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War on graft in mining, palm oil hit by new law weakening Indonesian enforcer

University students heading towards the Indonesian parliament's building in Jakarta to protest against several controversial bills, including the recently passed KPK law. Image by Hans Nicholas Jong/Mongabay.

  • Indonesia’s anti-corruption commission and its supporters have warned that the passage of a new law will severely hamper the fight against graft, including in the natural resources sector.
  • The law is the culmination of more than a decade of attempts by parliament — whose members have frequently been charged and convicted of corruption — to curb the powers of the commission known as the KPK.
  • The KPK had in recent years intensified its focus on tackling graft in the mining, plantation and natural resources industries.
  • The sector has long been rife with corruption, most commonly the issuance of permits and concessions by local officials in exchange for bribes from companies.

JAKARTA — Laode Muhammad Syarif has been spearheading a critical war against corruption in Indonesia for the past four years.

Since December 2015, he’s served as a leader of the Corruption Eradication Commission, the country’s antigraft agency, better known as the KPK. In recent years, the agency has intensified its efforts to crack down on the pervasive corruption in the natural resources sector.

These cases range from the president of the state-owned power utility allegedly taking bribes to award contracts for the construction of a $900 million coal-fired power plant; local politicians busted for kickbacks from a palm oil company seeking to quash an investigation into its pollution of a lake; to a provincial governor allegedly taking bribes to allow land reclamation in a protected bay.

This past July, Laode, who has a doctorate in environmental law and served on the IUCNs World Commission on Environmental Law, pledged the KPK’s continued commitment to cracking down on corruption cases in this sector through a joint initiative to “rescue Indonesia’s natural resources.”

Speaking to Mongabay last week, however, he said he wasn’t so sure anymore whether the KPK can live up to that commitment.

“Unfortunately I’m not optimistic,” he said at KPK headquarters in Jakarta. “If we see the government’s policies that seemingly only chase investments as much as possible, I’m not optimistic.”

There’s been an outpouring of anger, grief, and even a mock funeral, in recent weeks leading up to and after the passage of a controversial bill that severely curtails the KPK’s ability to carry out investigations.

Under the bill, passed by parliament on Sept. 17, the KPK is no longer an independent state institution. Instead, it becomes a government agency, staffed by the very civil servants it was originally tasked with monitoring, and overseen by a council handpicked by the president and parliament — a body of legislators who have often been the target of anti-corruption investigations.

It has also been stripped of its authority to carry out independent wiretaps of suspects — one of the key weapons in its war on graft that has helped it achieve a near 100 percent conviction rate.

“To be honest, I’m a little disappointed with all that’s happening recently,” Laode told Mongabay. He took a deep sigh and was silent for about 10 seconds before going on: “I don’t see a bright future for environmental protection and the anti-corruption [movement] in the next five years.”

KPK deputy head Laode Syarif, right, addresses the press on Oct. 28 as two of his colleagues display the confiscated bribe money. Image by Indra Nugraha for Mongabay.

Reining in the KPK

The bill was passed in a record 12 days from the start of deliberations, ahead of the Sept. 30 end of the current legislators’ five-year term. The passage of the bill, along with proposed amendments to the criminal code, prompted massive protests by university students in Jakarta and other cities across Indonesia. They’ve called on President Joko Widodo to issue an executive order that would quash the new law.

But despite having built his career on a reformist image and making the fight against corruption one of his priority agendas during his campaign, Widodo has made it clear that he will not intervene to prevent the new law from being enacted.

Parliament has repeatedly tried to curb the KPK’s powers since it was established in 2003, pushing a series of series of bills to that effect in 2010, 2011, 2012, 2015, 2016 and 2017. In 2011, one lawmaker, now a deputy speaker, even proposed dissolving the KPK, on the grounds that the commission was simply too powerful and working unchecked.

