Wednesday, February 23, 2005

Corruption: The Root of Evil in Indonesia

A selection of articles that cover about mismanagement, corruption that is, in Indonesia ~ from many different angles, such as illegal logging, tax office, results of TII survey on corruption in Indonesia, anti-corruption judges at Corruption Eradication Commission (KPK), and some hopeful signs in winning war on corruption. In chronological order and the highlights are mine.


Feb 15-21, 2005

Not On the Payroll

Without a presidential decree, the ad hoc anti-corruption judges appointed seven months ago still get no salaries, except for loans from Bappenas.

The following question should be posed to President Susilo Bambang Yudhoyono: is the government really serious about stamping out corruption? This is important because corruption cannot be eradicated by merely giving speeches or making statements. And proclaiming an Anti-corruption Day is not a sign that the problem is being tackled. The measure of whether corruption is being addressed or not is how many corruptors have been investigated and how many have been put on trial. Even better would be an accounting of how much money belonging to the state has been recovered by confiscating the assets of these corruptors.

Forget finding out how many corruptors are in jail. Members of the Corruption Eradication Commission (KPK), set up almost two years ago, don't even know when they will ever get their salaries. Even the offices and staff are still disorganized. The public, on the other hand, has been very enthusiastic in forwarding reports of corrupt activities. As of last week, a total of 2,243 reports had been received, but the KPK has only dealt with 16 of them. Two have gone through the first phase of trials at the corruption courts, namely the case involving suspended Nanggroe Aceh Darussalam Governor Abdullah Puteh and the Mi-2 helicopters, and the case of Sea Transportation Directorate General official Muhammad Harun Letlet and the land purchase for the construction of a port at Tual, North Maluku.

These two cases are currently being tried before ad hoc judges Dudu Duswara, H. Achmad Linoh and I Made Hendra Kusuma. Perhaps the focus of concern at the moment is that these three judges, appointed in July, have yet to receive any salaries. It was only after they complained in writing, and the letter was read out at a House of Representatives (DPR) session that the three judges were each given a Rp20 million loan. The loan came from the National Development Planning Board (Bappenas) Justice and Human Rights Directorate.

Why have their salaries not been paid? The reason, once again, is that there has been no instruction from the president, despite the fact that the Supreme Court has already handed a draft of the presidential instruction to President Yudhoyono. The president, perhaps following procedures, sent the draft to the State Secretariat. It is not clear where the draft is now.

The draft details the regulations covering all the ad hoc anti-corruption judges, of which there are nine. There are three at the initial level, three at the appeals level and at the final appeals level. These nine judges should already be working in Jakarta, but because nobody seems to care for their welfare, the appeal and final appeal level judges have gone back to their homes in the provinces.

It is truly regrettable how slow and shoddy this matter has been handled by President Yudhoyono's government. In the beginning there were promises that these judges would receive facilities better than those offered to normal judges, for example satisfactory housing and even bodyguards because of their highly strategic mission. It is entirely proper that they be given these facilities so they are not tempted by offers from the corruptors. What has actually happened is that they are living in an apartment, sharing rooms between them, rented by the State Secretariat. There are no bodyguards. Even worse, as explained earlier, is that after months of living off their savings, they are now living off loans. So, Mr. President, are you serious about stamping out corruption?


Feb 15-21, 2005

Anti-Corruption Judges - Awaiting Gain
By L.R. Baskoro

Since their appointment seven months ago, the ad hoc anti-corruption judges are yet to be paid. Every session, they take turns to dig deep into their pockets for Rp150,000.

Three middle-aged men hurried out of the cramped room on the eighth floor of an apartment owned by the State Secretariat, located in the district of Kemayoran in Central Jakarta. Wearing casual everyday clothes and none-too-flashy sandals, few would have recognized these three as key players in a country busy proclaiming to all and sundry the fight against corruption.

They are judges, engaged daily in the trying of the case against Aceh Governor Abdullah Puteh, indicted on corruption charges over the purchase of a Russian Mi-2 helicopter, valued at Rp12.5 billion. They are three of the nine ad hoc anti-corruption judges appointed on July 26, 2004, and sworn in by the then President Megawati, last October 7.

That particular apartment in Kemayoran, temporary accommodation for the three, consists of five rooms. They have all been allocated one room each, with one of the remaining two serving as the library, and the other being used for discussions. There were no obvious security measures visible around the building, with the visitor's room on the ground floor appearing deserted. Apart from an absence of visitors, no security attendants were on hand either, to summarily check anyone coming into the building, as is usually the practice at such apartments. Maybe this was because it happened to be a Sunday.

On that same Sunday they had arranged to go shopping at a supermarket in the Sunter area, the purpose of which was to stock their fridge, which was quite bare, save for several bottles of water and a few leftover vegetables. At the supermarket tasks were divided up evenly between the three: one had the job of buying fruit and vegetables, while another was charged with looking for kitchen spices, eggs, and instant noodles; the last of the trio, meanwhile, picked out a few snacks and other lighter foodstuffs.

At the checkout, one of them handed over a credit card. "Now we're really 'matang-makan dengan utangan' (surviving on loans)," whispered Dudu Duswara, 53, on duty ad hoc judge in criminal corruption cases to Tempo. The other two men also serving as judges in corruption cases are H. Achmad Linoh, 63, and I Made Hendra Kusuma, 43.

Although seven months have passed since being appointed, the ad hoc judges are still yet to be paid. Since last July, in accordance with stipulations, they had in fact left their previous jobs. Dudu and Linoh for example, have ceased lecturing at their respective campuses, University of Langlangbuana in Bandung and University of Jember. There is also Made, who has closed his notary office in Denpasar.

Aside from abandoning their old jobs, most have had to leave their families at home. The only one who has moved his wife into the apartment is Dudu. Dudu's wife is also the one who simultaneously helps out with the daily cooking duties and keeps the 'home' of these judges clean and tidy. There is also no security gadget whatsoever there. The door, for example, is only 'protected' with a small chain, which was attached after they had been residing there for a week. "An angel watching over us is our only protection," said Dudu.

The flat is no oil painting either. Probably the only eye-catching things there are the two piles of dossiers from their cases, lying on the guest table. "That's the Abdullah Puteh file. We're up against a lot of things in the prosecuting of this particular case. Not like the other case," Made said, pointing to a dossier as thick as a pillow. Indeed, apart from the Puteh case, the three judges are currently trying a corruption case estimated at Rp10.8 billion, stemming from the Tual Port development project in Maluku. The defendants are Harun Letlet and T. Walla, two officials in the Sea Transportations Directorate.

These are the two cases they are dealing with every working day. The morning session sees the Letlet case, with the Puteh case filling the mid-afternoon slot. Every day, together with two other career judges, Dudu, Linoh and Made also take turns at digging into their pockets to provide the Rp150,000 necessary to finance the adjournments that come during every courtroom session. The money is used, among other things, to buy food, drink, cigarettes and other such needs.

Different to these three, the other six ad hoc judges are still living in their own respective hometowns. There has been no sign so far, that the Supreme Court (MA)-their headquarters-will summon them to Jakarta. "I'm ready to be called to Jakarta at any time," said M. As'adi M. Al-Ma'ruf, 54, ad hoc judge at the appeals level in corruption cases, to Tempo. "As a judge, you should really be in the office anyway, even when there aren't any cases."

Until now, As'adi has just been lazing around his house in Desa Sukaraja in Banyumas, ever since resigning as a judge from the Banyumas Religious Court. The father of four is still waiting for his first paycheck, just like the other ad hoc judges. "I just don't understand how this country can be like this," he offered.

Dudu, Linoh and Made admit to having already approached the MA, as well as the National Development Planning Board (Bappenas), to enquire about their delayed wages. They were told that their payments were currently being processed by the president. This was also broached by the MA's Secretariat General/Clerk Court, Gunanto Suryono, before the House of Representatives (DPR) Legal Commission, on Wednesday two weeks ago. "The Supreme Court is not yet able to authorize payment of the judges wages, because there is no presidential decree on this matter," Gunanto said.

