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Bulletin of Indonesian Economic Studies

ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20

Combating Corruption in Indonesia? The
Ombudsman and the Assets Auditing Commission
Stephen Sherlock
To cite this article: Stephen Sherlock (2002) Combating Corruption in Indonesia? The
Ombudsman and the Assets Auditing Commission, Bulletin of Indonesian Economic Studies,
38:3, 367-383, DOI: 10.1080/00074910215532
To link to this article: http://dx.doi.org/10.1080/00074910215532

Published online: 17 Jun 2010.

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Bulletin of Indonesian Economic Studies, Vol. 38, No. 3, 2002: 367–83

COMBATING CORRUPTION IN INDONESIA? THE
OMBUDSMAN AND THE ASSETS AUDITING COMMISSION

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Stephen Sherlock

Information and Research Services, Parliament of Australia, Canberra
Early optimism that post-Soeharto governments would lead a systematic campaign
against corruption has largely been disappointed. The creation of the ombudsman
and the Assets Auditing Commission (KPKPN) were hopeful signs, but both initiatives are symptomatic of the weaknesses besetting Indonesia’s anti-corruption efforts. Despite their best endeavours, both organisations have weak powers, are

under-resourced, receive only token political support and exist in isolation from other
investigative and enforcement agencies. International research suggests that official
efforts to eliminate corruption are effective only as part of a coordinated campaign
to reform administration, policy making, legislative institutions and the judiciary.
Threatened exposure or punishment of corrupt officials is not enough: all the institutional incentives and disincentives for abuse of public office for private gain must be
confronted. In Indonesia the problem is that most of those empowered to take such
initiatives have no incentive to do so because they profit from the status quo.

INTRODUCTION
The promise to combat corruption has
been a central element in the rhetoric of
Indonesian governments since the end of
the Soeharto regime in May 1998. But like
the hopes for reformasi as a whole, early
expectations of change have largely been
disappointed (King 2000). The record of
the three post-Soeharto presidents, B.J.
Habibie, Abdurrahman Wahid and
Megawati Sukarnoputri, in fighting
sources and cases of corruption has been

patchy (Hamilton-Hart 2001). There
have been some initiatives on the legislative front, one or two prominent cases
have been pursued and some anti-corruption bodies have been established.
Under the Habibie administration, Law
31/99 on corruption created special provisions for investigating corrupt acts by
public officials, and provided for the es-

tablishment of an anti-corruption commission. Law 28/99 created the KPKPN
(Komisi Pemeriksa Kekayaan Penyelenggara Negara, Commission to Audit
the Wealth of State Officials, or Assets
Auditing Commission), and a presidential decree by Abdurrahman Wahid
created a National Ombudsman’s Commission (Komisi Ombudsman Nasional,
KON) in 2000. One of the most prominent individuals with a reputation for
corruption, the former close associate of
Soeharto, Bob Hasan, has been gaoled.
The most high profile case has been that
of ‘Tommy Soeharto’ (th e former
president’s son, Hutomo Mandala
Putera), who was convicted of corrupt
land dealings, went into hiding and

then had his conviction overturned by
the Supreme Court. He was later re-

ISSN 0007-4918 print/ISSN 1472-7234 online/02/030367-17

© 2002 Indonesia Project ANU

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368

arrested and, along with other charges,
was accused of the murder of one of the
judges who convicted him of corruption.
In July 2002 he was gaoled for 15 years.
But the momentum of anti-corruption
actions had arguably come to a halt by
the beginning of 2001, when then President Abdurrahman Wahid became completely absorbed in efforts to survive the
campaign by members of the legislature
to unseat him. It has not been regained

since Megawati’s accession to power in
July 2001. Megawati has made a number of statements committing her government to combating corruption, but
they have remained at the level of general promises and exhortations to the
nation to abstain from corrupt activities.
There are no indications that she has
developed a comprehen sive anticorruption strategy or that she has seriously thought about how to develop
one. The investigation into the corrupt
Soeharto billions has evaporated and
the ‘Tommy’ case has once again shown
up the dysfunctional nature of the
legal system. The governor of Bank Indonesia, Syahril Sabirin, was sentenced to three years imprisonment
for his alleged involvement in the
Bank Bali case, but the conviction was
later overturned by a higher court
(Kompas, 30/8/02). Akbar Tanjung, the
speaker of the DPR (People’s Representative Council, Indonesia’s parliament)
and leader of the Golkar party, was detained as a suspect on charges of using
public funds for private political ends,
but was able to use his influence to be
released. Although later convicted and

sentenced to three years gaol, Akbar was
released pending an appeal and at the
time of writing remains as leader of the
legislature. In the meantime, the bill to
establish the Anti-corruption Commission, which Law 31/99 required to be created by August 2001, is sitting among the
growing pile of unpassed bills in the

