Tactical fund: no receipts, no questions asked

Endy M. Bayuni, Jakarta, The Jakarta Post

The ongoing corruption investigation into the General Election Commission (KPU) centers more on who among its members got how much money. Naturally, the focus is on the men and women on the commission because they were picked for their clean reputation and track records. That they should now fall from grace (or be about to) because they succumbed to temptation like most other human beings is what makes this story juicy.

Little attention, it seems, is being lavished on the existence of what is officially called the tactical fund -- the account from which the money allegedly being parceled to the KPU members had come from. We have learned, from the KPU treasurer's own admission, that the fund itself was money accumulated from "gratuities" given by KPU's contractors and suppliers.

That the presence of the fund has raised so few eyebrows reflects, by and large, the wide public acceptance of such an account and of the business practices associated with it.

There seems to be nothing out of the ordinary about such a fund.

Many companies, and even most government and non-governmental institutions in this country, have such an account in their books, though it may be called by different names. In all likelihood, the Corruption Eradication Commission (KPK), which is investigating the KPU case, also runs such a fund.

Essentially, a tactical fund is used for expenditure for which there will be no receipts. They are items that you find difficult to account for. When you operate in a country as corrupt as Indonesia, expect the unexpected. Those who have operated in this country long enough know this, and have budgeted for this unexpected, or rather unaccounted, expenditure.

This may include money to bribe petty government officials to secure business permits and licenses, work permits, visas and other documents; even if you don't need to offer a bribe, money helps to speed up the process. It may be payments to journalists to ensure favorable reporting or to the local security authorities or thugs to ensure the safety of your premises. On a larger scale, it may be bribes, gifts, gratuities or kickbacks to secure your contracts.

In most cases, there are no receipts as proof that such payments have been made. Hence, it is easy to see where the name tactical fund comes from: it is spending what is considered to be part of business tactics. Your accountant may accept this as legitimate expenditure and book it under that account.

The flip side of the lack of transparency and accountability of this tactical fund is that it may also be freely used, as in the case of KPU, as an account to receive money for which, again, no receipts are required or even made. The KPU treasurer, Hamdani Amin, disclosed that the commission received $1.15 million as gratuities -- or kickbacks really -- from its many contractors and suppliers.

Notwithstanding the amount (and that is a hell of a big tip), the practice suggests that the contractors won their bids -- for the ink, the ballot papers and boxes, utensils, and what-have-you -- not necessarily because they were the most competitive, but more likely because of collusion involving insiders, whoever they might be.

If the contractors could afford to return so much money to the commission's treasure chest in the form of kickbacks, logically they could have offered much lower prices in the first place, and they would have saved the nation's taxpayers tons of money. It also raises questions about the margin of markup they were allowed to get away with by the KPU. Saving taxpayers' money obviously is something alien to the contractors and to the KPU.

The practice of taking kickbacks from contractors is also regarded as nothing out of the ordinary by most people and seemingly by the investigators of the case, because this has become a common business practice in this country.

So common perhaps that even KPU members who accepted money from their treasurer (who is a civil servant loaned from the Ministry of Home Affairs) never asked questions about the origins of the money.

They accepted at face value the treasurer's explanation that the money, which came on top of their Rp 15 million monthly salary, was for payments for taking part in activities related to their work at the commission. Had they bothered to ask the questions, they probably could have prevented this scandal and returned the money to the rightful owner: the taxpayers.

But then, this is the sort of payments that the less questions you ask, the better it is for you. You can at least proclaim your innocence later on, should anyone inquire about the money.

Slush funds have not only been given a degree of respectability with an official title, but they have also been deemed as a normal and acceptable way of running a business in this country, largely because of our indifference.

It is beyond the scope of the investigators at the KPK to look into the practice of managing tactical funds in this country, especially since public attention is more focused on the high profile figures involved. The money involved certainly puts it in the small league in the normally high stake corruption game.

But the investigation could at least trigger a review of business practices commonly found in this country, including the giving of gratuities by contractors and running tactical funds.

If we could have saved $1.15 million alone from the KPK, imagine the savings we would be making from all the other state and government institutions if we do away with tactical funds.

The current anticorruption campaign would do well to take up this issue.

In the meantime, one valuable lesson we can take from the KPU corruption case is that from now on, lest we want to follow in the unfortunate steps of the KPU members, we had better start asking for receipts for all payments we make, and asking probing questions for all payments received.

The writer is chief editor of The Jakarta Post.