Friday, May 7, 2010

Indonesia Pays a High Price for Its Corrupt Heart

Overcoming the culture of graft is a formidable challenge
AS NEWS spread of the shock departure of Indonesia's reform icon and finance minister, Sri Mulyani Indrawati, this week, one senior markets trader in Jakarta gave an almost despairing view of the country's prospects of overcoming its entrenched culture of corruption. ''It's just a massive task,'' he said. ''It like brain surgery. No, it's more difficult. It's like you have to alter Indonesia's DNA.''

The assessment was a touch uncharitable. In everyday interactions, Indonesians are almost unfailingly honest and gracious. The problem arises when they join the country's institutions that are beset with corruption. From the legislature to the judiciary, and the Tax, Customs and Immigration departments - graft and bribes are common. Those wanting to work in these places will often have to pay up to get an entry level position and then spend the rest of their careers trying to recoup their investment, sometimes outlaying more sums as they rise up the career ladder. The going rate to join the Jakarta police force, for example, can amount to 80-90 million rupiah ($9750 to $11,000), according to Neta Saputra Pane, the head of Indonesia Police Watch, a non-government group that monitors corruption.

''An Indonesian is a victim of corruption from the day he's born until the day he dies. When a baby has to be delivered, it is common for Indonesian families to be told there is not a room available, unless they pay. When someone dies, they will be told there is no more vacant land to bury the man. Again, when they pay, suddenly they get a grave for their loved one,'' Pane says. Ordinary Indonesians are fed up with corruption, collusion and nepotism. Since the President, Susilo Bambang Yudhoyono, asked citizens to send him text messages outlining instances of graft, he has received more than 3 million of them. Yudhoyono was re-elected in large part because of his reputation for probity and his vow to attack corruption with vigour.

But Indrawati's resignation to join the World Bank has highlighted that the battle is far from won. The feisty technocrat has attempted to take on some of the most powerful vested interests in Indonesia, chasing down the tax debts of business tycoons and removing corrupt officials.

Some of those interests, most notably the business and bureaucratic elites that make up the Golkar Party, are part of Yudhoyono's ruling coalition. The backlash has been intense. Indrawati's enemies accused her of illegality and corruption in the bail-out of a small financial institution Bank Century during the 2008 financial crisis . No corruption was proven despite months of investigation. Why she chose to leave is unsure. But, as the analyst Kevin O'Rourke says: ''Whether she was pushed or disgusted and walked away probably doesn't matter. It reflects badly on Yudhoyono.'' Corruption blossomed under Suharto but arguably got worse after he was deposed in 1998 and power was decentralised to the regions, creating new tiers of government. Yudhoyono's anti-corruption efforts have followed the established playbook. There is an independent Corruption Eradication Commission, and a group of officials in his office are tasked with cleaning up the ''judicial mafia''.

Under Indrawati, the government targeted the tax office, increasing salaries and setting up a merit-based promotion and remuneration structure, reasoning that it would promote honesty and the increased revenue could underpin future anti-corruption efforts. But an extensive syndicate of corrupt tax officials persists, trading rulings for bribes, often in collusion with law enforcement officials. The tax revelations followed the acquittal of a junior officer, Gayus Tambunan, who had $3 million in his bank accounts. The outrage they garnered provided a new opportunity to clean out corruption and led to new laws giving ministers the power to sack civil servants. Defeating corruption requires a change in the behavioural equation. That is, the risks of making or taking a bribe must outweigh the benefits.

The history of anti-corruption efforts shows that there is no proven path to success. But there has been one common characteristic for success: strong and uncompromising leadership. Traditional Javanese values, however, put a premium on harmony and non-confrontation, and Yudhoyono is the personal epitome of these ideals. In important respects, these values help him govern an ethnically diverse nation. But they don't assist in tackling deep-seated corruption. Sydney Morning Herald By Tom Allard in Jakarta.

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