Stephen Sherlock

DPR. Likewise, as discussed later in this
paper, the bill to put the ombudsman on
a proper legislated footing has still not
passed through the DPR.
This paper argues that the disappointment of early post-Soeharto aspirations to eliminate corruption results
from the interaction between a lack of
political will at the highest levels of
government and a lack of attention to
the wide range of reforms in state institutions such as the judiciary, the
bureaucracy, the military and the legislature that would be required to attack the systemic nature of corruption
in Indonesia. It contends that the lack

of progress in combating corruption is
fundamentally due to a failure of political will on the part of successive
post-Soeharto governments but that,
even if the current government were to
launch a serious anti-corruption effort,
the generally simplistic understanding
of the nature and origins of corruption
implicit in most official actions would
hamper this effort. The fitful and uncoordinated character of government
anti-corruption initiatives both reflects
and is reinforced by the fact that the
legislature, the judiciary and the bureaucracy are permeated with corruption and are controlled by networks of
individuals who have every interest in
resisting reform. The paper considers
the examples of the KON and the
KPKPN as illustrative of the fate of institutions that have insufficient political backing and scant resources and
powers, and which have been set an
impossible task because they are isolated within a larger state apparatus
that is hostile to change.
THE NATIONAL

OMBUDSMAN’S COMMISSION
The role of an ombudsman is to deal with
complaints from the public about decisions, actions or omissions by public of-

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Combating Corruption in Indonesia?

ficials. Ombudsmen’s institutions vary
throughout the world (Manning 1999:
1–3; Pope 1999: 46, 83), but generally they
have a responsibility to receive and investigate reports from the public about
government administration being performed contrary to law, unfairly, or with
excessive delay; to make recommendations to rectify and eliminate any improper or poor administrative conduct
revealed in the investigations; and to report, usually to the national legislature,
on their activities, including investigations undertaken on their own initiative.
In a few cases, ombudsmen also have the
power to investigate illegal activity and
to prosecute such cases (International
Ombudsman Institute 2001).

It is generally considered that, to be
effective, an ombudsman must have the
power to compel government agencies
to respond to its inquiries, to obtain all
documents relevant to an investigation
and to question officials. Most ombudsmen’s institutions do not have the power
to enforce their recommendations, but
in most countries with an active media,
legislature and civil society, the pressure
of public and parliamentary exposure is
a powerful inducement for government
agencies to respond positively to recommendations from an ombudsman. An
ombudsman investigates all types of
maladministration and illegality, not
just cases of corruption, but it may uncover evidence of corruption in the
course of investigating complaints. The
ombudsman then needs the power either to prosecute cases of corruption or,
as is usually the case, to pass on information to anti-corruption agencies and/
or law enforcement agencies.
The creation of the National Ombudsman’s Commission in Indonesia

followed a commitment made by Abdurrahman Wahid in his presidential
inauguration speech of October 1999.
This became embodied in Presidential

369

Decree (Keppr es) 44/200 0, and the
KON was established in March 2000.
The Keppres provides for a commission
of nine members, headed by a chief ombudsman and a deputy ombudsman.
Wahid named Anton Sujata, a former
deputy attorney general, as the chief
ombudsman, and empowered him to
appoint the other members of the commission.
Under Keppres 44/2000 the responsibilities of the KON are to receive
complaints fr om the public about
maladministration, and request clarification or information from the government agency concerned; to make
recommendations to the agency and
monitor its compliance with them; and
to report on its activities to the president

of Indonesia.
The institutions covered by the decree
include the judiciary and the courts, the
police, and state-owned corporations,
parliaments and government departments at the central and regional level.
The Ombudsman: A Paper Tiger?
Although the KON has the role that is
usually assigned elsewhere to an ombudsman, it is critically lacking in the
powers of enforcement. 1 It cannot compel agencies or individual government
servants to respond to its inquiries, to
release documents or other information,
or to allow it access to their premises. It
also cannot enforce its recommendations
or compel agencies to act on its advice.
Any recommendation for legal action or
prosecution must be passed on to the
police or the prosecutor’s office for
action. In the words of one of the commission members, the ombudsman is ‘a
Magistrate of Influence not a Magistrate
of Sanctions … the recommendations of
the Commission are not legally but morally binding’ (Surachman 2000: 2).
What this means in practice is that
government agencies are not bound to

