Removing state from commerce prevents graft

Removing state from commerce prevents graft

Leslie Palmier, London

I have been a student of corruption for many years, and of
Indonesia even longer (my first visit was in 1951), so I hope my
suggestions below on possible measures against corruption will be
helpful. Needless to say, I am concerned only with broad
principles. Whether they are accepted, and how they may be
implemented, is a matter for those who have the difficult task of
fighting this plague.

When corruption is as widespread as it is in Indonesia, curing
it will be very difficult. It will not be quick, but will take
years, even decades. It will not be cheap, but will use a great
deal of the people's money to stop it being corrupted into the
pockets of the rich and powerful. It will not be easy, but will
meet considerable opposition from the corrupt. Nor will it be
popular. Many of those who now agitate against corruption will
protest against the measures necessary to stop it.

Nevertheless, corruption should be curbed. It is preventing
Indonesia from becoming less poor. As we now know, the most
important agent in development is foreign direct investment
(FDI). This does not go to a country where everyone expects a
bribe, and even the courts of justice are corrupt.

Some suggest that the penalties for corruption are too
lenient, and should be increased. In China the crime may incur
the death penalty., but this does not seem to have had much
effect. Another suggestion is that officials are corrupt because
their salaries are too low. If this were true, one would expect
to find that the senior, better paid, officials were less corrupt
than the less well paid.

But the reverse is the case (not only in Indonesia, and not
only in modern times). Also, in the late 1970s the oil boom
increased official salaries considerably. There was, however, no
sign of a reduction in corruption.

Usually, corruption is a crime of the rich, not the poor. As
one local report -- the Wilopo report in the late 1960s -- put
it: "...the powerful and rich were adept at sophisticated methods
of corruption and at destroying any evidence."

As President Susilo Bambang Yudhoyono has said, corruption
cannot be eliminated, only greatly reduced.

How? Briefly, by making it very difficult. About only twenty
years ago, theft of motorcars, or from them, was common in
Europe. It is now rare. This did not happen because of more
aggressive policing, longer prison sentences, etc.

This would have been the direct line of attack, but as an old
English saying has it: "In love as in war, the frontal assault
rarely succeeds".

The reduction in car crime was the result of motor
manufacturers improving locks and installing alarm systems. So
also with corruption: Prevention succeeds, punishment fails

Avoiding the direct attack means not leaving the fight against
corruption to the legal system. Indeed, when a case of corruption
reaches the courts of law, this should be seen as failure, not
success, of anti-corruption policies. In any case the Indonesian
law on corruption needs reform. Corruption is usually defined as
the use of office for personal or private gain.

But the law requires evidence that the state finances or the
state economy have suffered loss. This seems to define an act by
its consequences, which is incorrect. If I give money to the
poor, this remains a good act even if they waste the money. And
if I steal money, this is a bad act, even if I give all the
stolen money to the poor.

This provision of the law smells as if it originated with the
Dutch trading company, the VOC. The directors may not have cared
how honest their employees were, so long as the Company did not
lose. In a modern state, murder is murder, even if the victim is
not a government official, and corruption is corruption, even if
the funds or the economy of the state have not suffered loss. It
is difficult to prove corruption.

The provision mentioned, by making it even more so,
encourages the crime. Popular reaction to recent trials suggests
that the public resent this obstacle to conviction. Consequently,
faith in the system of justice could well be eroded, which is
another good reason for amending the law.

Corruption is a disease not of Indonesian culture, but of
government administration. It is the result of a lack of
discipline, which follows from a failure to take responsibility.
This was well shown during the enquiry into the case of Akbar
Tanjung. In answer to a question, the former president, B.J.
Habibie, replied to the effect that he had entrusted the task of
relieving the poor in Java to Akbar.

When he heard no more, he assumed that all was well. This is
not good enough to prevent corruption.

Effective strategy requires that all officials supervise the
activities of their subordinates to ensure that none act in any
way which might give the administration a bad name. In
particular, any activity, which might, in the opinion of a senior
official, lead to a suspicion that a subordinate was using his
position to obtain material or financial advantage for himself,
should be sufficient cause for instant dismissal, while an
official who was not fulfilling his supervisory responsibility
should be disciplined.

This is not a matter for criminal prosecution, simply a
question of internal discipline in the government service. After
all, government employment is not a basic human right. An
official who uses his position for profit is not unlike a soldier
who sells his weapons. This is dealt with by the armed forces,
without bringing in the courts of law.

The object of this discipline is to isolate officials from the
main source of the infection of corruption. The only way to
prevent this is to ensure that all contacts with businessmen
occur only with permission from more senior officials, who should
receive a report afterwards.

If there is one "iron rule" about corruption, it is that
wherever there are state enterprises, there will be corruption.
This was so in the Soviet Union and its satellites in Eastern
Europe. It is still so in China, and will remain so, no matter
how many of the corrupt are shot, so long as there are state
enterprises.

A dramatic example of this rule occurred in India in 1969.
The Prime Minister, Mrs. Gandhi, nationalized the banks, and they
immediately became hotbeds of corruption. Singapore has gone to
much trouble to ensure that its government is honest. The only
instances of corruption that have occurred were connected with
the state housing enterprise.

In Indonesia as elsewhere, corruption will be curbed only if
and when the state removes itself from commerce. There may have
been good reasons for state enterprises in Indonesia in the 1950s
and 1960s, but it is difficult to believe that those reasons are
still valid in 2005.

The writer is formerly founder Director of the Centre for
Development Studies, University of Bath, U.K., and Associate
Fellow of St Antony's College, Oxford. He is the author of The
Control of Bureaucratic Corruption: Case Studies in Asia.