Demokrasi

by Hamish McDonald

  Also in 2013, a foreign investor in another business, a mine that had failed to produce enough of the high-grade coal promised by its geologist, found himself called to the Jakarta police headquarters (known as Polda) for questioning over a personal guarantee for part of the mine’s financing. The lender had not even initiated civil proceedings for recovery of the loan, and the loan agreement had an arbitration clause anyway. The investor found himself immediately taken away to the police cells on suspicion of fraud, where he spent two months while his staff and family worked for his release. When he finally won a court order declaring the case a civil matter and ordering his immediate release, the police rearrested him outside the court. Stepping up the pressure, they transferred him to the capital’s Cipinang prison, where he spent a week sleeping on the floor of a mass holding area with common criminal suspects. Becoming seriously ill, he was transferred to a hospital. Some weeks later he was allowed home, with the police case still pending.

  Conversely, the system is highly useful to rich vested interests who are trying to protect themselves against efforts by the state or other parties to investigate or retrieve ill-gotten gains, and to lighten or evade punishment.

  The desultory pursuit of the Suharto family and its wealth after 1998 is the prime case in point. As we have seen, Suharto’s resignation was followed immediately by a public pledge by the defense forces chief, General Wiranto, to protect the ex-president and his family. Leaked conversations showed that his successor, Habibie, was similarly inclined. The law enforcement agencies reacted to calls for his prosecution timidly. They put Suharto under “city arrest” in early 2000 and announced that he would be prosecuted for embezzling some $571 million in government donations to charitable foundations under his control. But the courts repeatedly excused him from attending hearings on the grounds of ill health, certified by his own doctors, despite his frequently being photographed receiving visitors and making public appearances.

  When Suharto did enter a final decline in May 2007, prosecutors decided to close the case, with Yudhoyono and his senior ministers saying it would be improper to order otherwise. In August that year, the Supreme Court gave another warning to his critics. In 1999 the US magazine Time had published a cover story alleging the Suhartos had accumulated about $15 billion worth of land and other wealth, and that a single transfer of $9 billion at the time of his fall had caused a tremor in European financial markets. Suharto sued. Two lower courts dismissed his case, even though Time was unable to prove its figures, notably about the alleged transfer of secret overseas funds. (Though the figure may have been questionable, that Suharto kept money hidden overseas was not. In 2007 the US ambassador Lynn Pascoe reported an executive of the Swiss-based UBS-Warburg as saying that Suharto had been “one of the biggest Indonesian customers” of its private banking arm for many years.) After a six-year delay, the Supreme Court suddenly upheld the defamation action, awarding Suharto Rp 1 trillion (then $106 million) in damages. The magazine would have the judgment overturned in a review, but for a while the decision had a chilling effect on the media. It was widely seen as a case of “judges for hire.”

  The former president’s family members had a harder time but were not without help from corruption in the legal system. In 2000 his least popular child, Tommy Suharto, got an eighteen-month jail sentence from a Supreme Court judge over an $11 million land swindle. Tommy went underground but remained in contact with friends, who presumed him to be somewhere in the network of houses on Jakarta’s Cendana Street, owned by the Suharto family and hallowed ground that was still guarded by the military, and which the civilian police hesitated to search rigorously.

  While Tommy was on the lam, the courageous judge Syafiuddin Kartasasmita died in a gangland-style hit. The assassination was traced back to Tommy, who was found in 2002 and sentenced to fifteen years in jail. Tommy served his sentence in a suite of eight air-conditioned cells in a luxury wing of Cipinang prison, one cell fitted as a billiard room. He had access to a special badminton court and once a week was seen at an exclusive golf course on “medical” parole. In a mysterious decision under Yudhoyono’s government, authorities released Tommy in 2006, only five years into his jail term.

  In 2003 Suharto’s half-brother Probosutedjo also faced court on corruption charges. His jail term was four years, which was then reduced to two years. When he later complained that the reduction had cost some $600,000 in payments to the judges via his lawyers, without him knowing how much was really needed, his full sentence was reinstated. Probosutedjo was pulled out of a hospital and sent back to jail.