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give any substantive response to the
KON. Statistics provided by the commission show that during 2000, the first
year of its operation, it made approaches
to government agencies about 836 complaints, and received 494 responses, a
response rate of 59%. Agencies in the
legal and judicial sector, which were the
subject of 54% of complaints, made up
66% of the responses to the ombudsman’s recommendations.
In the circumstances, this might seem
a surprisingly good result, but these statistics do not give any indication of the
nature and quality of the agencies’ responses. Both simple acknowledgments
and obstructionist responses are included along with the rest. The figures
also do not allow any conclusions to be
drawn about the seriousness or complexity of the cases involved or about
general trends in the responses. It might
be, for example, that there is a good response rate from agencies in simple
cases that do not open up any serious
issues of systematic and regular failure
in administration, or do not involve the
possibility of high level corruption. But
if no responses are being received in the
major cases of discrimination, abuse of
power, corruption or other maladministration, then the ombudsman is arguably ineffective. Getting a full measure
of government agencies’ responses to
the KON is difficult in the absence of
meaningful data.
Perhaps not unexpectedly, members
of the commission have developed generally optimistic interpretations of their
experience with the state apparatus.
Some members have expressed surprise at the quality of the cooperation
they have received, especially from the
courts, and have suggested that the limits to the ombudsman’s powers have
not proved a major problem. Sunaryati
Hartono, the deputy ombudsman, indicated that when she took up the po-

Stephen Sherlock

sition she expected the absence of legal
sanctions to be a weakness for the KON.
But she now thought that it could even
be a strength, because it allows officials
to resolve issues raised by the ombudsman in their own way. The KON, she
said, is seen as an agency to assist bureaucrats to improve their services,
rather than as a ‘big brother’ relating
to government employees in a hostile
and inquisitorial manner (interview,
February 2001). Commission member
Masdar Mas’udi said that officials were
generally quite open to discussing cases
and general issues, but he was less emphatic that this always led to the resolution of complaints (interview, February
2001). Another commission member,
Sri Urip, a former business executive,
was of the opinion that agencies preferred not to be seen to be at loggerheads with the ombudsman over low
level matters, but she expressed reservations about the ombudsman’s capacity to resolve major cases (interview,
February 2001).
Standard international practice is to
provide an ombudsman with the power
to obtain information, documents or
other records from an agency, or an individual within an agency, within a
specified period of time (International
Ombudsman Institute 2001). Without
such power, the ombudsman’s inquiry
can simply be ignored or delayed for so
long as to render it ineffectual. The experience of the Indonesian ombudsman
is also that agencies will sometimes simply deny that any cause for complaint
exists, leaving the ombudsman with no
power to persist with an investigation
other than to send another letter to the
agency (interview with chief ombudsman, January 2001). An ombudsman
should also have the authority to call
witnesses and to examine them under
oath. This power may be necessary to
allow the full version of events in a case

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Combating Corruption in Indonesia?

to be obtained from individuals who
might otherwise choose to obstruct an
investigation. In addition, an ombudsman should have the power to enter the
premises of an agency whose actions are
the subject of a complaint, if it judges
that this is necessary to ensure that all
documents and other relevant information are being supplied. In the case of
Sweden, where the concept originated,
the ombudsman even has the power to
initiate prosecution if it finds evidence
of illegal behaviour.
The Need for an Act of Parliament
At the heart of the KON’s problem of
ineffectual powers is its lack of legislative backing. The Keppres was only designed to be an interim instrument. It
allowed the KON to begin operating immediately, but it also empowered the
ombudsman to draw up legislation for
an institution with powers in accordance
with international practice. The KON
fulfilled its commitment to present a bill
to the Ministry of Justice, but it was met
with non-interest and obstruction from
within the ministry. The bill was subsequently submitted directly to the
DPR, whose Legislation Office (Badan
Legislasi) agreed to consider it for acceptance as a DPR Initiative Bill (as distinct from a government bill). At the
time of writing the Legislation Council
and the KON were still negotiating over
its content.
As an interim measure before the passage of the bill, the chief ombudsman
raised with then President Abdurrahman Wahid the possibility of extending
the powers of the commission under the
authority of the Keppres. Although the
latter is reported to have given inprinciple agreement, there was no
progress on the proposal before his dismissal as president. There have been no
reports of President Megawati proposing to issue a stronger decree.

371

Not only does the Keppres not allow
the KON to force government instrumentalities to cooperate, it also requires
that the ombudsman report not to parliament but to the president. Internationally, an ombudsman’s obligation to
report to parliament is seen as an important part of the accountability of executive government to the legislature,
and as a useful tool for parliament to
scrutinise the activities of the executive.
It also makes the ombudsman itself accountable to the people’s representatives
and to the public.
Parliamentary accountability is an
internationally recognised principle for
an ombudsman, but the performance of
the Indonesian legislature since its reconstitution as a democratically elected
body after Soeharto’s demise gives
cause for doubt about how effective the
DPR would be as a support for the ombudsman. First, the widespread reputation for corruption among legislators
themselves suggests that many may be
hostile to a body that might reveal cases
of corruption and the practices that encourage it. Second, there have been
proliferating reports about the low level
of participation in the regular work of
the DPR by many of its members (JP,
10/12/01; 11/12/01; 15/12/01; 1/2/02;
4/6/02; 12/6/02; 28/9/02), suggesting
that output from the ombudsman,
whether in the form of an annual report
or of individual investigations, would
be ignored by many legislators. At best
it might be used selectively for shortterm political advantage.
The Problem of Funding
The lack of real political backing for the
ombudsman is also clear from the
government’s unwillingness to provide
adequate funding. For about the first six
months of its operation, the KON did not
receive any funds from the state budget!
Members of the commission performed