Under the blueprint of the presidential decree, first-level ad hoc judges are to receive Rp12 million, with those at the appellate level to be paid Rp15 million. Judges at the highest level are to receive Rp17.5 million. Around two weeks ago, the MA did indeed provide the three above-mentioned judges with Rp20 million. "But this was more in the form of a loan, with a letter to go with it," Made said.

Dudu is hoping that President Yudhoyono will immediately submit his presidential decree, which would enable their lives to return to normal. According to them, their lives have taken a nosedive from "mantab-makan tabungan" or living on savings, to "matang-makan dengan utangan" meaning surviving on loans. Along with his two colleagues, Dudu is determined not to tire of exercising his rights before the Supreme Court. "We were advised by Pak Abdul Rahman Saleh before his promotion to attorney general. He said we would be better off making a fuss and standing up for our rights, rather than staying quiet, only to be subsequently 'making eyes' while carrying out our duty," Dudu said.


Feb 15-21, 2005

Action for Action's Sake?
By Sukma N. Loppies, Karana W.W. (Palangkaraya)

Draft plans for the establishment of the Prosecution Commission have already been submitted to the president. But, concerns have arisen that the commission will trigger resentment among prosecutors.

As merican law-related television serials like Law and Order become popular in Indonesia, legal experts are becoming more aware of the disparity between Indonesia's legal system and the legal systems operating in other countries.

Criticizing Indonesia's law enforcement officers has become a favorite pastime of legal observers, born from the corruption which permeates the Indonesian legal system. And the public has become cynical that law enforcers can actually enforce the law. It is in response to this situation that Attorney General Abdul Rahman Saleh has pushed for the formation of the Prosecution Commission, in an effort to inspire prosecutors to meet the standards of ethical professionalism shown in TV programs like Law and Order.

Within the next few weeks, President Susilo Bambang Yudhoyono is slated to sign a presidential decree ratifying the establishment of the Prosecution Commission. The draft plans for the formation of the commission were submitted to the president three weeks ago. "We are currently waiting for a presidential decree on the formation of the selection committee," said chief of planning at the Attorney General's Office, Halius Hosen.

The commission could have a significant impact on the AGO. Apart from monitoring the working performance of prosecutors, the commission will also be authorized to submit recommendations to the attorney general for sanctions against prosecutor misconduct. Formed in accordance with the Prosecution Law (Law No. 16/2004), the commission will also focus on increasing prosecutor welfare benefits. "The commission will have an extremely important function," said Abdul Rahman Saleh.

According to Hosen, although the selection team will be in charge of recruiting commission members, the public will still have the opportunity to contribute to the selection process. In this way, the AGO can gain important input from the public on prospective commission candidates. "The principle [behind the commission] will be transparency. This will ensure that the commission is accepted by the public and that the working performance of the AGO improves," said Hosen.

"The selection team will comprise prosecutors, former prosecutors, academicians, and members of the public," said Achmad Santosa, expert staff at the AGO. According to Santosa, the draft plans for the formation of the Prosecution Commission have already undergone several revisions. One of the major issues debated has been the appointment of selection committee numbers. The selection team will comprise seven members and will be in charge of recruiting commission members.

There has also been opposition to the formation of the commission. "Certain AGO staff members are frightened of the commission, because they are concerned about being continuously monitored," said Hosen. Opponents of the commission claim that the AGO already has a working internal monitoring mechanism. However, Attorney General Rahman remains committed to realizing the plans to form the commission.

Certain prosecutors have also expressed objection to the Prosecution Commission. "I only hope that all aspects of the commission are thoroughly researched," said head of the Central Kalimantan High Prosecutor's Office, Abdul Hakim Ritonga. Ritonga questioned whether the commission is necessary at all. "It shouldn't simply be a matter of taking action for action's sake," he said. "The AGO already has a monitoring mechanism to deal with prosecutor misconduct," Ritonga added. According to Ritonga, Government Regulation No. 30 already covers disciplinary measures against rogue civil servants and any civil servant found guilty of committing criminal actions will be processed through the courts. "The existing mechanism at the AGO is already very specific and regulated," he said.

Ritonga also expressed concern that the commission would trigger resentment among prosecutors. "The salary [of commission members] is higher than that of other prosecutors," he said. According to Ritonga, IV-D rank prosecutors with 30 years of service currently receive about Rp2 million a month, whereas commission members are to receive between Rp15 million and Rp30 million per month.

However, Hosen rejected Ritonga's concerns. Hosen claims that the commission will encourage prosecutors to improve their working performance and strive for greater professionalism. "The commission will also monitor the records of esteemed prosecutors and recognize their career achievements," explained Hosen. "Work performance evaluations in the past often lacked objectivity," he added.

Achmad Santosa, coordinator of the Legal Reform Program under the Partnership for Governance Reform in Indonesia, also said that the commission would focus on improving prosecutor welfare benefits. According to Santosa, the concerns about the function and jurisdiction of the commission are due to misinformation.

Separately, Attorney General Rahman said that he hoped that the commission would improve the image of the AGO. According to Rahman, legal observers have often criticized the AGO's own internal monitoring mechanism. "When prosecutors have been sanctioned, these sanctions have been considered too lenient," he explained. However, he remains convinced that the commission will be successful. Rahman also emphasized that the commission would not conflict in jurisdiction with the existing internal monitoring mechanism of the AGO.

According to Rahman, any complaints against prosecutors will first be handled by internal AGO monitoring. "But, if the commission is dissatisfied with the way the case has been handled, it will step in," he explained. Rahman also said that any complaints lodged with the commission must be forwarded to the AGO's internal monitoring mechanism.

"So, the commission will be aware whether the monitoring mechanism will handle the complaint or not," he explained. Rahman believes that once the commission is running, the working performance of prosecutors will become transparent and it will become clear which prosecutors are bona fide and which are not.

It's a Matter of Welfare
Attorney General Abdul Rahman Saleh understands that satisfactory welfare benefits are important for the working performance of his staff. And the AGO is currently planning reforms in this area. "We have already submitted our suggestions to the National Development Planning Board (Bappenas)," said AGO spokesperson, R.J. Soehandojo. The AGO has recommended that prosecutor salaries be raised to between Rp6 million and Rp10 million.

Chief of planning at the AGO, Halius Hosen, claims that low prosecutor wages have contributed to the corruption which has become endemic throughout prosecutor offices. However, Hosen acknowledged that low wages are not a legitimate reason for prosecutorial misconduct. "Low welfare benefits may be a consideration, but cannot be an excuse," he said.

At present, prosecutor salaries are indeed low. M. Azril, a prosecutor at the Lhokseumawe District Prosecutor's Office in Aceh makes a basic salary of Rp980,000 per month. He also receives an additional Rp750,000 bonus for his III/B ranking, a Rp75,000 allowance for rice and an additional Rp250,000 as head of intelligence. The majority of this money is sent to his wife and children in Medan. "If the government deems this enough, it is their prerogative," he said. Azril said that when he decided to become a prosecutor, he prepared himself to face all difficulties, including low wages.


State finance system prone to massive corruption: KPK

Jakarta, Feb. 18 (Antara): Corruption Eradication Commission (KPK) hairman Taufiqurrahman Ruki said on Friday the state financial system invited corruption and needed immediate repair.

"I've told the minister of finance that a thorough assessment on the state financial system should be conducted so as to help prevent corruption," Taufiqurrahman said after signing a memorandum on understanding on corruption eradication with Minister of Finance Yusuf Anwar.

An assessment of the system, Taufiqurrahman said, would help curtail corruption in a number of institutions under the supervision of the Ministry of Finance.

The KPK chairman said he hoped the signing of the memorandum of understanding would lead to real action.

He also expressed concern over the apparent lack of desire on the part of both the state and the legal system to work together to fight corruption.


Radio Australia
February 18, 2005

Indonesia: President promotes a business friendly image

Cutting beaurocratic red tape has been marked as a priority area by foreign investors interested in Indonesia. President Susilo Bambang Yudhyono was in Malaysia and Singapore this week talking up the benefits of his country as an investment destination. Indonesia has unveiled plans for massive infrastructure improvements and it needs millions of jobs for the ranks of unemployed. Foreign investment is showing signs of picking up following last year's peaceful elections coupled with SBY's business-friendly image.