But with the KPK consistently rated the most trusted of Indonesia’s notoriously corrupt state institutions, there’s a widespread sense among the public that parliament’s attempts to rein in the KPK are self-serving: In the past five years alone, more than 250 national and local legislators have been from charged and convicted by the KPK. Twenty-two of them were members of parliament, including speaker Setya Novanto and deputy speaker Taufik Kurniawan. The KPK has also targeted local governors, mayors and district chiefs, many of them for issuing mining, plantation or logging permits in exchange for bribes to fund election campaigns.

The commission has also not spared the Widodo administration. In the past year, it has charged two ministers with corruption — one of them in connection with the coal power plant project — and is investigating two others implicated in separate cases. The president’s chief of staff, Moeldoko, was widely ridiculed for justifying the passage of the new bill by saying that “The institution of the KPK can hamper investment efforts.”

University students heading towards the Indonesian parliament’s building in Jakarta to protest against the new KPK law. Image by Hans Nicholas Jong/Mongabay.

‘Disturbing’ the tycoons

For anti-corruption activist Emerson Yuntho, the KPK is the only state institution that the public can rely on when it comes to fighting graft in the natural resources sector.

“It’s the one that we can still pin our hopes on to solve mafia practices in the forestry, plantation and mining sectors,” he said.

The commission’s “death” under the new law will be music to corruptors’ ears, according to Edi Sutrisno, executive director of TuK Indonesia, an NGO that advocates for social justice in the agribusiness sector.

Under the KPK’s watch, he said, businesses had been obliged to play by the rules, such as paying taxes, especially after the KPK began focusing on corruption in the natural resources sector in 2014. That initiative entailed, among other measures, a massive effort to review thousands of licenses held by mining companies across the country.

The KPK found more than a thousand mining companies operating without proper permits in forest areas, and pegged the state losses as a result at 15.9 trillion rupiah ($1.1 billion) per year.

“The KPK has repeatedly campaigned for increasing state tax revenue from the natural resources sector, such as palm oil and mining,” Edi said. “The KPK is forcing these tycoons to really pay taxes. This of course disturbs [them].”

Since 2016, the KPK has also been looking into the palm oil sector under a similar initiative. At the same time, the Widodo administration has been loosening environmental protections and easing investments in the extractives industries.

Nur Hidayati, executive director of the Indonesian Forum for the Environment (Walhi), said the efforts to weaken the KPK were part of a grand design to allow business tycoons to extract even more natural resources in Indonesia and operate outside the rules without worrying about being prosecuted. She cited the example of a 2018 government regulation on integrated business permit issuance, which allows companies in certain sectors, including forestry, coal mining and palm oil, to acquire a business permit without first conducting an environmental impact assessment.

Walhi recently filed a legal challenge against the regulation.

Greenpeace activists protest in front of the KPK building in Jakarta in 2009, calling for the arrest of the Indonesian minister of forestry over permits handed out in Riau province. Azmun Jafar, a district chief from the province, is depicted as behind bars. Photo courtesy of Greenpeace/Flickr.

‘Practically dead’

The KPK’s job isn’t just to catch corrupt officials and company executives, said Hariadi Kartodihardjo, the commission’s forestry-sector investigator and a lecturer at the Bogor Institute of Agriculture (IPB). The KPK also works to improve the management of the country’s natural resources through its various initiatives, such as those on mining, palm oil, and the “rescue” of Indonesia’s natural resources.

These are meant to support the government’s policies in the natural resources sector, including a moratorium on new palm oil permits, which Hariadi said was based on the KPK’s own palm oil initiative.

With the KPK weakened, Hariadi said he was worried these initiatives will wither away.

“If there’s no monitoring from the KPK, then [the initiatives] will be ignored, especially by local governments,” he said. “We know that the KPK no longer has authentic authorities [due to the new law], so they’re practically dead. So I fully agree that [the KPK] is in the process of dying.”


Banner image: University students heading towards the Indonesian parliament’s building in Jakarta to protest against several controversial bills, including the recently passed KPK law. Image by Hans Nicholas Jong/Mongabay.


This story was reported in part by Mongabay’s Indonesia team, with an earlier version published on our Indonesian site on Sept. 19, 2019.


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