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their duties without any payment at all.
During that time the ombudsman was
almost entirely funded by the Asia
Foundation, together with assistance in
kind from sympathetic individuals. The
commission was housed in what was described as a ‘storage space’ in a cosmetics company (interview with KON
members Sri Urip and R.M. Surachman,
and commission staff, January 2001). All
office facilities, down to desks and
chairs, had to be borrowed. The commission did not move into permanent accommodation until December 2001, and
even this was possible only because of
the personal connections of one of the
commission members.2 The only regular source of support from the state budget is for the salaries of staff, who are
paid according to their functional classification in the civil service.
Underfunding sends negative signals
to the public and government agencies
about the government’s commitment to
combating corruption and improving
accountability and government services.
It also limits the ombudsman’s capacity
to set itself up to do its job—to obtain
appropriate facilities and equipment and
to hire sufficient staff and train them to a
professional level. The ombudsman’s
staff need training in face-to-face public
service; in interviewing techniques; in
analysis of complex cases; in report writing and provision of advice; in understanding the machinery of government;
and in knowledge of laws, regulations
and procedures and of legal and judicial
institutions. Members of the commission
are of a common view that they need high
quality, well paid and well trained staff,
and admit freely they have yet to reach
the standard they would like. They are
also acutely aware that part of the background to official corruption in Indonesia
is low salaries, and that the commission
will not be immune from pressures to
accept unofficial payments.

Stephen Sherlock

The ombudsman’s main response to
the problem of inadequate resources has
been to seek foreign donor funding. The
Asia Foundation provided around
Rp 400 million during the KON’s first
year of operation, and continues to fund
both routine and developmental expenditure. An international donor consortium, the Partnership for Governance
Reform in Indonesia, will provide $1
million for a program of institutional
development over three years.3
One way in which donor funding has
been used is to provide a salary supplement so that staff of the KON are paid
at a level appropriate to their skills and
duties, to help eliminate the incentives
to corruption. Staff are therefore paid
at a higher level than their civil service
counterparts, with the supplement paid
in the form of an honorarium, since civil
service regulations do not allow employees to receive an official salary
higher than their designated level. In
the opinion of the deputy ombudsman,
the honorarium is still insufficient to
make up a salary that can attract high
quality staff and reduce the temptation
to ‘take gifts’ for providing services.4
The resort to foreign funds is logical,
but what effect it will have on the ombudsman is an open question. Technical and other support from foreign
donors might assist in making the KON
an effective and non-corrupt institution,
but dependence on outside support
could also come at the cost of channelling the activities of the ombudsman into
paths that it might not otherwise have
followed. At the very least, the documentation required by international
agencies can divert a lot of intellectual
and administrative resources. Aid always comes with conditionality, but the
advice of foreign development ‘experts’
has not always proved the most appropriate to local circumstances. A reputation for heavy foreign funding might

Combating Corruption in Indonesia?

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also leave the ombudsman vulnerable
to political attack if its investigative
work creates enemies inside the bureaucracy or beyond.
Membership of the Commission:
Interim or Permanent?
The problem of insufficient funds is critical to the all-important issue of who will
lead the institution as members of the
commission. The members received no
remuneration for the first six months,
and have since received a salary of just
Rp 2 million (about $200) per month.
Even this has been paid on an irregular
basis. It is clearly far below the level that
people with comparable qualifications
could earn in the private sector, and
completely inadequate to attract candidates with the requisite experience and
standing. The problem has been dealt
with by recruiting retired people with
independent means, or people with income from other positions, with the expectation that they will work on a
part-time basis for the KON.
Employing commission members on
a part-time basis was a reasonable strategy in the circumstances, but it is not
an approach that should be used in the
long term. Being a member of the KON
is not like working on a board or for a
commission that requires only periodic
attendance at meetings and other occasional commitments. The function is
not one of oversight or monitoring, but
demands regular and sustained hours
of duty in the commission’s office in
order to handle a constant flow of casework. Since they decide on recommendations to government agencies about
every case in their area (these decisions
then being ratified by the chief ombudsman), members need to be in almost
daily contact with commission staff,
and must keep up a regular output of
work to prevent backlogs. The number
of people who can be expected to do