Presenter/Interviewer: Finance Correspondent Karon Snowdon.

Speakers: Dato Mohammad Izat Emir, President of the Malay Malaysian Businessman and Industrialists Association; Regional Economist with GK Goh Investment in Singapore, Song Sen Wun; Alex Chen deputy Executive Chairman of Metro Kajang Holdings.

SNOWDON: President Susilo Bambang Yudhoyono's first stop was Malaysia, where talking up investment needed less tricky diplomacy than the sensitive issue of the hundreds of thousands of illegal Indonesian workers there facing expulsion.

Malaysian business groups say its a good time to consider investing in Indonesia.

Dato Mohammad Izat Emir, President of the Malay Malaysian Businessman and Industrialists Association, has two cardboard factories in the country and is planning more investments. He says President Yudhoyono is well regarded.

EMIR: We're extremely impressed with his speech, his very up to date understanding of the situation both in Indonesia and Malaysia. And he's very blunt and his ambition of his realisation in areas that concern business people, such as transparency, corporate governance.

SNOWDON: The climate is improving economically as well as politically.

According to just released figures, the economy grew a better than expected 5-point-one per cent in 2004 and was especially strong in the last quarter, expanding by 6-point-7 per cent, Regional Economist with GK Goh Investment in Singapore, Song Sen Wun forecasts stronger growth next year.

SONG: Looking at the trend and looking at the confidence that we're seeing in Indonesia which we haven't seen for several years there's reason to believe that Indonesia will probably end up with growth that will be higher than 2004, we're looking at about six per cent growth, again driven by private consumption.

SNOWDON: So its a good time for President Susilo Bambang Yudhoyono to be on his investment drive as he's been doing this week in Malaysia and Singapore. How's he been received in Sinagpore?

SONG: Certainly very well, I mean he gave a public lecture and there was a huge turnout including the entire Singapore Government Cabinet. He did quite well out of it and I think everybody appears to be quite willing to go into Indonesia particularly at this point when there's quite a bit of potential for private consumption to drive growth.

SNOWDON: Malaysian businessman, Alex Chen is considering investing in Indonesia for the first time in infrastructure and plantations. He's deputy Executive Chairman of property developer and construction company, Metro Kajang Holdings.

CHEN: I would consider investing in Indonesia because Indonesia is our nearest neighbour. We hope our neighbour's economy will improve. Also there are many areas of business in which Malaysia and Indonesia can cooperate and compliment each other.

SNOWDON: As for problems, Alex Chen says there's still lots of Indonesian red tape to be cut. And I asked if Chinese Malaysians hold any concerns over Indonesia's reputation at some times in its past for anti-Chinese sentiment.

CHEN: Of course there are some businessmen concerned about uncertainties in the past. But now we should look forward that overall investment atmosphere will improve, then the businessman will come to Indonesia.

SNOWDON: Indonesia's plans for major road building projects will particularly interest Malaysian companies.

In addition to improving the legal system, investors want land acquisition made easier and development leases extended.

Dato Mohammad says President Yudhoyono promised to look into it.

EMIR: To do this we need to acquire certain properties that belong to the villages along the highway. And in the past it has been very difficult now he assured us its going to be easy, smooth and practical. And he said he realised Indonesia needs a lot of investment and they are prepared to humble themselves and decalred that they have a lot to learn and they want to go in that direction.

SNOWDON: This will be politically sensitive in Indonesia, especially the issue of land acquisition, and present another challenge for President Yudhoyono who's promised to deliver economic growth and jobs consistent with the people's expectation of enhanced democracy.


The Jakarta Post, Jakarta
Saturday, February 19, 2005

Investigators tell how they uncovered smuggling

"This is a smuggler...ha...ha.... He is a mafia (member)...ha...ha...," an unidentified man told undercover investigators.

He pointed his finger at a Singaporean in a yellow checked shirt, who was counting stash of cash on his desk.

The Singaporean smiled and said, "The problem is that somebody asks me to smuggle. The problem is the buyer. No buyer, no smuggling."

"This smuggling is better than drug smuggling. Drug smuggling is no good. This one is OK," he said in a heavy Sing-lish (Singaporean English) accent.

That was a dialog captured on video and presented by the London-based Environmental Investigative Agency (EIA) and its Indonesian partner, Telapak, when unveiling their investigation into the world's biggest smuggling operation of merbau (intsia) from Papua province to China.

The timber smuggling involves around 300,000 cubic meters of timber a month and generates around US$1 billion in revenue. The two NGOs claimed that the racket was the world's biggest smuggling operation in terms of one species of timber being smuggled from one place to another.

"The huge illegal trade of merbau logs between Indonesia and China is the world's biggest environment-related crime and it endangers Papua forests," said John Newman, an EIA investigator.

Arbi Valentinus of the Bogor-based Telapak told The Jakarta Post that the three-year investigation started in 2002, based on reports received from Papuans and local media.

"There were news reports on rampant illegal logging in Papua that they had never seen before," Arbi said after releasing the report: The Last Frontier at a media conference on Thursday in Jakarta.

His colleague, M. Yayat Afianto, said the investigation had been perfectly prepared before they traveled from the eastern tip of Indonesia to the industrial town of Nanxun in China.

"We studied the history of forest management in the area and contacted people in Papua to assist us in accessing the logging areas and talked to the tribal communities," he said.

At the same time, EIA was trying to uncover the chain of syndicates that stretched across Asia and involved high profile businessmen, high-ranking military personnel and customs officials. Each played an important role from preparing shipping documents to finding buyers.

The two NGOs spent around Rp 200 million (around $21,750) for sending two-person teams periodically to document the individuals involved in the racket. In conducting the investigation, the team had to pose as timber businessmen or bird-watchers.

Several members of the teams received threats from unidentified persons, who felt threatened by their investigations.

"With regard to the bureaucrats, we didn't have many problems. They were cooperative. But some of our friends received phone threats saying that they would harm their families," said Yahya.

But, the threats did not deter them from going ahead with the investigation. However, the deforestation of more than three million hectares a year was more fearful to them than the threats.

Moreover, the investigators felt that the Papuans had suffered losses from the rampant theft, he said.

"An elderly villager in Papua once told us how timber companies extracted 5,000 cubic meters of merbau from a site but only paid the locals Rp 7 million," the report said.

Merbau is one of the most valuable species of wood in Southeast Asia and is often used as flooring. It is worth about US$270 per cubic meter.


The Jakarta Post
Saturday, February 19, 2005

Minister vows to curb illegal logging
By Muninggar Sri Saraswati, Jakarta

Minister of Forestry Malam Sambat Kaban said on Friday he planned to meet with Coordinating Minister for Political, Legal and Security Affairs Widodo Adi Sucipto to help resolve the rampant illegal logging in Papua, which a recent report says is backed by members of the military.

"It is organized crime and it involves many officials," he said on Friday.

He said it would not be easy to arrest and prosecute military or government officials involved in the crime because "they are very tricky."

Kaban was responding to a report by the London-based Environmental Investigation Agency (EIA) and the Indonesian environmental group Telapak, which revealed a massive smuggling operation of illegal logs from Papua to China by an international syndicate.

The report implicates top military and government officials, Indonesian law enforcers and crooked entrepreneurs in Malaysia, Hong Kong and China in the crime.

The report says about 300,000 cubic meters of merbau (Intsia) logs from Indonesia, most of them from Papua, are being smuggled to China each month. Merbau is one of the most valuable timber species in Southeast Asia.

Separately, State Minister of the Environment Rachmat Witoelar said that his office would soon conduct an environmental assessment of Papua's forests to examine the destruction caused by the illegal logging there.

"Papuan forests are among the few forests left in the country. We must preserve them, therefore, we'll make an environmental assessment soon," he said.

Kaban said that his ministry would conduct a massive offensive on illegal logging in Papua but said that to be effective it must be supported by other ministries and government institutions.

"We have conducted crackdowns (before) in Kalimantan, but they have only worked for a while," he said.

Kalimantan used to be the center of illegal logging operations in the country, but as its forests had been greatly diminished loggers were now focussing on Papua, activists said.


