Combating the corrupt elite<\/p>\n
By Teten Masuki<\/p>\n
JAKARTA (JP): The hurly-burly of the student-led movement
\nagainst collusion, corruption and nepotism seems to have been
\nsidelined.<\/p>\n
Now topping the nation's agenda is the establishment of new
\npolitical parties, the amendment of laws on general elections and
\npolitical parties and the distribution of essential foodstuffs.<\/p>\n
The Habibie government appears to be unwilling to investigate
\nthe allegedly ill-gotten wealth of former president Soeharto, his
\nfamily and his cronies.<\/p>\n
Logically, Habibie should prioritize this move to prove that
\nhe and his government are not Soeharto derivatives. He should at
\nthe same time inculcate a clean and democratic spirit into the
\neconomy to strengthen his political legitimacy in the eyes of the
\ncountry and the world at large.<\/p>\n
But this is not likely to happen because Habibie's Cabinet is
\nriddled with corruption, collusion and nepotism. It is public
\nknowledge that the Habibie family runs the Timsco Group, which
\nhas more than 80 companies under its aegis.<\/p>\n
The group's rapid growth was due to privileges extended by the
\nstate agencies under Habibie's control when he was state minister
\nof research and technology and chairman of the Agency for the
\nAssessment and Application of Technology.<\/p>\n
The family of Ginandjar Kartasasmita, the Coordinating
\nMinister for Economy, Finance and Industry, owns the Catur Yasa
\nGroup, while Coordinating Minister for Development Supervision
\nHartarto owns the Garama Group, which has similar business
\ninterests to the Timsco Group. The Armed Forces (ABRI) also has
\nbig business interests.<\/p>\n
There seems to be great concern that once this information is
\nmade public, it will jeopardize Habibie's authority.<\/p>\n
Seen in this light, it is not surprising that Habibie
\ndismissed Attorney General Soejono Atmonegoro after he pledged to
\ninvestigate the wealth of Soeharto's family and cronies. Soejono
\nwanted to establish a team to investigate corruption which
\ninvolved members of the general public and he proposed turning
\nthe Attorney General's Office into an independent agency.<\/p>\n
Unfortunately, Soejono's plans will be hatched by his
\nsuccessor, Lt. Gen. Andi Muhamad Ghalib. It is not clear whether
\nthis has something to do with a pledge to protect Soeharto's
\ndignity and good name made by Ghalib's former boss, ABRI
\nCommander General Wiranto.<\/p>\n
The pledge, which was made shortly after Soeharto's fall from
\ngrace in May, did not explicitly suggest that efforts to
\ninvestigate the wealth of Soeharto and his family would be
\nhalted.<\/p>\n
The compromised efforts to fight corruption made by the new
\nAttorney General have been met with skepticism, particularly over
\ntheir ability to investigate the Soeharto family's foundations.
\nSome even doubt the seriousness of the Attorney General's Office.<\/p>\n
Apart from the sudden replacement of Soejono, the
\ninvestigation has not been conducted transparently and doubt has
\ntherefore been cast on its independence.<\/p>\n
Furthermore, the investigation is only searching for evidence
\nof accounting fraud and is ignoring the issue of abuse of power,
\neven though it is widely known that the political elite, the
\nbureaucracy and big business were guilty of gross misuse of power
\nin addition to numerous white collar crimes.<\/p>\n
The public is also aware of the judiciary \"mafia\" which
\ninterferes with court decisions and is therefore afraid the
\ninvestigation will simply serve to launder money stashed away
\ninside the foundations by rubber stamping its legitimacy.<\/p>\n
On the issue of corruption, the investigation has so far
\nfocused only on Soeharto and his family. Some say that their
\nwealth is disproportionate since the former president's monthly
\nsalary was only Rp 10 million.<\/p>\n
The Indonesian Business Data Center estimates that the
\nSoeharto family controls total assets worth over Rp 300 trillion
\n(US$30 billion). The assets include more than 1,000 companies in
\nnearly all sectors of the economy, 105 foundations, and a number
\nof private properties.<\/p>\n
The exact value of the family's overseas assets, including
\nbank deposits and funds in non-bank institutions (trust funds),
\nis not known. Forbes magazine reported that between 1986 and 1989
\nSoeharto's deposits amounted to US$16 billion. They may have
\ngrown since then. Recent reports alleged that an $8 billion
\ndeposit placed in an Austrian bank may have belonged to Soeharto.
\nThe former president has denied these reports.<\/p>\n
It is sad that Soeharto has steadfastly refused to explain the
\norigins of his wealth in public, especially since in his
\nautobiography he claims not to have come from a wealthy family.<\/p>\n
The findings of the Indonesian Corruption Watch (ICW) suggest
\nthat corruption involving ministers, politicians, the
\nbureaucracy, business tycoons and the Soeharto family can be
\nplaced in one of two categories -- corruption in a legal way
\nsupported by the official state policies; and corruption by way
\nof accountancy through marking-up projects and credit.<\/p>\n
The misuse of state funds can take many forms in this sort of
\nenvironment.<\/p>\n
First, state-owned enterprises can be forced to cooperate in
\njoint ventures with certain foundations or crony companies. The
\ncompanies then enjoy a monopoly in the production, distribution,
\ntrade and development of projects at marked-up prices.<\/p>\n
Second, state-owned enterprises are obliged by presidential
\ndecree to channel their profits into particular foundations.<\/p>\n
Third, state-owned companies are coerced by unofficial letters
\nand telephone calls to deposit funds in a bank. The funds are
\nthen advanced as credit at special interest rates to certain
\ncompanies.<\/p>\n
Fourth, state-owned companies are compelled to buy shares in
\ncertain companies, despite the fact that they are financially
\nunsound.<\/p>\n
Fifth, through presidential decrees, certain companies win
\nexemptions on income tax, export-import duty and get government
\nfunds at very low interest rates.<\/p>\n
Under this scheme, certain companies owned by members of the
\nelite have developed into big business groups and expanded into
\nall sectors of the economy at home and abroad. Do not be
\nsurprised to see that many young businessmen already control
\nscores of large companies.<\/p>\n
Since there are political obstacles to investigating
\ncorruption, especially corruption among the elite, it has been
\nproposed that the establishment of an independent and autonomous
\nbody to investigate the wealth of state officials should be put
\non the agenda for the special session of the People's
\nConsultative Assembly (MPR) in November.<\/p>\n
The body must be given full authority to investigate
\ngovernment officials and businessmen who are suspected of being
\ncorrupt. The body would not be necessary if the existing legal
\ninstitutions like the Attorney General's Office could work
\nindependently.<\/p>\n
We have to remember that the investigation and restitution of
\nthe state's wealth must be done carefully. It must not further
\ndamage business activities. If it does, tax revenues will fall
\nand unemployment will rise.<\/p>\n
The writer is the coordinator of the Indonesian Corruption
\nWatch working committee.<\/p>",
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