Indonesia: Telling Lies

Jeff Werner

Jakarta—Muhammad Nazaruddin, a bright 32-year-old, was an up and coming national politician destined for high office, perhaps even president. He was one of the new political tigers that won office as the result of Indonesian President Susilo Bambang Yudhoyono's election victory in 2004. By 2010, Nazaruddin was already treasurer of the ruling Democratic Party and a member of the House of Representatives Budget Committee, which oversees government projects.

Nazaruddin's downfall came last May when local newspapers reported he received bribes totalling 25 billion rupiahs ($2.8 million) for a construction contract to build athletes' housing at the Jakarta 2011 Southeast Asian Games. In late September, two members of the project consortium were convicted of involvement in the bribery scandal and were sentenced to only two and two-and-a-half years in prison and a fine of Rp 200 million ($22,300). "If that's all they get, there won't be any deterrent effect," says Indonesia Corruption Watch chairman Danang Widoyoko.

Shortly after these charges first surfaced, the Corruption Eradication Commission (KPK) formally accused Nazaruddin of accepting bribes involving the project. Subsequent charges included two cases that totalled Rp 2.3 trillion ($256.5 million) in bribes. In August, Nazaruddin's lawyer revealed a letter from his client suggesting he'd keep mum about crimes committed by the Democrats if Yudhoyono would guarantee his family's safety, leading to the obvious, if unproven, conclusion that the party's leaders are culpable in as-of-yet-undisclosed offenses. Then in September 2010, the chief of the Constitutional Court alleged Nazaruddin had offered an unsolicited payment of $120,000 to the court's secretary-general. Nazaruddin resigned hastily, launching a series of stinging attacks accusing high-ranking government figures, including the Sports Minister Andi Mallarangeng and the secretary of the Democratic Party's ethics committee, Amir Syamsuddin, of crooked deals. After implicating powerful former associates, he fled to neighboring Singapore for what he claimed was a medical appointment. However, he never bothered to return—at least not for three months. That is when Indonesian authorities discovered him, living under an assumed name in Cartagena, a plush Caribbean beach resort in Colombia. The Indonesian government sent a specially chartered executive plane at a cost of Rp 4 billion ($468,000) to collect him. That too provoked a few raised eyebrows, until the KPK pointed out that a previous whistle-blower who returned on a commercial flight had been poisoned.

"Corruption in Indonesia is just like Coca-Cola," says Widoyoko. And indeed the problem has permeated far beyond the billion rupiah bribes that prop up the already rich and powerful. It has become a deeply embedded feature of Indonesian society and everyday life. Corruption is sapping the growth and undermining the foundations of the world's third largest democracy.

In the time of Indonesia's long-time leader, Suharto, life was a lot simpler for the foreign investor. Suharto ran a one-stop shop. You paid your money to one person, and everything was arranged. Today, in the wake of regional power-sharing, you not only have to bribe officials at the federal level, but also at regional and local levels. This complicates matters. Today, a foreign investor often needs a professional team based in Jakarta and in the appropriate provinces to figure out all the people who need to be paid off.

Corruption has trickled down to every aspect of life. It's routine for authorities to pull over drivers—whether or not a motoring offence has actually occurred—and ask for Rp 50,000 ($5.64) to avoid being taken to court. Agung, a Jakarta property developer, explains, "You are told you have been speeding, or there is something wrong with your car. You are then asked for 'some money for a friend.' This is a code phrase that the officer is demanding a bribe for some sort of alleged motoring offense."

Truck drivers and transportation firms make regular payments to police, officials at weigh stations, even local thugs at checkpoints to allow their overloaded...