The Age (Melbourne)
Saturday, February 19, 2005

No Bribes? No Bent Police? Something's Not Right
By Matthew Moore

Jakarta - There are signs the new president of Indonesia is winning his war on corruption.

Few signs provoke more trepidation than the three-metre monster that greets you when you enter Jakarta's drivers' licensing maze.

It's a flow chart that describes the 10-step process to get your licence, known to Indonesians as a SIM. For the locals, and anyone who's lived here, it is guaranteed to instil fear: 10 steps in any bureaucratic process means either 10 long queues or 10 bribes.

The choice is simple: spend hours or days at the only place in the city you can get a licence, or pay someone to queue-jump and grease palms on your behalf. Given Jakarta's traffic, and the location of the centre in hard-to-reach West Jakarta, it's no surprise that paying one of the agents who greet you on arrival has long been the standard way to get your licence.

If you don't want to deal with them, there have always been plenty of police officers happy to solve your problems while you top up their wallets.

But now, suddenly, everything has changed. The agents have gone and they've taken the queues with them. When I approached a policeman for help, he didn't ask me how much I could pay, but steered me to the first window, where I waited less than a minute for the eye-test form.

I didn't even know they had eye tests. In years gone by, the eye test was like the road-rules exam: just another box to be ticked in a back room once your agent paid the right price.

Instead of the Rp300,000 ($A42.90) I paid an agent last year, the price now is only Rp65,000, the same amount that's listed on the receipts. And the SIM card, with photograph and thumb-print included, was ready within 40 minutes.

And this wasn't some special deal for foreigners. It's for everyone, like the well-dressed woman Frida sitting next to me. She had always used an agent in the past and was delighted to find none around this time.

"It's good," she said. "It's quick and it's clean, this is the way it's supposed to be."

I asked another policeman about the changes and he agreed the system now was "clean" and looked embarrassed when I told him police used to take money to help.

Frida, and everyone else I spoke to, said the changes were the direct result of President Susilo Bambang Yudhoyono's high-profile exhortations to police to end corrupt practices. Soon after he was sworn in, he took TV cameras along when he visited the police chief, General Da'i Bachtiar, and urged him to clean up the system.

At the licensing centre at least, the message seems to be getting through. Although it's far too early to claim success, other anecdotal evidence is emerging that the new leader's anti-corruption drive is beginning to work.

When I got stuck in the wrong traffic lane and was forced to drive my car into one of Jakarta's busy bus terminals recently, whistles blasted at me.

Police officers walked me to their office and told me that what I had done was forbidden. I apologised for my mistake.

Then the offence book came out and the police said they would have to issue me with a summons. Normally, such court talk is a subtle invitation to open discussions about how such pesky problems might be settled in a more convenient way for everyone involved.

But when I took their cue, and suggested a small fine might be paid on the spot, the two officers protested and said they were embarrassed at the very idea of what I'd proposed.

They put their book away, took no money, and sent me home asking only that I be more careful next time. Suddenly, Indonesia feels like a very different place.


The Jakarta Post
Saturday, February 19, 2005

Corruption, who cares?

"I don't care," has apparently become a catchphrase among government officials, following President Susilo Bambang Yudhoyono's example. Responding to a survey showing his declining popularity, the President said earlier this month: "I don't care about my popularity."

The President's words have given others in his circle an idea or two. Minister of Finance Yusuf Anwar, when asked about a survey by Transparency International Indonesia (TII) showing the customs office as the most corrupt institution in the country, said on Thursday, "Just let it go. I don't care."

A similar response also came from Jakarta Governor Sutiyoso over the labeling of Jakarta as the most corrupt city in the country by the TII. Although he did not use the words "I don't care", Sutiyoso retorted that the wrong businesspeople were probably selected as respondents -- those who did not win tenders for city projects.

The indifference of Yusuf and Sutiyoso is particularly worrying as it is in response to corruption within institutions under their command.

The TII's survey, which places the customs office as the most corrupt institution in the country, is actually not surprising. It just confirms public perception, and even a previous survey by the World Bank that ranks customs and also the tax office as two of the most corrupt institutions. The TII survey puts the tax office in 11th place on its list of most corrupt institutions.

Rather than belittling the survey, the minister should have used it as a tool to further pressure the customs office to improve on its performance, or to set about removing corrupt officials from the customs office.

Similarly, Sutiyoso's serious consideration of the results would have been more reassuring than his defensiveness. Actually, his argument -- that it makes sense that most corruption cases occur in Jakarta as 70 percent of financial transactions in the country take place in the capital -- could be spot on. However, stating the obvious as a defense just sounds like making excuses.

At the very least, Sutiyoso and Yusuf should have welcomed the results as a commendable effort from the TII in the fight against corruption.

Indeed, the TII's 2004 Indonesian Corruption Perception Index survey is a good reminder to all of us of our duty to refuse to tolerate corruption in our government, as well as in our society.

Any civil effort, no matter how small, strengthens the campaign against corruption, particularly at a time when the legal institutions at the helm of the corruption fight are struggling in their mission.

One of the most important of these institutions is the Corruption Eradication Commission (KPK), an independent institution established in 2002, following a prolonged tug-of-war between the government and members of the House of Representatives. While it struggles to bring to justice big-time embezzlers, the latest Constitutional Court verdict was a major blow for the commission.

Although the verdict recognizes the commission's existence, it says the commission can not try cases that predate its establishment.

Another key institution in the fight against corruption is the Attorney General's Office. Interestingly, in a hearing between House Commission II and III and the Attorney General's Office on Thursday, one legislator referred to the office as a "village of thieves", prompting a heated debate. Although this statement was probably politically motivated, it also stirs in us the uneasy feeling that we can not hope for too much from prosecutors in sending major corruption suspects to prison.

Is our battle against corruption really so futile? That all depends on which way you are looking at it. Reassurances can be found, that the country is inching toward its goal of creating clean governance, in the progress made by various civic groups outside the government, such as the TII, the Indonesian Corruption Watch and other anticorruption groups and activists. The next question is, how fast are we are proceeding. Maybe not fast enough, but at least, when public officials are not concerned about combating corruption, somebody else in society is willing to fight in their place.


The Jakarta Post
Saturday, February 19, 2005

Finance ministry signs MOU on corruption eradication
By Urip Hudiono, Jakarta

Despite his "I don't care" response to a recent survey that found two institutions under his supervision to be among the most corrupt a day earlier, Minister of Finance Yusuf Anwar on Friday signed a Memorandum of Understanding with the Corruption Eradication Commission (KPK).

KPK chairman Taufiqurrahman Ruki said the MoU was very important since the KPK had indicated potential loopholes for corruption in the state budgetary accounting system handled by the finance ministry.

"We have discussed this matter for the past three months and agreed upon the need for a full review of the system," he said.

With the review, Ruki said he hoped corruption, such as bribery and markups within the state budgetary system, could be addressed, along with the potential for graft within the ministry's own administration system.

Yusuf explained that revamping his ministry's administration system was among the many efforts to minimize the opportunities for corruption to take place.

"That is the main reason for reviewing the taxation and customs laws," he said. "It is also to prevent opportunities for backroom deals."

Ruki added that he expected the anticorruption drive to be fully implemented by all ministry officials following the MoU.

"I expect the ministry's top officials to enforce monitoring against corruption within their offices from now on," he said in a stern manner.

With the MoU, the KPK will have the authority to share information and conduct joint investigations with the ministry's inspectorate general.

Previously, the KPK had asked Yusuf to sign "a contract" with the Director General of Taxation Hadi Purnomo and Director General of Customs and Excise Eddy Abdurrachman to keep them accountable for the potential graft in their offices.

The finance ministry established a new investigation bureau specifically for corruption within its inspectorate general late last year.

The tax and customs offices have been under fire of late following numerous studies highlighting the gross level of corruption within each, including this week's survey by Transparency International Indonesia (TII).

The 2004 Indonesian Corruption Perception Index survey, with 1,305 business owners and top managers of local and multinational firms as respondents, revealed that the customs service had the highest incidence of corrupt interactions at 62 percent.

Some 140 respondents said they had to pay bribes to the customs service approximately 31 times per year, with each bribe averaging Rp 38 million (US4,086).

The tax office, which is also supervised by the finance ministry, was ranked as the 11th most corrupt institution on the list.

