Combating the corrupt elite

By Teten Masuki

JAKARTA (JP): The hurly-burly of the student-led movement against collusion, corruption and nepotism seems to have been sidelined.

Now topping the nation's agenda is the establishment of new political parties, the amendment of laws on general elections and political parties and the distribution of essential foodstuffs.

The Habibie government appears to be unwilling to investigate the allegedly ill-gotten wealth of former president Soeharto, his family and his cronies.

Logically, Habibie should prioritize this move to prove that he and his government are not Soeharto derivatives. He should at the same time inculcate a clean and democratic spirit into the economy to strengthen his political legitimacy in the eyes of the country and the world at large.

But this is not likely to happen because Habibie's Cabinet is riddled with corruption, collusion and nepotism. It is public knowledge that the Habibie family runs the Timsco Group, which has more than 80 companies under its aegis.

The group's rapid growth was due to privileges extended by the state agencies under Habibie's control when he was state minister of research and technology and chairman of the Agency for the Assessment and Application of Technology.

The family of Ginandjar Kartasasmita, the Coordinating Minister for Economy, Finance and Industry, owns the Catur Yasa Group, while Coordinating Minister for Development Supervision Hartarto owns the Garama Group, which has similar business interests to the Timsco Group. The Armed Forces (ABRI) also has big business interests.

There seems to be great concern that once this information is made public, it will jeopardize Habibie's authority.

Seen in this light, it is not surprising that Habibie dismissed Attorney General Soejono Atmonegoro after he pledged to investigate the wealth of Soeharto's family and cronies. Soejono wanted to establish a team to investigate corruption which involved members of the general public and he proposed turning the Attorney General's Office into an independent agency.

Unfortunately, Soejono's plans will be hatched by his successor, Lt. Gen. Andi Muhamad Ghalib. It is not clear whether this has something to do with a pledge to protect Soeharto's dignity and good name made by Ghalib's former boss, ABRI Commander General Wiranto.

The pledge, which was made shortly after Soeharto's fall from grace in May, did not explicitly suggest that efforts to investigate the wealth of Soeharto and his family would be halted.

The compromised efforts to fight corruption made by the new Attorney General have been met with skepticism, particularly over their ability to investigate the Soeharto family's foundations. Some even doubt the seriousness of the Attorney General's Office.

Apart from the sudden replacement of Soejono, the investigation has not been conducted transparently and doubt has therefore been cast on its independence.

Furthermore, the investigation is only searching for evidence of accounting fraud and is ignoring the issue of abuse of power, even though it is widely known that the political elite, the bureaucracy and big business were guilty of gross misuse of power in addition to numerous white collar crimes.

The public is also aware of the judiciary "mafia" which interferes with court decisions and is therefore afraid the investigation will simply serve to launder money stashed away inside the foundations by rubber stamping its legitimacy.

On the issue of corruption, the investigation has so far focused only on Soeharto and his family. Some say that their wealth is disproportionate since the former president's monthly salary was only Rp 10 million.

The Indonesian Business Data Center estimates that the Soeharto family controls total assets worth over Rp 300 trillion (US$30 billion). The assets include more than 1,000 companies in nearly all sectors of the economy, 105 foundations, and a number of private properties.

The exact value of the family's overseas assets, including bank deposits and funds in non-bank institutions (trust funds), is not known. Forbes magazine reported that between 1986 and 1989 Soeharto's deposits amounted to US$16 billion. They may have grown since then. Recent reports alleged that an $8 billion deposit placed in an Austrian bank may have belonged to Soeharto. The former president has denied these reports.

It is sad that Soeharto has steadfastly refused to explain the origins of his wealth in public, especially since in his autobiography he claims not to have come from a wealthy family.

The findings of the Indonesian Corruption Watch (ICW) suggest that corruption involving ministers, politicians, the bureaucracy, business tycoons and the Soeharto family can be placed in one of two categories -- corruption in a legal way supported by the official state policies; and corruption by way of accountancy through marking-up projects and credit.

The misuse of state funds can take many forms in this sort of environment.

First, state-owned enterprises can be forced to cooperate in joint ventures with certain foundations or crony companies. The companies then enjoy a monopoly in the production, distribution, trade and development of projects at marked-up prices.

Second, state-owned enterprises are obliged by presidential decree to channel their profits into particular foundations.

Third, state-owned companies are coerced by unofficial letters and telephone calls to deposit funds in a bank. The funds are then advanced as credit at special interest rates to certain companies.

Fourth, state-owned companies are compelled to buy shares in certain companies, despite the fact that they are financially unsound.

Fifth, through presidential decrees, certain companies win exemptions on income tax, export-import duty and get government funds at very low interest rates.

Under this scheme, certain companies owned by members of the elite have developed into big business groups and expanded into all sectors of the economy at home and abroad. Do not be surprised to see that many young businessmen already control scores of large companies.

Since there are political obstacles to investigating corruption, especially corruption among the elite, it has been proposed that the establishment of an independent and autonomous body to investigate the wealth of state officials should be put on the agenda for the special session of the People's Consultative Assembly (MPR) in November.

The body must be given full authority to investigate government officials and businessmen who are suspected of being corrupt. The body would not be necessary if the existing legal institutions like the Attorney General's Office could work independently.

We have to remember that the investigation and restitution of the state's wealth must be done carefully. It must not further damage business activities. If it does, tax revenues will fall and unemployment will rise.

The writer is the coordinator of the Indonesian Corruption Watch working committee.