The U.S. Embassy and corruption

The U.S. Embassy and corruption

By Donna K. Woodward

MEDAN, North Sumatra (JP): A reader recently asked in the
"Letters" column of Dec. 28 why the United States Embassy has not
referred any possible violations of the Foreign Corrupt Practices
Act to the U.S. Department of Justice. One possible reason: lack
of evidence. While admitting privately what payments they make,
people rarely complain officially about corruption because of
their fears of bureaucratic retaliation. This may seem hard to
imagine for those who think Americans believe we're all-powerful.
But when it comes to taking action against corrupt officials,
American business executives tend to be no braver than the simple
kampong tukangs or vendors who dare not repel a police officer's
pressure for cigarette money...

As reader Collin Sinclair noted, American businesses are
prohibited by the Foreign Corrupt Practices Act from paying
bribes -- a prohibition some say would sorely hinder their
competitiveness overseas, were it not so often honored in the
breach. For some executives illegal payments are an inherent part
of their modus operandi and success; they have little interest in
terminating the mutually beneficial arrangements they have co-
engineered with accommodating officials. Others feel coerced to
make payments to survive within the system but would prefer not
to. Yet they will not report the facts to Embassy officials. Why?
Because Embassy officials do not want to hear about it and do not
encourage people to report corruption.

Diplomats' accomplishments, their performance evaluations,
their promotions and future assignments, depend in large part on
their effectiveness with local government officials. Diplomats do
not like having to confront or challenge their hosts; witness
Soeharto's 32 years of praise from the diplomatic community,
despite the universal awareness of his corruption and human
rights violations. They chose to "See no Evil."

Diplomats do not like the distasteful business of going to a
Trade and Industry Minister or a Minister of Mines or a Pertamina
Director to say, "By the way, the American head of Company X is
complaining that he cannot get the permit he needs; he says
someone is waiting for his payment."

I know this because I myself have reported problems to my
Embassy -- albeit small and low level problems -- without result.
Two years ago a few Medan-based Americans reported problems to
U.S. Embassy officers, but there was no follow up. Would anyone
care to guess how likely those people will be to report other
corruption to the Embassy? (This diplomatic neglect happened
under the previous Ambassador. The current Deputy Chief of
Mission has given his assurance that future complaints about
demands for illegal payments would not be ignored by the
Embassy.)

Some time ago former USAID consultant Jeffrey A. Winters
turned the spotlight on corruption at the World Bank. Professor
Winters also cited the U.S. multinational Freeport McMoran of
Irian Jaya, in connection with alleged corrupt practices.
Freeports' American CEO vehemently denied corruption in their
Indonesian operations, with the disingenuous explanation that
there couldn't possibly be corruption by an American corporation
because corruption is against the law.

Last year Acehnese human rights workers accused Mobil Oil of
providing bulldozers to the Indonesian Army -- bulldozers that
were reportedly used to prepare mass graves for victims of
military torture. No one is accusing Mobil Oil of having any
criminal involvement in the deaths in Aceh. What the Mobil Oils
and the Freeports and the international lenders do have is an
interest in the smooth operations of their enterprises.

In the old Indonesia the way to ensure smooth operations was
to maintain smooth relations with civilian and military
authorities -- at all costs. When subtle solicitations were made
for financial and material assistance, assistance was given.
Sometimes the assistance was humanitarian, maybe a village
medical clinic. Some requests seem questionable. A bulldozer for
a military operation? From a private foreign corporation? Yet few
questions were ever asked, and few requests, however
questionable, were denied.

Business executives and officials of international
organizations close their eyes to these and other more direct
forms of corrupt practices in their operations, citing the cost-
effectiveness of cooperation.

Corporate executives and international aid officials would be
in a far better position to withstand unethical pressure if there
were visible support from their Embassies. But anyone suggesting
to a business executive that he/she look to the Embassy for help
will be laughed out of the room. Where are our Embassy officials
when we need support in refusing demands for illegal payments? No
doubt we would be told that Embassy officials are working behind
the scenes, quietly and indirectly, to make their consternation
known where it counts. That, after all, is diplomacy. But if this
is what is being done, it is not enough.

Can our Embassies continue to justify public silence in the
face of the rampant corruption which still affects corporations,
international aid organizations, and private individuals? True,
our Embassies have many interests at stake in dealing with the
Government of Indonesia; yes, they must maintain cordial
relations; and yes, at times certain issues must take second
place to other priorities.

Corruption, though, is an issue whose timeliness is
indisputable. Some diplomats would hide behind the facade of
"cultural sensitivity." But tolerance of corruption is not a sign
of respect for Indonesian culture. Neither should speaking
against corruption be confused with interfering in Indonesia's
sovereignty. Objecting to corruption is not an improper intrusion
upon another government's authority. Official corruption violates
not only American law but also the laws of Indonesia.

Protecting overseas nationals from abuse of power by foreign
government officials is traditionally among the most basic and
important functions of all consular services. But when we face
extortionist demands for payoffs, our Embassies seem to be in a
Hear No Evil, See No Evil mode.

Until Embassies encourage citizens to report corruption, and
aggressively follow up allegations of retaliation with high level
Indonesian officials, there is little hope that individuals will
prevail against corruption. If the U.S. Embassy is serious about
fostering American corporate compliance with the Foreign Corrupt
Practices Act, now is the time for the Ambassador to act.

If Ambassador Robert Gelbart is serious, he will appoint
someone to handle complaints of violations of the Foreign Corrupt
Practices Act (FCPA) just as Foreign Service Officers are
assigned to handle other citizen services. The Embassy will
encourage people to report the problems, detail by dirty little
detail. Then, Mr. Sinclair, the U.S. Embassy might see those
things that should be brought to the attention of the Department
of Justice.

It may be reassuring to Mr. Sinclair to know that although
Indonesia chose to safeguard the stability of its investment
climate by honoring the Paiton power contract, this does not mean
that American corporations cannot be investigated for their
alleged violations of American laws.

The U.S. government might independently decide to look into
the actions of the American members of the independent power
producers bidding consortium. And President Abdurrahman Wahid
might want to discuss with law experts the possibility under the
FCPA of requiring the investigation by U.S. authorities of
companies suspected of making illegal payments to procure
contracts with Indonesian companies, if sufficient evidence can
be gathered in Indonesia. Those who offered illegal payments
should stand alongside those who demanded them, in the overall
scheme to bring those guilty of corruption to justice.

The writer is an attorney and former American diplomat at the
U.S. Consulate General in Medan, and president director of PT Far
Horizons.