However, Yusuf was not exactly overjoyed by the survey. "It (the corruption within my ministry) is an old story. I know about it, you know about it and everybody knows about it," he said. "That's why we shouldn't make a fuss about it. What's more important is that we keep on working to improve things."


The Jakarta Post, Jakarta
Saturday, February 19, 2005

ICW takes textbook allegation to KPK

Indonesia Corruption Watch (ICW) alleged on Friday that corrupt practices are taking place in the provision of textbooks by local officials, administrators and legislators in four regencies.

ICW reported to the Corruption Eradication Commission (KPK) that its investigation indicated that regional autonomy had allowed much collusion to occur among local officials of the Ministry of National Education, regional administrators, and Provincial Legislative Councils (DPRD) in book procurement in the regencies of Garut (West Java), Batang, Semarang (both in Central Java) and Sleman (in Yogyakarta).

According to the ICW Public Accountability Review, the corrupt practices included introduction of local laws that benefited vested interests, bribery, direct appointment of publishers without proper tender procedures, sub-contracting without bids, production of substandard books, price mark-ups, and book rebates.

ICW's investigation, instigated by reports from local communities, found that although education officials are often seen as the main culprits, they were actually only executors and victims of higher level bureaucrats.

Fatar of the Batang Budget Monitoring Forum explained that collusion between bureaucrats and legislators was at the root of corruption in many regions. "For example, in 2004 the executive and legislative bodies of Batang regency agreed to execute an investment loan worth Rp 21 billion for textbooks, which was to be paid in installments over a period of three years. However, existing regulation No. 107/2000 requires that long-term loans can only be granted for facilities that produce income to pay back the loan."

"The regent and DPRD of Batang also legalized the direct appointment of PT Balai Pustaka to carry out a book publishing project worth Rp 7.3 billion. However, Presidential Decree No. 80/2003 states that all projects worth more than Rp50 million must be put up for tender," Fatar said.

Prior to the late 1990s, when national government was highly centralized, textbook production was monopolized by stated-owned publisher Balai Pustaka. In order to assist the government in decentralizing the provision of educational materials, the World Bank provided loans to the Indonesian government to conduct tenders to select book publishers across the country that could provide quality textbooks for schools.

In September 2004, the World Bank stopped loans to 10 individuals and 26 firms due to fraudulent and corrupt practices in relation to its Indonesian Book and Reading Development Project. The World Bank said that the action was part of an anti-corruption drive initiated by its President James Wolfensohn.

Fatar, commenting on efforts at decentralization in education, said that corrupt practices still existed even though the actors had changed. "Now, according to our studies in Batang, the main way these criminals act is through book rebates, which are signed off by teachers."

In its report, ICW cited the provision of a 20 percent rebate for textbook projects in 2003 to Batang administrators by Balai Pustaka. The rebate, however, was not put into state coffers.

ICW's Public Service Monitoring Division officer Ade Irawan said that price markups and reductions in book quality are also very common.

"Despite price markups, the quality of books is substandard. The paper used is very low quality, as many as 75 pages could be missing from the books, and the book topics do not fit into the national curriculum. This situation, however, is considered appropriate by the people responsible for approving it," he said.


AFP, February 21, 2005

Indonesian anti-graft suspects may be held up to six-months without charge

Indonesians suspected of corruption could be detained without charge for up to six months under new measures aimed at stamping out rampant graft, Vice President Yusuf Kalla said.

The latest weapon in President Susilo Bambang Yudhoyono's war on corruption is an extension of measures introduced under anti-terrorist legislation and aimed at stemming one of the largest drains on Indonesia's economy and luring back foreign investment needed to reverse the country's economic slump.

Vice President Kalla, speaking to the Media Indonesia newspaper, said that law enforcement had been weak in handling corruptors, especially the biggest offenders.

"If they were not released by the police they would be freed by the prosecutors, or the judges or even while they are in jail," Kalla said.

"That is why we are working on a new government regulation that will put corruptors on the same level as terrorists. We will be able to detain them for six months without charge," he said.

He said that the government was working to build a surveillance and prevention system, but did not elaborate further on the planned measures.

A few months after the 2002 Bali bombings, in which over 200 people were killed, the government issued two stringent anti-terror regulations that became law the following year.

The law allows for long periods of detention without warrants and heavy punishment, including the death sentence and long jail terms.

Since his inauguration in October, Yudhoyono has vowed to stamp out an endemic culture of bribery, kickbacks and collusion.

Indonesia has been rated by global watchdog Transparency International as one of the most corruption-prone countries in the world.

But Kalla said that he believed corruption was now beginning to decrease.

"There may still be some, but the trend is going downward," Kalla said.

Commenting on reported public dissatisfaction on the government's slow pace in battling corruption, Kalla said that catching corruptors was not easy and that time was needed to track and convict them.

He pointed out that scores of former legislators, councilors and government officials in regional areas had been tried, or are facing trial for graft in recent years.

In some areas entire district or city councils have been charged with corruption.

The government, Kalla conceded, was far more focused on curbing corruption than addressing past cases.

"What is more important is the trend, how to curb it," Kalla said.


The Jakarta Post
Monday, February 21, 2005

Govt lacks courage to eradicate illegal logging: Minister

Jakarta (Antara): Minister of Forestry Malam Sambat Kaban expressed concern on Tuesday over rampant illegal logging practices in the country.

Kaban said that his ministry had reported 59 businessmen allegedly involved in a wide range of illegal logging practices to the police and the prosecutors office, but not a single case had been investigated.

"We have reported the businessmen to the two institutions, but there has been no response yet," he said.

The minister believes that the powerful businessmen had run their business network in such a orderly and organized way by involving certain civil servants of his ministry, the police and the prosecutors office that it was difficult to uncover.

"They run a well-organized network, which is backed up by abundant funding resources. They are as slippery as eels put in a pond of lubricating oil," he said.

Kaban further said that the rampant illegal logging practices run by such businessmen had led to the rapid rate of destruction on the country's forests, including those in protected areas.

Their reckless activities have caused the state to suffer losses amounting to about Rp 40 trillion (US$4.32 billion) with about 30 million cubic meters of logs smuggled overseas per annum.


Feb 22-28, 2005

Defending Corrupt Party Politicians?

Attempts to eradicate corruption can easily go astray if the accused are defended by political parties who are doing nothing more than looking after their own. Most of these people are suspected of embezzling the finances of regional legislative councils in cases recently uncovered by provincial prosecutors.

Political solidarity in corruption cases involving party members is misplaced solidarity. Taken further, it could be seen as obstructing law enforcement. On the other hand, parties whose members stand accused of corruption feel their cases have been politicized. Public exposure of the cases is seen as an effort to create problems for one party by a rival party that happens to be in power.

Prosecutors, in other words, are being used as a political tool. That is more or less the conclusion of the Forum to Defend Indonesian Democracy (FPDI), the legal advisors of the Indonesian Democratic Party of Struggle (PDI-P). Other parties are also moving to defend their own members who have been accused of corruption. This habit, if it can be called that, may have been started by the Golkar Party when it openly expressed its support for Akbar Tandjung after he was accused of corruption.

A legal problem has now become a political problem. Political parties believe that the government has injected political bias into the law. This was reflected when House of Representatives (DPR) Commission III formed a committee on regional houses of representatives (DPRD), tasked with monitoring corruption investigations against DPRD representatives. The tactic of defending fellow party members by accusing the prosecution of political bias became particularly apparent when Attorney General Abdul Rahman Saleh testified at a recent stormy joint session of DPR Commissions II and III.

The session, called to discuss problems related to investigating the embezzlement of DPRD finances, was tense from the start. Parliamentarians were unhappy with the use of Government Regulation No. 110/2000, which the Supreme Court declared invalid at the end of 2000. The fact that prosecutors still apply this regulation was used as an example of how cases are being politicized to a point where they appear almost contrived. Such is the viewpoint of the political parties.

The question of a regulation's validity as the basis for indictments and accusations should best be resolved in a court of law. Political pressure should not be used to bring about a verdict. Without realizing it, in its enthusiasm to monitor the work of the Attorney General's Office-and to defend the interests of party members-the legislature has exceeded its role by entering into the sphere of the judiciary.