373

all this on a semi-honorary basis must
be quite small.
In fact, most of the individuals who
have been appointed as members of the
commission are far too busy with other
public activities to be able to devote the
necessary time to the job. For example,
Teten Masduki is head of Indonesia
Corruption Watch, probably Indonesia’s
foremost anti-corruption NGO (nongovernment organisation), and a well
known public figure deeply involved in
many activities. Masdar Mas’udi is a
prominent figure in the traditionalist
Islamic organisation Nahdlatul Ulama
(NU). Sri Urip has become fully involved with work in overseas donor
support for governance reform.
Since its establishment in March 2000
the commission has lost four of its original nine members, leaving the current
five trying to fill all their roles. For reasons that are not entirely clear, none of
the vacancies has been filled. It may not
be due only to inadequate financial
compensation, but commission members have listed this as a key factor
(interview with Sunaryati Hartono,
February 2001). In any case, the current
members were intended only to be interim office holders who would relinquish their positions when a new
commission was constituted after the
ombudsman was provided with legislative backing. As we have seen, the bill
is still in transit at the DPR, with no
clear date for its passage. The current
members may have been appropriate
for an interim body that was soon to be
superseded, but the delay has meant
that the commission as it is currently
composed is unviable.
Operation and Management of the
Ombudsman’s Commission
Despite the unpromising circumstances
described above, it should be said that
the members of the commission and

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374

their staff appear to have made an heroic effort to create a viable, functioning
institution —something that should not
be dismissed lightly when so much of
the Indonesian state apparatus is dysfunctional and corrupt. The chief ombudsman and the other members seem
to have given considerable attention to
ensuring that the commission is a well
managed organisation, with clear procedures, staffed with qualified people
who are committed to good service delivery. International experts and aid
organisations have generally been
impressed with its commitment to
organisational development and internal good governance.
Despite the almost complete absence
of official financial support, the KON
has managed to establish the physical
and institutional infrastructure for a
working commission. With some foreign assistance it was able to set up permanent office premises and hire suitable
personnel. The experience and talents of
the commissioners themselves have enabled the commission to develop clear
administrative procedures, particularly
in the critical area of case management.
They have also invested considerable
effort in developing a corporate identity
among the staff and a sense of the importance of internal good governance.
The achievements of the commission
so far are a good indication of the limitations and possibilities of a commission
operating within current constraints,
and of the importance of providing it
with proper powers and funding. KON
reports show that government agencies
have answered most of its correspondence even though they are under no
compulsion to do so. A small study of
the ombudsman’s case files has shown
that its requests for clarification and recommendations to government agencies
have sometimes been very helpful to
people dealing with state institutions.

Stephen Sherlock

The intervention of the ombudsman has
sometimes cleared obstacles for complainants or restarted stalled processes
of the civil service or the judiciary. This
is not to say that all the complainants’
cases would eventually have been resolved in an entirely satisfactory way,
but the ombudsman has, at the very
least, started processes moving.
However, the instances where the
KON has had some effect have been in
cases of minor significance. They have
involved matters such as persuading a
state-owned corporation to pay its bills
to a creditor, inducing a government
agency to resume discussions with an
aggrieved employee and, in particular,
having judges who have made suspect
decisions in cases before them transferred or removed from those cases.
On the other hand, for the people the
KON has helped, small though their
cases might be, the ombudsman is a
wonderful innovation. One complainant
wrote to the ombudsman, ‘Thanks be to
God that our Republic has an ombudsman …’.5 At a time when progress in
governance reform appears to have
stalled, even the modest achievements
of the ombudsman should not be underrated. Apart from the individuals involved in particular cases, the work of
the ombudsman can contribute to encouraging public demand for something
that is very basic but has been denied to
Indonesians for decades: efficient, clean
and accountable government services.
There is little sign, however, that
KON members are giving thought to
non-conventional or indirect ways of
using the limited powers they have
available. There is, for example, wide
scope for the KON to use data gathered
from complaints to build public support
for change in the processes of government. As the number of cases continues
to accumulate they will provide a primary source for research on trends in

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Combating Corruption in Indonesia?

corruption and maladministration, for
publicising key cases, and for launching
public information campaigns about
ways to overcome corruption and bad
governance practices. In the early
months of the commission’s existence it
received good media coverage, but it has
long since slipped from the public eye.
The ombudsman needs to highlight
major cases of maladministration or corruption and prominent individuals who
might be implicated, such as heads of
government agencies and state-owned
corporations, judges or politicians, and
to work for constant media attention.
Internationally it is also common for
an ombudsman to launch inquiries or
investigations on its own initiative. Such
investigations may be motivated by a
particular individual’s complaint or by
the ombudsman’s view that an issue that
has come to its attention (e.g. through
the media) warrants investigation. They
are generally directed at instances of
systematic misuse of power by a government agency, or at its failure to deal
effectively or fairly with a particular
administrative problem.6 For the Indonesian ombudsman, a thorough investigation of a government agency would
be difficult given its existing powers and
funding, but the KON could consider
conducting a small-scale pilot investigation and widely publicising the results.
THE ASSETS AUDITING
COMMISSION
The KPKPN was an initiative of the Habibie administration in the first flush of
enthusiasm for reformasi. Under the
mandate of Law 28/99 and Presidential
Decree 81/99, the commission was established in January 2001 with the authority (1) to carry out audits of the
wealth of state officials in the legislature,
executive, judiciary and state enterprises
and regional business bodies; and (2) to
receive reports of official corruption

