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.