Seemingly, however, this problem was not of great concern. The hostility towards the AGO overflowed into chaos at the joint session when one legislator suggested that the attorney general "should not act like a moralist inside a den of thieves." Saleh took these words literally and demanded that the speaker retract them and apologize. The disturbance ended when the joint session was adjourned. Leaving aside behavior almost worthy of a kindergarten, shown in its entirety on television, the root of the problem is that there is a lack of trust and respect between the two sides.

Because it is now a political issue, people don't feel the need to justify their mistrust of the AGO, as if the fact that prosecutors are rotten is a notoir fact-public knowledge whose truth need not be proven. This is what Attorney General Saleh was protesting when he objected to the word `thieves' in reference to prosecutors under his authority. Even if there is some truth to the view that prosecutors are rotten, it cannot be used as a reason to regard those accused of corruption to be innocent.

The dispute between the political parties and the prosecutors should be turned into a more useful dialectic, which would force the AGO to clean up its act and demand that its investigation into corruption cases be expanded and accelerated so more facts can be uncovered. The reaction of the political parties should not be to put pressure on the prosecutors so that they become so weak they halt their investigations or, worse, release those who are guilty.

Forming a team to defend political party members accused of corruption is an example of mistaken solidarity. Party members suspected of corruption are not victims of their party's circumstances, and they are not engaged in representing the people's interests. Rather, parties who protect the guilty could be seen to be involved in their alleged crimes.


Feb 22-28, 2005

Cover Story
Soetjipto: "Our party defending corruptors? That's nonsense"

The meeting room inside the PDI-P (Indonesian Democratic Party of Struggle) headquarters at Lenteng Agung, South Jakarta, was full of people last Tuesday. Close to 120 PDI-P current and former legislators from the provinces had gathered to meet the party bosses. A number of those legislators were being indicted for cases of corruption. "We wanted to obtain information from the provinces," said PDI-P Secretary-General, Soetjipto.

That information was very important, because it was linked to the investigation of some provincial legislators. Besides gathering information for a meeting with the attorney general, they were preparing a position paper on PDI-P's stance. Soetjipto sat with Tempo reporter Widiarsi Agustina to discuss the meeting. Excerpts:

What is the background for the PDI-P meeting with its Regional House of Representatives (DPRD) members?
The meeting was to take an inventory of cases involving our members in the provinces. Not all our party members are good, but neither are all of them bad. This meeting is a follow-up of our visit to the provinces some time ago. We were asked about the corruption cases that had befallen some of them. Because these legal actions were many, I said that they should be handled by legal professionals, not by me. That is why we invited them to Jakarta to meet with our legal experts. We gave them guidance, how the laws were and so forth.

It seems PDI-P is defending its corrupt members?
It's not about defending corrupt members. We received information from members in the provinces who were indicted for corruption. By coincidence, all over the country, those indicted came in groups. This is strange. If the case was corruption, why groups? Who made the mistake? Because a lot of them should not have been indicted at all, particularly when the money involved numbered in the millions.

Why wasn't it appropriate?
Some of our members in Bali were declared by the Bali District Court to be suspected of embezzling the regional budget (ABMD) valued at billions of rupiah. One of them was I.B.P. Wesnawa, former DPRD speaker in Bali. The accusation was too much. How is it possible that a member whose luxury was a hand phone be accused of corruption? Then there was a member who still lived with his in-laws and was also accused of corruption. He was forced to sell all of his possessions during his interrogation by law enforcement agencies.

The prosecution and the police are treating all cases in the same way by using Government Regulation (PP) 110/2000 on the Protocol and Finances of DPRD Leaders and Members to take legal action against the DPRD. Yet that regulation is in conflict with Law No. 22/2003, and has been annulled by the Supreme Court in its 2002 judicial review.

Even though many of our members may be guilty, we are not evading the issue. We will press for legal action to be taken against some of them. We will take a hard line and dare to dismiss members who are proven guilty, for example if they are being accused of trafficking in drugs.

What kind of defense is PDI-P providing?
Cases in the provinces are quite uniform. We have gathered some legal experts to study the problem and will form an advocacy team. Upon completion, we will disseminate the results of the study to our constituencies in the provinces.

Why doesn't the PDI-P create a team of legal experts in each of the provinces?
In the provinces, most of them have selected their own advocacy teams. Some of them use the teams we provide, they are quite open.

From there we can see which members are guilty, which ones are good but not alert enough. That's why we get upset when they say our party defends corruptors. That's nonsense.

I am very upset because one newspaper featured a cartoon with a PDI-P ranch full of rats. If we enforce the law, we shouldn't be chasing just the rats, because the cats also need to be bathed. The central and provincial prosecutor's offices must be audited together. It can be seen later that there are genuine prosecutors as opposed to those who play at being prosecutors.

What is your opinion about all these legal actions against corruptors?
Some of them do need to be arrested and legally processed. But lately, judging from what I read, the whole thing seems to head towards some kind of character assassination.


The Jakarta Post
Wednesday, February 23, 2005

SBY: Police, Military Involved in Illegal Logging
By Rendi A. Witular and Eva C. Komandjaja, Jakarta

Military and police personnel along with officials from the ministries of forestry and immigration are all involved in the lucrative business of illegal logging in Papua, President Susilo Bambang Yudhoyono has proclaimed.

His statement, quoted by Ministry of Forestry MS Kaban on Tuesday, drew immediate signals of apparent cooperation from the mentioned institutions. Operations assistant to the Indonesian Military (TNI) chief Maj. Gen. Adam Damiri, said the TNI is investigating whether their involvement was limited to their personnel, or whether the institution itself was involved.

Minister Kaban said, "According to the President, personnel of the eastern Navy, the police in Papua, the Trikora Regional Military Command (based in Papua provincial capital of Jayapura), local offices of the ministries of forestry and immigration in Papua, all have indications of being involved in illegal logging in Papua." He had earlier attended an unscheduled Cabinet meeting on illegal logging.

The meeting followed on last week's revelations by the London-based Environmental Investigation Agency and the Indonesian group Telapak. It's report accused the TNI and other officials of smuggling 300,000 cubic meters of timber per month from Indonesia (mostly Papua) to China, with a value of more than US$1 billion.

Kaban on Tuesday named some of the business people allegedly involved, with their main operations taking place in Papua, Jambi, East Kalimantan, Dumai in Riau and North Sumatra -- but he did not name any high ranking officials or military and police officers.

"There's no way the TNI is not involved. The ship carrying the illegal timber was guarded by warships," he said.

The President has instructed that an "integrated crackdown" take place in the next two weeks, Kaban said, against all suspected parties, which would cost some Rp 8 billion (about $860,000).

National Police Chief Gen. Da'i Bachtiar said apart from cooperating in the crackdown, his office would conduct "shock therapy" against personnel suspected of involvement in the crime. A former police chief of Sorong regency in Papua and five of his subordinates are on trial for alleged illegal logging in the province.

Also on Tuesday deputy chief of detectives at the National Police Insp. Gen. Dadang Garnida said police are seeking funding of Rp 48 billion a year in order to conduct six operations per annum, or Rp 8 billion per operation, against illegal logging.

He said that with the Rp 8 billion spent in an earlier operation, police had managed to recover around Rp 1.5 trillion worth of illegal timber.


The Jakarta Post, Jakarta
Wednesday, February 23, 2005

Limited supply partly blamed for illegal logging

The high demand for timber on the growing national and international markets and limited supply keeps the illegal timber trade thriving and results in ever increasing pressure on Indonesia's forests, environmental activists say.

Indonesia has the world's highest rate of deforestation, with about three million hectares, or an area of forest the size of Switzerland, being lost every year.

Christian Purba, director of the Bogor branch of Forest Watch Indonesia, said a shortage of supply for the domestic timber industry meant that businesses were willing to buy logs wherever they could get them, including from illegal suppliers.

"Only 20 percent of total demand in Indonesia is capable of being provided from legal sources. The rest of it is illegal," he told The Jakarta Post on Monday.