375

from the public and to initiate the gathering of evidence.
Internationally, a function such as this
is generally the responsibility of an anticorruption commission. The recently
establishedCounter-corruption Commission in Thailand regards the collection of
asset declarations by public officials as
one of its major activities.The legislatures
of many countries have laws or internal
regulations for the declaration of assets
or financial interests by members of parliament. Indonesia appears to be alone in
establishing a separate agency for registering information about the assets of officials in all three arms of government
and state enterprises.
Powers and Financial Resources
The powers and financial resources of
the KPKPN are very similar to those for
the KON. The KPKPN’s powers are limited, and its allocation from the state
budget is insufficient for the job it has
to do. While the commission has the
power to request information from officials, neither Law 28/99 nor Keppres
81/99 provides for sanctions for noncompliance or for supplying false information. Members of the commission do
argue, however, that certain provisions
of the criminal code making it an offence
to disregard a government request or to
supply false information could be used
to prosecute officials. The commission
also does not have the power to seize
documents, to question officials or to
check bank accounts or other financial
records. The KPKPN can request clarification about information provided to
it, and officials are expected to permit it
to check their bank accounts, but it can
only investigate bank accounts that officials submit to it. The commission cannot check any bank account, whether in
the official’s name, in the names of family members, or in aliases, unless it receives the official’s explicit permission.

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The chief commissioner of the
KPKPN, Yusuf Syakir, met with President Megawati in November 2001 to argue the case for an increase in the
commission’s powers. He then announced that Megawati had agreed to
support legislation to make it an offence
to provide the commission with false
information, or to fail to make a declaration of wealth to it (Reuters, 26/11/01).
Significantly, Megawati herself has not
made any statement on the matter. In
any case, the passage of such legislation
through the DPR—let alone effective
legislation—is extremely unlikely. Independent executive action to empower
the KPKPN would be a more believable
indication of Megawati’s intentions than
second-hand expressions of support for
changed laws.
The budget of Rp 24 billion (about
$2.5 million) for the KPKPN’s first year
of operation was insufficient for the
physical and human infrastructure necessary to process the huge volume of
information received and to analyse the
data for the purposes of uncovering corruption. The commission is housed in
cramped accommodation packed with
completed and incomplete declaration
forms. Most of the commission’s staff are
occupied with routine work such as data
entry. The KPKPN does not have the
funds to hire the specialised legal, financial and investigative expertise that is
essential to making sense of the mass of
data flowing into its offices. Like the
ombudsman, the KPKPN has been
forced to look to foreign assistance to
compensate for the limitations of its state
budget allocation. At the time of writing it is in discussion with foreign donor agencies, but should it become
dependent on overseas aid the same
questions will arise as were suggested
above in the case of the ombudsman’s
commission.

Stephen Sherlock

The Operation of the KPKPN
The main activity of the KPKPN has
been to send out forms requesting officials to make a complete listing of their
property. It distributed 25,000 forms, of
which less than half had been completed and returned more than a year
after the commission was established. 7
The main use made of the information
from the forms so far is to pass it to the
press. In the case of leading political
figures, this has generated considerable
publicity. The commission has also
been able to win some media attention
for members of the government, the
DPR and regional assemblies (DPRD)
who have failed to make declarations.
Despite the publicity, a large number
of these individuals had still not been
persuaded by late 2001 to fulfil the
statutory obligation to declare their assets to the KP KPN (Koran Tem po ,
17/5/01; 9/10/01; 16/11/01).
On the other hand, the KPKPN has
been to some extent a victim of the relatively high profile it has achieved. Stories about officials and politicians not
filing declarations, and the fact that even
some of the most senior members of central and local governments have not
bothered to respond to its approaches,
have only served to draw attention to
the commission’s lack of power. There
have been a number of calls to disband
it because it is unable to enforce its authority, there being no sanction for failing to make a declaration.
The KPKPN recently declared that it
had verified the declarations of 600 state
officials and was conducting special investigations into the declarations of 30.
The chief commissioner announced that
he would pass on the details to the police, the attorney general’s office and the
military police if the commission’s investigations proved that the officials’
assets had been illegally obtained (JP,

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Combating Corruption in Indonesia?

