Wed, 26 Jan 2011

Sometimes graft is a grease that allows a badly regulated economy to run. Yet complacency about corruption is always ill-advised, as it can all too easily drive out legitimate business and destroy the trust that holds society together. Indonesia has hovered on this brink in the past and may be there again now.

The scandal causing the most buzz is that of tax official Gayus Tambunan, who famously bribed his way out of jail 68 times before his trial and even traveled abroad. Last week a court sentenced Mr. Gayus to seven years in prison for abetting tax evasion and bribing judges and police officers, far less than the 20 years prosecutors sought. The head of the directorate of taxation, Mochamad Tjiptardjo, was also replaced on Friday.

Mr. Gayus's career of taking bribes from companies in return for tax breaks remains murky, but no one disputes that the networks surrounding him - the "tax mafia," "prison mafia" and "judicial mafia," target of the government's Judicial Mafia Taskforce - have yet to be rolled up. The investigation so far seems less than rigorous. For instance, during the trial only one of the companies from which Mr. Gayus admitted taking bribes was cited. The problem may be that with so many companies and officials potentially implicated, most of the country's elite wants this case to be closed.

The suspicion is that the mid-ranking Mr. Gayus got special treatment in order to keep him from naming his corrupt superiors and clients. While the police have reportedly discovered millions of dollars in cash and gold in his safety deposit boxes, Mr. Gayus is widely believed to have stashed plenty more abroad, possibly on his recent trips to Singapore and Macau. His ability to pass through immigration on a false passport suggests he continues to have strong support within the bureaucracy.

There are some precedents for these kinds of hijinks. Tommy Suharto, the former president's son who was sentenced to 15 years for murdering a Supreme Court judge, did a fraction of that time in a luxury jail cell and used to fly via helicopter from prison to the golf course. Ex-con and musician Bona Paputungan recently created a hit Youtube video entitled "If I Were Gayus Tambunan," in which he sings a mordant tale of how the corrupt buy their way out of prison.

What's different today is the merger of government and business. In the Suharto era, businessmen needed to curry favor with politicians to get favors, and so paid bribes in various forms. But at least the top figures within the ruling Golkar Party retained their own power base and could knock heads together when the country faced a crisis.

Today, some prominent businessmen are getting more directly involved in politics, either by taking office themselves or bankrolling political parties. This increases the risk that Indonesia will go down the same road as the Philippines, in which a nominal democracy is ruled by a small group of families with a lock on political power and economic activity. Instead of competing, businesses are able to use the levers of power to keep out new entrants and create rent-seeking oligopolies.

Indonesia still has a way to go before it slips into Philippines-style kleptocracy. But if President Susilo Bambang Yudhoyono continues to allow the judiciary and national police to deteriorate, the last line of defense will be public anger strong enough to demand that the next administration arrests the country's slide. That anger is now building.