Togu Manurung of the Indonesian Forestry Academics Union (Persaki) had earlier said that the demand from local industry averaged between 63 million and 80 million cubic meters of logs through last year, while only 12 million cubic meters could be provided through legitimate felling.

"The problem is that the demand is higher than the supply. This results in timber businesses buying from illegal sources...," Christian said.

With one of the largest tropical rain forest covers in the world, Indonesia is a major player in supplying the annual global timber demand of more than 1 billion cubic meters.

"A colleague of mine once said that only 17 million cubic meters of timber products are (legally) available for export," said Christian.

Telapak and the Environmental Investigation Agency (EIA) last week reported that around 2.3 million cubic meters of Indonesian timber were smuggled onto the Chinese market last year, which made Indonesia the world's second biggest exporter of illegal timber, after Russia.

Telapak activist M. Yayat Afianto said that international demand was high for various types of wood found in Indonesia.

"Each of the major islands in Indonesia produce certain species of wood that are in high demand in different timber industries. These include ebony, ramin (Gonystylus) and merbau (Intsia). Logs from each of these species are worth thousands of U.S. dollars," Yayat explained.

Christian said the retail price of ramin logs in Europe or North America could reach US$1,000 per cubic meter, while merbau was worth up to US$2,288 per cubic meter.

The high prices offered on the international market have led to rampant smuggling of these rare species.

"Between 50 and 60 cubic meters of timber are smuggled from Sumatra on average each day every year. About 250 cubic meters come from Kalimantan and between 60 and 70 cubic meters from Sulawesi. Right now, about 10,000 cubic meters are being smuggled out of Papua each day," Yayat said, revealing the results of Telapak's investigation.

Christian proposed two solutions for tackling industry-related problems: taking action against guilty companies and importing legal timber from countries not involved in the timber smuggling racket.

"The government should close down those companies that refuse to purchase legal timber because they say it is more expensive," he said.

"If our industry cannot meet domestic demand, we should consider importing wood from other countries, but only from those countries not involved in the illegal syndicates. The purpose of this would be to bring supply and demand into equilibrium," Christian explained.


Investigation Illuminates Illegal Timber Trade from Indonesia to China
By Jim Lobe, OneWorld US

Washington, D.C., Feb 22 (OneWorld) - International criminal syndicates are smuggling tens of millions of dollars worth of merbau logs from Indonesia's Papua province to Chinese timber processors, according to a new report released by the London-based Environmental Investigation Agency (EIA) and its Indonesian partner, Telapak.

The report, "The Last Frontier," says about 300,000 cubic meters of logs are shipped out of one of the last remaining intact tropical forests in the Asian-Pacific region to feed demand for hardwood flooring and garden furniture in China, one of the world's fastest-growing economies. The groups charged that China has become the world's largest buyer of illegal timber.

Papua, a resource-rich province where a low-level insurgency based in the indigenous population has been pursued for decades, is controlled by Indonesia's notoriously corrupt military (TNI) which appears to be profiting from the trade, according to the report.

"Papua has become the main illegal logging hotspot in Indonesia," according to Telapak's M. Yayat Afianto. "The communities of Papua are paid a pittance for trees taken from their land, while timber dealers in Jakarta, Singapore and Hong Kong are banking huge profits."

The local communities only receive about US$10 for each cubic meter of merbau felled on their land, according to the report. In China, however, the same logs are sold for as much as $270 per cubic meter.

Some of the profits go to corrupt police and military officers who pay local communities to cut the timber and then are paid around $200,000 per shipment to ensure that the logs are safely shipped out of Indonesia and its territorial waters, eventually winding up in a small town called Zhangjiagang in eastern China that in just a few years has become perhaps the world's largest tropical log trading port. The rest of the profit goes to criminal syndicates that oversee the trade.

"This massive timber theft of Indonesia's last pristine forests has got to be stopped," said Afianto.

True to their past work, EIA and Telapak investigators posed as interested traders in order to trace smuggling operations.

They found that Indonesian and Chinese government officials who were apparently aware of the trade looked the other way. Investigators found that logs shipped to Zhangjiagang were cleared through customs using false Malaysian paperwork to disguise their origin. They were then shipped on to the nearby town of Nanxun, China's main center for the manufacture of wood flooring.

The town, which had just a few flooring factories five years ago, now boasts more than 500 that are supplied by over 200 sawmills cutting only merbau logs. "Every minute of every working day the Nanxun factories process one merbau log into flooring," according to the report.

"Indonesia and China signed a formal agreement over two years ago to cooperate in tackling the trade in illegal timber," said EIAs Julian Newman. "So far these words have not been matched by actions. The smuggling of merbau logs between Indonesia and China violates the laws of both countries, so there is a clear basis for action."

The logging of merbau in Papua follows the huge logging operations that have deforested much of East Kalimantan province and Sumatra over the past decade. Over 70 percent of Indonesia's original frontier forests have been lost, and the country's deforestation rate is the world's worst, with an area the size of Switzerland being lost every year, according to the report.

With one of the last virgin forests, Papua, formerly known as Irian Jaya, has in effect become the "last frontier" for the timber companies.

A Dutch colony until 1963, Papua was forcibly annexed by Jakarta in 1969. In the face of a poorly armed insurgency--until relatively recently, most of the insurgents commonly fought with bows and arrows--the territory has been occupied by tens of thousands of Indonesian troops. In addition, Jakarta promoted the immigration to the territory of thousands of Javanese, a program that further aggravated tensions with the indigenous population.

The world's largest gold mine, the Grasberg mine, is also located in Papua and is owned by New Orleans-based Freeport-McMoran.


The Jakarta Post
Wednesday, February 23, 2005

Responses to graft survey show depth of problem
By Tony Hotland, Jakarta

Last week, Transparency International Indonesia (TII), announced the findings of a survey it conducted on corruption in the country. Todung Mulya Lubis, a member of TII's board of directors, discussed these with The Jakarta Post's Tony Hotland.

Question: The Transparency International Indonesia (TII) survey has produced indifferent responses from those whose names or institutions appeared on the roll of shame. How do you see this?
Answer: Frankly, I'm very confused why these government officials are so easily offended. The TII survey shows the business community's perceptions of corrupt areas in Indonesia. The results show that Jakarta is perceived as the most corrupt city in this country. I am aware that this finding makes a lot of sense as Jakarta and other areas perceived as corrupt like Medan and Surabaya are centers of industry and trade. But that is no excuse for taking the survey's findings for granted.

The survey should serve as a reference for these administrations in increasing internal reform with a view to creating clean governance. Their responses, however, have been negative instead of taking on board the main point, which is that the business community still sees corruption as a systemic, endemic and widespread practice here despite much-hyped anticorruption campaigns by the government. Their responses are definitely not in line with the commitment of the new government to eradicating corruption and accepting criticism and input graciously. This survey confirms the Transparency International annual survey, which places Indonesia as the fifth most corrupt country in the world. We are making efforts to revive and bring in new investment here, but if this kind of survey is responded to in this way, the omens are not promising for progress.

The survey shows that bribery is also partly due to the willingness of those in the business community to offer bribes to government officials. Do you see the current situation as a double-edged sword?
It is sad to see that the respondents, 90 percent of which are local businesspeople, have an ambivalent stance about corrupt practices such as bribery. On one hand they support good governance, but on the other hand many of them voluntarily offer bribes, whether simply to show gratitude or to win contracts. Those who do so are likely those with smaller businesses who feel that they have to offer bribes so as to be able to compete with the big boys. Not a few businesspeople also include bribe money as part of their costs as they feel that bribes will be necessary and they will have to compromise even though they know it is the wrong thing to do.

Given the rotten system we have here, it is up to the business community to show more support for clean governance by refusing to offer and pay bribes, and demonstrating zero tolerance for corruption in any form. It is part of their responsibilities to create clean governance. One simple instance, they must pay their taxes honestly instead of "playing dirty" with officials to evade tax. It's their obligation.

How about the governance system here? You specifically quoted a respondent as saying that "the system is such that you cannot avoid corruption".
It is indeed a very dangerous kind of apathy that perhaps many people, including those in business, have in their heads about our administration system. That's why the government has launched a major anticorruption campaign to reform the institutions and the personnel, and should stick to it come what may. The legislation and regulations mandating a transparent and accountable system are already in place, so it's just a matter of implementation and political will.

