urbaningrum resigned in February.
Last November, Dipo Alam, Mr. Yudhoyono's cabinet secretary, reported three ministries to the Corruption Eradication Commission, including the Agriculture Ministry, for alleged graft involving collusion among senior government officials and national lawmakers. Andi Mallarangeng, from Mr. Yudhoyono's Democratic Party, resigned as youth and sports minister in December after being declared a suspect in the sports complex scandal, while three other ministers including Mr. Suswono have been linked to graft cases but remain in their jobs.
In March, investigators from the Corruption Eradication Commission raided the offices of two national lawmakers from Golkar, Indonesia's largest political party, including one belonging to its party treasurer, in connection with suspected corruption involving the construction of sports facilities for Indonesia's 2012 National Games.
Analysts have been predicting a spike in illegal political financing before hotly contested legislative and presidential elections set for next year.
"The problem is, if there isn't a good political party financing system, you'll have political parties focusing on getting money rather than focusing on representing constituents or pursuing ideas that they can present as alternatives," said W. Paul Rowland, a Jakarta-based associate with the Center for Democratic Institutions at Australian National University.
"The legal risk of being a political party treasurer is huge," Mr. Rowland said. "If you look at the number of investigations against political party treasurers by the anti-corruption commission, you can certainly draw some conclusions. There's certainly a connection between political parties, the positions they hold in ministries and these corruption cases."
The other problem is that many of Indonesia's 10 largest political parties have a wealthy patron or group of patrons who bankroll some operational expenses and campaigns in exchange for either being the chairperson or being able to exercise influence on legislation and government policies, according to analysts.
On Monday, Hajriyanto Y. Thohari, deputy speaker of the House of Representatives, proposed that the government allocate up to 16 trillion rupiah a year for political parties to diversify their funding sources.
Marcus Mietzner, a senior lecturer at Australian National University and author of a forthcoming book on party and campaign financing in Indonesia, said that dramatically increasing public funding for political parties is a critical part of any overhaul effort.
In 2005, annual state funding for political parties was reduced from 1,000 rupiah per vote won in national, provincial and district legislatures in the previous election to 21 million rupiah for each seat won — which decreased total funding about 90 percent, Mr. Mietzner said. In 2009, the amount was further reduced to 108 rupiah a year for each vote won.
Mr. Mietzner said that in Turkey, which has a population of 75 million, political parties received the equivalent of $175 million from the state after the 2011 election for their operations, compared with the equivalent of $1 million for Indonesian parties that year, based on their 2009 poll results.
"You can't really have credible reform without a significant increase in state subsidies," Mr. Mietzner said. "Party membership is collapsing around the world, including in developed countries. As a result, most new and consolidated democracies offer state subsidies for parties, which usually cover 25 to 30 percent of total party expenditure. In Indonesia, it's now probably 0.01 percent. The amount of state subsidies to parties is absolutely minimal."
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