Business embroilment
The government has finally admitted what businesspeople have been concerned about: a likely backlash against the business world in the stepped-up drive against corruption, collusion and nepotism (KKN). Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie told the House of Representatives on Wednesday that the government, determined to build good governance both in the public and private sectors, is facing a dilemma.
Cracking down vigorously on KKN in the business world might cripple economic activities as a great number of businesspeople were, one way or another, implicated in those evils, which were accepted as common business practice during the Soeharto and B.J. Habibie administrations.
The great fanfare in which the Texmaco loan case was disclosed and submitted to the Attorney General's Office last week unintendedly caused a massive run on Bank Putera Multikarsa, a unit of the Texmaco Group. The bank, suspended by Bank Indonesia from clearing activities on Tuesday, might have to be taken over and put under the Indonesian Bank Restructuring Agency (IBRA) at the expense of taxpayers if the owners cannot come up with fresh money to settle the negative balance. Under the new central bank law, Bank Indonesia can no longer inject liquidity credits to the banking industry. Liquidation or takeover of Bank Putera Multikarsa would be another major setback to the bank restructuring program, which is the key to economic recovery.
Several businessmen have complained about losing foreign orders or the confidence of their creditors due to the fallout from what they saw as disproportionately negative publicity based on incomplete, immature or inaccurate remarks by officials or in documents leaked to mass media.
However, the risk of shocking the business world obviously cannot be used as an excuse to simply forgive all the past sins of businesspeople and officials, or to be discriminative in disclosing and prosecuting KKN cases.
Abdurrahman Wahid, elected to the presidency mostly on the back of his integrity, is duty bound to act firmly, fairly and consistently to crack down on KKN if he is really serious about maintaining legitimacy and credibility, thus far the only assets he can capitalize on in sustaining popular support for his compromise, coalition Cabinet.
Investigating and prosecuting past KKN cases, instead of hurting market sentiment, will actually strengthen investor confidence in the economy because the drive will eventually enhance good corporate governance. Moreover, political stability without credible law enforcement means nothing to the business sector.
The government can minimize the risk of unintentionally damaging businesses if it pursues the anti-KKN drive through a good balancing act: prosecuting businesspeople involved in KKN practices but seeing to it that their businesses, if still commercially viable, continue normal operations. After all, the target of the campaign is not enterprises but the behavior of businesspeople or business executives.
The anticorruption campaign should also distinguish bad debts caused mainly by the economic crisis from those inflicted by a combination of KKN and economic depression. Certainly not all of the approximately 2,000 big debtors currently handled by IBRA should be blamed on KKN. Quite a number of them were well-managed enterprises which went under only because of the economic crisis. In fact, very few major companies, even those oriented mainly to the export market, could weather Indonesia's economic woes over the past two years, when the rupiah's exchange rate collapsed to as low as Rp 17,000 per U.S. dollar last year from Rp 3,000 in late 1997, the interest rates skyrocketed to as high as 70 percent and the economy contracted by almost 14 percent.
The most important, yet most delicate, task now is how to prevent measures taken within the anti-KKN drive from excesses that could unintentionally create misleading, or confusing information in the market. We all know that the market is highly sensitive to information.
But a balancing act is not an easy exercise in this reform era that demands high standards of transparency and public accountability. Officials who refrain from making comments or statements about major issues could be accused of cover-ups. Just look at how officials have been under constant, almost daily, pressure from reporters hunting for "hot, juicy" news. And bad things such as scandals and KKN cases usually hot news that sells newspapers.
The problem, though, is that premature remarks, incomplete or disproportionate statements about businesspeople alleged or rumored to be involved in KKN practices could mislead and confuse the market or cause their businesses to lose market confidence.
It is imperative that officials, notably law-enforcement officers, while acting firmly and fairly, should tread carefully when investigating KKN cases, refraining from commenting on cases still under investigation and not jumbling up KKN-implicated entrepreneurs with the viability of their businesses.
However, the public will understand and accept such restraint, and not misconstrue it for a cover-up, only if people are really convinced that the government is truly serious and not discriminative in cracking down on KKN. Gaining such public trust and support requires the government to produce definitive performances by successfully prosecuting several high-profile cases, which have widely been perceived to be blatant corruption and yet remain untouched by the law.