1/3/02). He did not clarify how the commission would obtain such proof, bearing in mind its lack of investigative
powers. The commission’s role is, in fact,
only to pass evidence on to law enforcement agencies. Without the powers to
question officials or to check financial
records other than those nominated by
each official, it means very little to say
that the declarations have been verified.
A key criticism has been that the commission itself, with 35 members, is too
large to make efficient use of the resources available. Many anti-corruption
organisations have claimed that its size
makes the KPKPN unwieldy in practical terms and vulnerable to political division and differences in strategic
approach. It has even been suggested
that the decision on its size was a deliberate ploy by interested parties to render the commission ineffective.
In theory the KPKPN could make an
important contribution to accountability of state officials by increasing the risk
that corrupt activities might be exposed.
Public disclosure of assets and expenditure far beyond their stated incomes
could seriously embarrass officials, especially elected ones. The discomfort felt
by many judges over the KPKPN’s revelations about under-declaration of assets by members of the judiciary was
underlined when the Indonesian Judges
Association (IKAHI) complained that
such disclosures could affect judges’
morale and ‘ability to pass independent
decisions’ (Straits Times, 1/8/02). Other
reports revealed that the attorney general himself had significantly understated his assets to the KPKPN, failing
to mention his recent construction of a
Rp 5 billion (about $550,000) house in
Jakarta (JP, 3/10/02).
More importantly, the information
contained in declarations could, by inclusion or omission, provide evidence

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for the investigation and prosecution of
corruption by an anti-corruption commission or law enforcement agencies. If
the supply of false or incomplete information were subject to prosecution, corrupt officials could be punished without
the actual corrupt transactions having
to be proved.
MAKING ANTI-CORRUPTION
AGENCIES WORK
We have seen that the KON and the
KPKPN are trying to build viable anticorruption agencies in the absence of
political will from the highest levels of
government. The lack of political backing manifests itself in inadequate powers, poor funding and difficulty in
attracting suitable personnel to lead the
institutions themselves. But even if
these bodies were to have better powers of enforcement, increased financial
resources and improved leadership,
how would they fare in the current institutional environment? Would their
individual or combined activities be
sufficient to have any significant effect
on the pervasive presence of corruption
in Indonesia today?
For many years the study of corruption by scholars and public policy practitioners was dominated by the idea
that corruption by its very nature was
not amenable either to measurement or
to systematic analysis. There were (and
continue to be) arguments that the notion of corruption is a Western construct and of no value in understanding
traditional societies, particularly those
with what came to be called ‘Asian values’. It was even said that corruption
could be desirable for ‘greasing the
wheels’ of government and commerce.
It was often implied or suggested that
combating corruption, particularly in
non-Western societies, was not only almost impossible but also unnecessary.

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In more recent years a body of literature has grown up that attempts systematically to understand the nature and
functioning of corruption and to provide
advice to authorities in their efforts to
eliminate it. In addition to the more
scholarly material, some of this work is
a product of the attention being given
to ‘good governance’ by international
aid agencies and institutions such as the
World Bank, the Asian Development
Bank and the IMF (Lindsey and Dick
2002), a fact that has made it suspect in
some eyes (Theobald 1999). There have
been attempts to quantify international
relativities in corruption, most notably
by the international anti-corruption
NGO Transparency International (TI),
whose Corruption Perception Index receives considerable attention. The quality of data used to compile this index is
variable, and its findings are often used
crudely (especially by the media), but
TI has produced a useful tool for comparing countries and monitoring change
over time.
Particularly within the more policyoriented literature on anti-corruption
initiatives, there has been debate about
the effectiveness of institutions such as
ombudsmen and anti-corruption agencies like KPKPN. Doig (1995: 151–65)
argues that anti-corruption agencies
‘may provide an effective means of promoting probity in government and
protection of state income and expenditure’, but TI states bluntly that such
bodies ‘are more often failures than successes’ (Pope 1999: 87).
Furthermore, it has been suggested
that anti-corruption agencies can themselves add to corruption, particularly
if they are, or threaten to become, effective in exposing those involved in it.
If they get close to uncovering powerful centres of corruption their activities
can be subverted by political interference, and officials from the anti-corrup-

Stephen Sherlock

tion bodies themselves may be bribed.
Agencies can also be misused for political ends by government leaders
wishing to sully the reputations of their
opponents, corruption by government
figures meanwhile being ignored.
Huther and Shah (2000: 12) have developed a framework for the evaluation
of anti-corruption initiatives, and argue
that ombudsmen and anti-corruption
agencies must be assessed in the context of the wider political and governance environment of a particular
country. They conclude that the likelihood of such institutions succeeding is
dependent on the level and pervasiveness of corruption in the country and
the overall quality of governance. There
is a degree of circularity in this argument, because it makes the almost selfevident observation that if the quality
of governance in a given country was
high there would be little corruption.
But the key point is that an an ticorruption body will be effective only
to the extent that it operates within a
framework of accountable and transparent judicial, bureaucratic and legislative institutions.
Manning (1999) stresses the importance of strong political backing from all
arms of government, combined with independence from executive government
intervention, and adequate financial and
human resources. The effectiveness of
any particular anti-corruption agency
cannot be assessed in isolation from
other institutions of accountability and
law enforcement, and from the political environment in which it was created
and within which it operates. Anticorruption bodies create disincentives
to corrupt behaviour by increasing the
risks attaching to corrupt transactions,
but they cannot themselves reduce the
potential rewards of corruption (such
as those created by unaccountable monopoly control over state corporations

