Jakarta govt must get cracking on corruption

A series of bizarre revelations and rulings last week has raised serious questions once again about Indonesia’s legal system.

Behind the walls of the prison on the remote island of Nusakambangan, influential prisoners are receiving special treatment. Mohammad ‘Bob’ Hasan, the long-time golfing buddy of former president Suharto, is allowed to leave for twice-monthly medical check-ups and ‘other needs’ in Jakarta.

Jail companion Tommy Suharto, who lives in an adjacent cell separated from others by a prison yard and five steel doors, enjoys special privileges too. He has cable TV and gets periodic remissions off his 15-year jail sentence for good behaviour.

Against the backdrop of these celebrity cells, the government decided last Friday to drop criminal charges against four ex-bank owners after they agreed to settle their debts.

Two Indian business executives of Polaris Software Lab were not so lucky.

They ended up in jail, albeit briefly, for failing to resolve a dispute with their local partner Artha Graha over a US$1.2 million (S$2.1 million) software deal. They were released after strong protests from New Delhi, and the incident still threatens to escalate into a diplomatic row.

Jakarta appears to be sending out the right signals in its fight against terrorism. The arrests of several extremists in the Oct 12 Bali bombings have earned the law enforcement agencies here plaudits.

But in stark comparison, moves against corruption and cronies of the Suharto era seem to be faltering and drawing the wrath of critics who see such failures as fodder to attack the Megawati administration.

Even more significant repercussions lie for the economy.

Unless Jakarta sends a clear and strong signal that it is fighting corruption, international investors will continue to stay away.

The government freed the four former bank owners because they were prepared to return 2.425 trillion rupiah (S$509 million) owed to state coffers. But the legal grounds for doing so are hollow.

How can anyone who has committed a crime against the state walk free simply because they have agreed to settle their debts?

And why the need for an extradition treaty with Singapore when Jakarta is refusing to get tough with economic criminals athome? The government needs to understand that bankrupting disreputable business groups and prosecuting clear-cut corruption cases will send the desired signals to investors, the bureaucracy and public.

It must also be consistent in the application of the law.

The Polaris case points to a concern by foreign businessmen that they do not have legal protection in Indonesia, especially in the event of a fallout with local partners.

The detention showed just how easy it is for the Indonesian party to initiate criminal procedures against their foreign partners – with the help of the police who seemingly act independently of the government and courts.

In most cases, these incidents get resolved quietly. But there have been glaring exceptions.

In 2000, for example, several executives of Manulife, at the time the fourth largest life insurer in the country, were accused of embezzlement and thrown into jail.

Several other high-profile lawsuits have made the global reputation of Indonesia’s judicial system even worse.

State-owned oil company Pertamina keeps defying a string of US court orders in a case involving US-based firm Karaha Bodas.

In July this year, the US District Court of Texas warned Pertamina that pursuing efforts in the Indonesian courts to annul an international arbitration award granted to Karaha Bodas in December 2000 could result in further sanctions.

Based on these examples and others, what confidence can investors have when contemplating private deals?

Are double standards being applied at the whim and fancy of courts – one for foreign investors and the other for powerful Indonesians?

Back home, Bob Hasan and Tommy Suharto and other wealthy prisoners are hardly receiving the same treatment as their compatriots.

Indonesia’s legal system is out of synch with the dramatic political and economic changes in the country since Mr Suharto’s fall in May 1998.

The public image of Indonesian courts is in tatters because they are perceived to be blatantly corrupt and subject to little control.

In the heady boom days of steadily rising investment and competition to lend money to Indonesia’s growing economy, it was easy to turn a blind eye to the system’s weakness.

The problem has hung like an albatross over the last three administrations, with even President Megawati Sukarnoputri admitting yesterday that it has worsened since the Suharto era.

She said recently: ‘Don’t forget that those mistakes continue to be made and in ways that often are worse than in the past.’

Fundamental changes are necessary. Vague and poorly enforced laws will not win any investments for Indonesia.