The policemen's bank accounts

The policemen's bank accounts

Last week's disclosure of indications of money laundering
involving hundreds of billions of rupiah related to the personal
accounts of 15 police officers is the biggest test yet of the
leadership and integrity of new National Police chief Gen.
Sutanto.

The public has long perceived the police as the most corrupt
of public institutions, along with the tax and customs services,
and this has been confirmed numerous times in opinion polls and
surveys. However, the revelation of the questionable accounts was
the first strong public evidence of the amount of money involved
in the malfeasance within the National Police. It is worth noting
that the highest take-home pay for a four-star police general is
about Rp 10 million (US$950) a month.

True, the principle of presumption of innocence must always be
upheld. But the information about the alleged money laundering is
highly credible because it was revealed after a meeting between
Gen. Sutanto and Yunus Husein, chief of the Financial Transaction
Reports Analysis Center (PPATK), which in many other countries is
known as the financial intelligence unit.

At the meeting, PPATK chief Husein reaffirmed the need for
strong cooperation between his institution and the National
Police in handling money laundering cases. He also submitted to
Sutanto a bulky report outlining the indications of money
laundering involving numerous bank accounts, including those
owned by 15 police officers.

There are two reasons this report is highly credible. First,
most banks and financial institutions in the country are hesitant
to report suspicious transactions for fear of losing important
clients. Hence, once they decide, or feel compelled, to report
suspicious transactions to the PPATK, as they did with the
policemen's accounts, there is a good chance the transactions are
highly suspicious.

The second factor is that lawyers and financial experts at
the PPATK, which is in charge of enforcing the money laundering
law, thoroughly analyze reports of suspicious transactions they
receive from banks and other financial institutions. Only when
they are convinced there are strong indications of money
laundering will they submit the case to the police for further
investigation.

So the indications and evidence of money laundering are
thoroughly checked before they are submitted to the police as to
the source of the money and the purpose of the underlying
transactions.

Sutanto's credibility, integrity and leadership will therefore
be seriously questioned if the money laundering cases against the
police officers are eventually rejected because of a "lack of
evidence".

We got the impression that Husein specifically lobbied for a
stronger commitment from Gen. Sutanto because of his frustration
with the lack of cooperation and the corrupt mentality within the
police. Over the past two years, the PPATK has submitted hundreds
of money laundering cases to the police for investigation, but
very few of them have reached the Attorney General's Office.

Cooperation between law enforcement agencies and among
financial service companies, as well as other state institutions
like the customs and tax services and the stock market watchdog,
is vital for the effective enforcement of the money laundering
law.

If Sutanto fails to act on the allegations of money laundering
involving his officers, it will damage his reputation and
compromise his integrity. It also would adversely affect the
credibility of the nation's campaign against money laundering.
This would be a big loss because efforts to fight money
laundering are also important for combating corruption and tax
evasion, which are rampant in Indonesia. Strong enforcement of
the law will make it extremely difficult for those involved in
corruption and for tax evaders to launder their ill-gotten money
in the legal financial system.

It is also worth remembering that even though Indonesia was
removed from the blacklist of the Financial Action Task Force of
developed countries last February, it is still subject to
periodical evaluation.

Failure to deal transparently and credibly with the
questionable personal accounts of these 15 police officers could
see Indonesian thrown back onto the blacklist. This would harm
Indonesia's economic competitiveness because it would add extra
costs to financial transactions with companies and individuals in
Indonesia.