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Combating Corruption in Indonesia?

or bureaucratic mechanisms), and are
powerless if they are not backed by effective judicial and law enforcement
agencies.
Klitgaard (1988) argues that corruption can be understood through the formula C = M + D – A (corruption equals
monopoly plus discretion minus accountability): corruption is more likely
to occur when officials have monopolistic control over state resources
(whether physical resources like those
owned by the state oil company, Pertamina, and the food distribution agency,
Bulog, or administrative powers such
as those controlled by taxation, customs
and industrial licensing agencies) and
a high level of discretion over who can
gain access to those resources, while at
the same time the mechanisms for holding these officials accountable for their
actions are weak or non-existen t.
Klitgaard’s point is that there are a
number of elements to the incentives
and disincentives that lead public officials and political leaders into corrupt
behaviour, and that these elements can
be understood in largely institutional
terms, that is, not in terms of individual
morality. Thus while many officials will
resist the temptations created by sole
and unaccountable control over resources, some will not. In such circumstances, the corrupt usually ensure that
they force out, coopt or silence the noncorrupt, because the incentives to do this
are so great.
Conversely, anti-corruption initiatives are likely to be effective to the extent that they attack the institutional
incentives to corruption and maximise
the disincentives. According to Klitgaard (1988), a way to measure the likely
success of an anti-corruption strategy is
to ask if it will reduce monopoly and/
or reduce discretion and/or increase accountability. In Soeharto’s Indonesia,
monopolies were deliberately created,

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and accountability was eliminated with
the conscious intention of perpetuating
monopoly and discretion (Crouch 1978;
Robison 1986; Elson 2001). Eliminating
these arrangements today clearly requires a multi-faceted strategy encompassing reform of the practices and
institutions that put unaccountable monopoly power into the hands of a privileged few. Such a strategy will have to
overcome subversion and open opposition from those with a vested interest in
maintaining the status quo.
Most popular and media discussion
of corruption in Indonesia does not,
however, centre on institutional reform
and the structural underpinnings of
corruption, but on the morality of those
who indulge in corruption, collusion
and nepotism. The elimination of corruption is usually seen as something
that will be achieved when today’s corrupt are punished and when strong
enough laws are passed to deter the
corrupt of tomorrow. This is the background to the media obsession with big
cases of corruption such as the Soeharto
billions and the Tommy Soeharto case.
Corruption in this view stems from the
moral failings of individuals, and thus
can be eliminated if moral rectitude can
be fostered among public officials and
business people. This allows leaders
such as Megawati to posture on the issue of fighting corruption by making
speeches imploring the country’s leaders to ‘jointly uphold the rule of law, political ethics and better social behaviour’,
as she did at a meeting of her party,
PDI-P (the People’s Democratic Party
of Struggle), in January 2002 (JP,
14/01/02).
The few concrete measures taken
since May 1998 have focused on disincentives, on accountability as a
mechanism to deter corrupt behaviour
through punishment. Thus the KON,
the KPKPN and indeed, if it is ever es-

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380

tablished, the Anti-corruption Commission are all designed to reduce corruption by increasing accountability, that is,
increasing the risk of exposure and punishment. Such disincentives are, of
course, an important part of an anti-corruption strategy, and a necessary tool
for preventing corruption and dealing
with its effects when it occurs. They do
not deal with the other factors in
Klitgaard’s equation, however: monopoly power and discretion. Corruption h as so often been a high ly
rewarding activity in Indonesia because particular people—from Soeharto himself to individuals such as
Ibnu Sutowo, with his control over the
resources of Pertamina in the early
years of the New Order (McCawley
1976), to Soeharto cronies such as Bob
Hasan, to the multitude of officials and
military officers who use their positions
to enrich themselves—have had monopoly power over state resources and
great discretion over who was able to
receive benefits from those resources.
If the institutions and procedures that
facilitate monopoly power and discretion remain in place, the incentives for
corruption are likely to overwhelm the
disincentives created by anti-corruption
agencies focused on punishment. The
rewards from corruption allow corrupt
individuals to buy themselves immunity
from investigation or prosecution, or to
evade sanctions through inadequate
regulation of financial institutions or
ambiguously worded legislation. In
these circumstances, the few individuals who are exposed or prosecuted tend
to be ‘small fish’ without political protection, or the occasional ‘big fish’ who
falls out of favour with the ruling power
or loses out in passing political configurations. Punishing the corrupt does not,
of itself, alter the conditions that make

Stephen Sherlock

corrup