  After Suharto died in January 2008, efforts turned to a civil action started in mid-2007 to recover some $1.6 billion ($440 million in state funds and over $1.1 billion in damages) from the seven yayasan (charitable foundations) that had been controlled by the former president. The money donated by or extorted from businesses—in the case of one foundation, a 5 percent levy on the profits of state-owned banks since 1976—had gone to many worthy causes, including thousands of scholarships, in displays of Suharto’s patronage. In the latter years of his presidency, it had also been shelled out to the president’s cronies, such as Bob Hasan, in unsecured, unrepaid “loans,” as well as to family interests. In March 2008 a Jakarta court ruled that one of the foundations, the Yayasan Supersemar, had to repay a quarter of the funds from state levies, $110 million, but declared the Suharto family itself not liable. Delivery of a single rupiah was still being awaited several years later.

  Tommy continued to have friends in some courts. Prosecutors launched civil suits to recover assets and profits from his various land scams and initiated actions to seize $50 million deposited in the tax haven of Guernsey. Mysteriously, $10 million of this hidden money came back to him via an account held by the Ministry of Justice. When the state logistics agency Bulog sued Tommy for Rp 250 billion (then $28 million), which it claimed to have lost in a 1995 land deal, the judges at the South Jakarta District Court threw out the suit and instead awarded damages of $550,000 to Tommy for “defamation of character,” declaring him to be a businessman with “an international reputation.” The then finance minister, Sri Mulyani Indrawati, had a better run with Supreme Court decisions, enabling her department to seize back $134 million in state funds from Tommy’s defunct Timor car project.

  In Indonesian circles, the terms “legal mafia,” “case broker,” and “account owner” are frequently used to describe coteries within the law enforcement and judicial communities. In these, there is little loyalty to the law, the government, or the judicial hierarchy, but a strong sense of entitlement to moneymaking opportunities.

  On the founding of the republic, the Indonesian police inherited a tradition of military-style security enforcement from the colonial Feldpolitie. In 1966 Suharto put them under the Ministry of Defense as the fourth arm of the military. The attorney general’s office and the prosecutors beneath it were also put under tight military control, with top positions filled with army legal officers.

  In the New Order, the highest priority was loyalty to the government and fulfillment of its objectives. Otherwise, resources allocated to the police and judiciary were tight, and agencies were left to raise their own funds. They became extortion rackets. The idea of prosecutors and defense lawyers being “officers of the court” went out the window. Police and prosecutors negotiated with the courts as equals, taking search-and-seizure orders as “requests” that had to be agreed to at top level. The law was a business, and all but a courageous few were part of it.

  After 1998, reform measures tried to change this. The police were separated from the armed forces in 1999–2000. The court system and its administrative staff were placed under a Supreme Court that was given more independence, and judges were monitored and trained by a new judicial commission. But corrupt practices persist, with cases surfacing of large payments to court officials, and defense lawyers telling their clients of direct demands for payoffs from
judges. Even in middle-level courts, these payments can amount to $50,000, in repeat doses, to stave off arrest. Whether defense lawyers are telling their clients the truth is another matter. As one academic legal expert puts it: “If the judgement is known in advance, they can play with that, and get someone to think they are paying for it.” The Indonesian legal community has numerous professional associations, for the simple reason that as soon as a lawyers’ body tries to exert any discipline on its members, it splits.

  The Indonesian National Police were ill-prepared to take over their role as the country’s principal enforcers of law and public security, either in total manpower (150,000 in 1999), technical resources, or accountability. Its staff augment their low official salaries with distributions from blatant and illegal fundraising systems. Unofficial traffic fines collected in on-the-spot settlements by police are pooled at headquarters by designated “quartermasters” and then distributed down the ranks in regular extra pay envelopes. Ambitious police officers develop protective relationships with businesspeople, in many cases from the vulnerable ethnic Chinese community. The businessperson gets protection from violence and ad hoc extortion; the police officer gets money with which he or she can fund promotions or transfers. Less scrupulous protection rackets involve illegal drugs, prostitution, and gambling, and often are centered in sleazy nightclubs and short-stay hotels run by retired police.