Given these kinds of perception about our system, over half of the respondents are content to rely on the Corruption Eradication Commission (KPK) to solve this deeply-rooted problem. It is the legal institutions, like the judiciary and public prosecution service, that need to be reformed instead of simply increasing the salaries of civil servants. Having a high salary does not automatically mean you will refuse a bribe.

What is TII doing to help reform the system?
We have a number of programs to put accountable and transparent systems in place in the regions. We've been assisting the Tanah Datar administration in running their administration. They signed what we call an Integrity Pact. For example, we're assisting them in implementing legislation in an accountable manner, like the presidential regulation on public procurement, and then we adapt the system to local conditions and the available resources. The regent of Tangerang has also called me to help them with the implementation of the same pact. We dream of creating islands of integrity that stand tall amid a sea of corruption.

Next year, we also expect to survey more areas, perhaps up to 40 compared to the 21 cities/regencies currently surveyed. And we also plan to conduct surveys on other aspects of corruption other than the bribery index and service satisfaction index.


Asia Times
Wednesday, February 23, 2005

Indonesia's Business Climate in Total Mess
By Bill Guerin

Jakarta - As Indonesian President Susilo Bambang Yudhyono and several of his ministers were wooing investors in Singapore last week, the Indonesian affiliate of French oil giant Total SA, the world's second-biggest gas producer, was making a third appearance in court to stave off a demand by two Indonesian contractors for seizure of its assets.

Foreign investors have major concerns about the lack of legal certainty, the difficulties of negotiating and enforcing contracts, arbitration and judgments, and unequal treatment of domestic and foreign companies. Total's Indonesian operations through Total E&P Indonesie cover seven oil and gas fields and more than 500 production wells in remote areas of East Kalimantan, including Handil, Bekapai, Peciko, Tambora and Tunu, that supply PT Badak NGL - one of the world's biggest LNG (liquefied natural gas) plants.

The dispute is over a US$19 million contract signed in 2001 between Total and a contractor, PT Sarana Kaltim Jaya, for work on the construction of platforms and a gas processing plant at the Tunu field. During the construction phase, technical difficulties in the field necessitated changes to the original budget of $19 million and both Total and Sanggar agreed on several revisions to the contract price.

Total had paid the contractors a total of $25 million by 2003 but the contractor continued to press for more, claiming that further price adjustments were necessary. Total refused to pay any more. Both sides then agreed to call in the Oil and Gas Upstream Regulatory Agency (BP Migas) to mediate. Total agreed to a proposed audit of the project by the Development Finance Comptroller (BPKP), though it made clear it had no contractual connection with the second contractor, PT Istana Karang Laut, as that company had been subcontracted by Sanggar, not Total.

The audit concluded that Total should pay some $7.131 million to the contractors, and last month the two filed a bankruptcy petition against Total, claiming it had refused to pay up. Indonesia's Bankruptcy Law, amended in 1998 after pressure from the International Monetary Fund (IMF), established a separate commercial court system. The IMF insisted on protection of creditor rights as a condition for its $4.8 billion bailout package at the time of the Asian crisis.

Last September, parliament passed a new law in a bid to close loopholes that have been used against foreign investors. Bankruptcy cases against the profitable local operations of British insurer Prudential and Canadian rival Manulife in 2002 resulted in both firms being temporarily shut down after financial disputes that gave rise to bankruptcy proceedings despite both companies' solid financial performance.

In 2002, the commercial court declared bankrupt a local subsidiary of Canadian insurance firm Manulife Financial even though the Indonesian Ministry of Finance declared the subsidiary solvent. The Supreme Court later overturned the ruling. In a similar case two years later, a commercial court in Jakarta declared Prudential's local unit bankrupt after a former consultant to the company accused the insurer of not paying his dues. A court-appointed receiver ordered the London-based insurer to suspend its local operations.

The new law specifies that only the finance minister can file a bankruptcy petition against insurance companies in commercial courts. The attorney general and the central bank are the only bodies permitted to file petitions against banks. Though the amendments to the Bankruptcy Act now prevent creditors from filing bankruptcy suits against solvent banks and insurance companies, any creditor can file a bankruptcy petition in commercial courts over a dispute with other commercial enterprises.

The plaintiffs are asking the court to confiscate the project and two Total office buildings in Jakarta and Balikpapan, East Kalimantan. They have demanded that the court issue an asset-preservation order on assets that belong to the state and are under BP Migas' supervision, including Total's onshore gas process in Senipah, its offshore facility in Tambora, payments from LNG buyers from Japan, South Korea and Taiwan, and the condensate payment from Senipah.

More than three centuries of Dutch colonial rule have left a legacy of the Roman-Dutch version of civil law, where, unlike the reliance on legal precedent and tradition of "common law" prevalent in the United Kingdom, Australia, New Zealand, Hong Kong, Singapore and India as well as the United States, Indonesian judges depend on statutes. An earlier Asian Development Bank report noted that the judges are free to apply the law as they see fit, which accounts for the lack of consistency in decision. Judges need commercial training and better pay and higher social stature, the report suggests. Corruption is also a major factor. Todung Mulya Lubis, one of Jakarta's most famous corporate lawyers and who represents Total, also happens to be the chairman of Transparency International Indonesia (TII), the local arm of the Germany-based anti-corruption watchdog. A TII report released last Wednesday ranked Jakarta as the most corrupt Indonesian city, while the courts and judiciary were ranked the most corrupt public institutions.

TII announced the results of its inaugural Indonesian Corruption Perceptions Index (IPKI), which surveyed 1,305 directors, managers and owners of businesses (1,117 with local firms and 118 with multinational firms) in 21 cities. Lubis said in a press statement that the survey, conducted to find out whether there is a correlation between domestic and foreign perceptions of corruption in Indonesia, shows that "corruption in this country continues to be seen as endemic, systemic and widespread".

Chris B Newton, president of the Indonesian Petroleum Association (IPA), was quoted as saying the bankruptcy case against Total was not helping the investment climate at all, and he feared that it would scare away badly needed foreign investment. Legal and judicial-sector reforms remain critical to any sustained improvement in the investment climate, but whether the Total case will hurt sentiment is doubtful, given investors' already-poor perceptions about Southeast Asia's largest economy.

While the case certainly highlights the unpredictability of Indonesia's legal system, elsewhere it would be seen as little more than a commercial dispute. Lawyer O C Kaligis, who represents the plaintiffs, argues that the case should not be seen as a threat to foreign investors as all companies operating in Indonesia must abide by the law. "This is a simple case - they owe some money that they have to pay. It is impossible for Total to stay here for so many years without benefiting from their projects," Kaligis said.

Lubis could even face charges of influencing court proceedings. Kaligis, representing the contractors, reported him to the police for holding a press conference during an earlier hearing of the bankruptcy petition and issuing a press statement while the court proceedings were still under way. During the press conference, Lubis said that should the commercial court accept the petition, it would scare off foreign investors. "Such a statement will influence the judges' opinion, while all we are asking is for the oil company to pay the money it owes our clients," Kaligis complained. "Why should he say stuff like 'the case will scare off investors'? This is a simple case between creditors and a debtor, not about influencing the investment climate."

On the same day the TII report was published in Jakarta, President Yudhyono pledged in Singapore to clear away red tape, corruption and other obstacles that have long deterred foreign investment. Tax, labor and investment laws will be amended to make the business climate more attractive, he said. "We believe that increasing transparency and reducing red tape [are] the necessary first step to address corruption."

The two countries inked a new investment guarantee agreement that gives most-favored-nation treatment to investments between the two countries. Any investment disputes that cannot be resolved will be referred to the International Center for Settlement of Investment Disputes.

Singapore at least has confidence that the Indonesian president will make progress on problems he has acknowledged himself could not be solved "overnight". Prime Minister Lee Hsien Loong said investment agreement would be "a very useful signal to investors that Indonesia welcomes investments and is moving to enhance the conditions for investments in Indonesia, and it will be noted by people from many countries".

Bill Guerin, a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 19 years as a journalist. He has been published by the BBC on East Timor and specializes in business/economic and political analysis in Indonesia.

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