  One full-time focus for a number of officers is to look for opportunities for police to insert themselves into civil disputes and turn them into criminal cases, as in the failed coal mine case. Usually this involves debt disputes. Anecdotally, the practice is spreading wider. A housewife who borrows from a moneylender, a business unable to service its debts—all become prey.

  Even the biggest multinational companies are not immune, despite being vital to the Indonesian economy. In 2013 local prosecutors in the attorney general’s office in Riau province persuaded the corruption court to jail two midranking employees of the biggest oil producer, Chevron, for allegedly defrauding the state of funds from an environmental cleanup that had never happened. Yet evidence showed that Chevron had not claimed any tax offset or other benefit, while soil testing made it clear that no problem existed. Another case launched by the attorney general’s office involved the alleged misuse of a wireless-spectrum license by Indosat, one of the largest telecom companies and controlled by Qatar Telecom. Its former chief executive got a four-year jail term.

  Both cases are under appeal. To legal experts, they demonstrate two things. First, judges who had effectively been unexposed to commercial cases throughout their earlier legal careers were ill equipped to spot even blatant misapplications of the law and were often biased against big business. Second, the cases were a signal that prosecutors were willing to go after even the biggest oil and telecom companies.

  In March 2008 the anticorruption commission fired what turned out to be the opening shot in a war with senior elements of the police and the attorney general’s office, a struggle that ultimately would threaten the KPK’s credibility. The agency arrested one of the top prosecutors in the attorney general’s office, Urip Tri Gunawan, while he was in possession of $600,000 in cash. Urip had been one of the leading figures in a drive launched by a new attorney general, Hendarman Supandji, appointed by Yudhoyono in 2007, to show that his department was in fact a credible anticorruption force, not part of the problem.

  Along with the civil actions against the Suharto foundations, Supandji had decided to target one of the biggest elephants in the room. During his five-year stint at the National Audit Agency, the economist Joedono had discovered that the largest leak of government money had occurred in an institution that was meant to be a pillar of fiscal reform, the central bank.

  Bank Indonesia had addressed the collapsing banking system in the 1997–98 Asian financial crisis by setting up a special liquidity fund to support commercial banks hit by runs on their deposits. One of the biggest private banks, Bank Central Asia, then controlled by longtime Suharto business associate Sudono Salim (Liem Sioe Liong) and two of Suharto’s sons, lost 50 percent of its deposits over two weeks. “The central bank would send truckloads of rupiah to the back door, and the employees would rush them to the tellers at the front,” recalls one banker. In all, Joedono says, some $64 billion in the rupiah value of the time was pumped into the system (by other calculations, the bank bailout amounted to $77 billion). In many cases, it went everywhere except to the bank customers, such as out to companies in Hong Kong, which were immediately folded up. Bank Central Asia was one that behaved “decently,” says Joedono, paying its account holders and quietly transferring equity to the government. But overall, only a small fraction was ever repaid or properly accounted for.

  Joedono found the missing billions listed in Bank Indonesia’s books under “accounts receivable” as “perpetual interest-free loans.” The amount was big enough to throw the central bank into negative equity, if properly disclosed. “It was difficult for me to remain polite,” Joedono says. He refused to sign off on Bank Indonesia’s accounts and instead wrote a “no opinion” finding.

  The then president, Abdurrahman Wahid, called him in urgently. “Whatever you do, don’t issue a no-opinion on the bank,” Joedono recalls Wahid saying. “That would be catastrophic. Confidence in the whole of Indonesia will vanish and the rupiah will have no value. We will be bankrupt!”

  Joedono mentioned that Bank Indonesia had given him two different lists of its assets. “How can you have an opinion if you have two lists?” he asked Wahid.

  In the end, Joedono stuck to his guns and issued the no-opinion report. The Ministry of Finance immediately recapitalized the central bank, and a crisis was averted. Joedono wrote a sixty-five-volume report, one volume on each of the banks refinanced by the liquidity fund, detailing what had happened to the money. He sent copies to the police, the attorney general, and the speaker of the parliament. Nothing happened for years, until Supandji decided to take the liquidity fund case up in 2007.

  When Supandji’s investigator decided in March 2008 to close the investigation into two of the bailed-out banks, Bank Dagang Negara Indonesia and Bank Central Asia, for “lack of evidence,” the anticorruption commission was alerted. Some days later, it arrested Urip in the act of taking a $600,000 payment from a Jakarta socialite and business deal fixer, Artalyta Suryani, who happened to be a friend and neighbor of Bank Dagang Negara Indonesia’s former owner, the Sino-Indonesian tycoon Sjamsul Nursalim, who had moved his office to Singapore. Other senior prosecutors were called in for questioning. Six months later Urip received a twenty-year jail sentence in the corruption court, and Artalyta later got five years. No link to Nursalim was found. Soon after her release from her spell in jail—which included a cell with luxuries like air-conditioning, a widescreen television, and a sprung bed—Artalyta was questioned in Singapore over the case of a palm-oil plantation in Sulawesi that eventually saw the local bupati jailed.

  After securing these convictions, the anticorruption commission took over the liquidity fund investigations from the shaken attorney general’s office. More embarrassing arrests followed. They included the central bank’s senior deputy governor, Miranda Goeltom, who up till then had been regarded as a path breaker for women into the top ranks of public service. It turned out that the approval of her appointment in 2004 had been eased by payments of $54,900 in traveler’s checks to forty-one of the fifty-six members of the parliament’s financial affairs commission. Further inquiries fingered other top Bank Indonesia officials whose appointments were also won by payments to parliamentarians. They included the father-in-law of one of Yudhoyono’s sons, who went to jail for five years. Government was bribing government.

  In 2009, however, confidence in the anticorruption commission was badly shaken. In May that year, police arrested its chief commissioner, a former star prosecutor named Antasari Azhar. He was charged with ordering the execution of a Jakarta businessm
an, who had been found in his car with bullets in his head. The businessman was killed, police alleged, because he was blackmailing Antasari over an affair with his wife, a twenty-two-year-old golf caddy. Antasari was immediately fired by Yudhoyono and the following year was given an eighteen-year jail term. He continues to explore avenues of appeal, putting forward technical evidence showing that a threatening message to the victim could not have come from his mobile phone, as police alleged. His case that he was victim of a frame-up continues to have some credibility among the Indonesian public.

  In September 2009 the police declared two other KPK commissioners, Chandra M. Hamzah and Bibit Samad Riyanto, as suspects in a case involving bribes from a businessman, Anggodo Widjojo, who was allegedly involved in a corrupt deal to supply communications equipment to the forestry ministry. The president suspended both commissioners from duty, and the KPK operated under a skeleton leadership. Then, in a sensational twist, transcripts of secret recordings surfaced that implicated Widjojo in a conspiracy to frame the two commissioners: the plot involved senior officials, notably a former deputy attorney general, Abdul Hakim Ritonga, an assistant attorney general for intelligence, Wisnu Subroto, and the national chief of detectives in the police, Inspector General Susno Duadji. The police proceeded with the case, arresting the two commissioners, and Yudhoyono ordered an inquiry from an independent team led by the prominent human rights lawyer Adnan Buyung Nasution.

  A Facebook campaign in support of the KPK and its embattled commissioners gained more than a million supporters. Several thousand demonstrators took to the streets of Jakarta. When the recordings were verified in the constitutional court, open to a fascinated and disturbed public, the police released the two men. Nasution’s “Team of Eight” found the original bribery case against the two commissioners to be weak and recommended that it be dropped. They urged action against the officials pushing it, as well as reinforcement of the KPK’s status and wholesale reform of the police and prosecution branch.