Indonesia Seeks to Deal With Dual Scandals
Can a long-suspect government win through to justice?
By: Ainur Rohmah
The Indonesian government, which has long been accused of looking the other way at major corruption allegations, suddenly has two major cases on its hands, one brought by the attorney general, involving massive theft amounting to up to US$17 billion from tin operations, and the other, initiated as a result of an investigation by Minister of Finance Sri Mulyani Indrawati, involving bribery by as many as 24 companies in export financing schemes.Â
In the history of natural resource corruption in Indonesia, the tin mining one probably ranks as the biggest loss in value ever so far. The question is whether the government, which has emasculated its once-famed Independent Commission Against Corruption, known by its Indonesian initials KPK, can carry the two cases through the courts, which have a less-than-savory reputation, to achieve real justice.
Two previous cases, one involving granting land exploration permits to PT Anugrah Harisma Barakah in Southeast Sulawesi, the other involving PT Duta Palma Group in Riau, are claimed to have cost the state up to Rp4.3 trillion (US$270.3 million) and Rp42 trillion (US$2.64 billion), respectively. However, in court, the prosecutor’s demand to pay for state economic losses by PT Anugrah Harisma was rejected by judges. In PT Duta Palma’s case, the Supreme Court cut the compensation from Rp42 trillion to only Rp2 trillion. Auriga Nusantara's Director of Law Enforcement Roni Saputra reminded prosecutors to be careful in compiling scientific evidence regarding state economic losses in the PT Timah case so as not to reap similar disappointing results.
The most spectacular of the two cases involves government officials and wealthy businessmen in the mining industry, with the arrest of at least 16 suspects believed to have looted hundreds of trillions of rupiah from the production of tin, coal, nickel, and palm oil, with the possibility of more arrests to come, officials say. It is said to be the biggest natural resource corruption case the government has ever brought. Investigators say they have confiscated tens of billions in rupiah, US dollars, and Singapore dollars.
Most prominent among the 16 arrested is popular businessman Harvey Moeis, 38, a fixture in the society pages, who recently flaunted his wealth by buying his two-year-old son a private jet. Robert Bonosusatya, another extremely wealthy figure believed related to the case, was questioned on April 1 for 13 hours but, according to local media, has remained silent about his relationship with Moeis, who this week had two cars confiscated, a black Rolls-Royce sedan and a Mini-Cooper S, a fraction of the assets the government is believed to be after.
Moeis, according to local media, rented Tokyo Disneyland to marry the prominent actress Sandra Dewi in front of Cinderella’s castle at a cost estimated at Rp1.5 billion.
He has been named a suspect in a tin mining corruption case involving PT Timah Tbk, a state-owned enterprise subsidiary with hundreds of thousands of hectares of concession area including on Bangka Belitung, an island province about 900 km north of Jakarta off the eastern coast of South Sumatra that is the center of tin mining operations in Indonesia. The theft is estimated to have cost the government up to Rp271 trillion (US$17.04 billion) between 2015 and 2022. Kuntadi, director of investigations for the attorney general’s office, said the amount could increase. The losses include environmental, economic, and restoration damages, both within and outside the forest areas.
Moeis, Kuntadi said, is a representative of PT Refined Bangka Tin (PT RBT), which actively lobbies and accommodates perpetrators of illegal tin mining in the PT Timah business area. He also allegedly lobbied the former President Director of PT Timah Mochtar Riza Pahlevi Tabrani, who has also been named a suspect, to allow illegal mining companies into PT Timah's business area. Moeis also allegedly asked tin smelting companies to deposit some of their profits to parties who "made a contribution" to their actions. The funds collected were allegedly then managed by PT Quantum Skyline Exchange (PT QSE), disguised as Corporate Social Responsibility (CSR) funds. The alleged money laundering was controlled by QSE Manager, Helena Lim, a businesswoman and socialite who has also been named a suspect.
RBT claims on its official website to be one of the largest producers of pure tin bars (ingots) in Indonesia. The company was built to meet increasing world demand for the best quality tin, with an integrated business starting from exploration, mining, and processing to marketing activities. RBT products have reached major tin markets throughout the world including the Netherlands, China, Japan, India, Taiwan, Hong Kong, Singapore, and Malaysia.
However, a number of anti-corruption non-governmental organizations say they suspect that Moeis is only an accomplice. The Indonesian Anti-Corruption Society (MAKI) said a businessman with the initials RBS – believed to be Bonosusatya -- founded and financed companies used as tools for tin mining corruption and is also suspected of being close to security forces.
“If you track the flow of money, the peak will reach RBS. The Attorney General's Office must be able to reveal it," said Boyamin Saiman, MAKI Coordinator. MAKI urged the institution to name RBS as a suspect and immediately issue a Red Notice to arrest him.
Researcher at the Gadjah Mada University’s Center for Anti-Corruption Studies (Pukat UGM) Zaenur Rohman urged investigators to reveal this case thoroughly because it is suspected that related authorities are involved. "It is impossible for a crime of this magnitude, which has been going on for so long and is happening before our eyes, to go undetected by the authorities, from licensing authorities, supervisory authorities, to law enforcement authorities," said Zaenur.
The Attorney General's Office is also investigating a report by the Sri Mulyani regarding companies involved in export financing through the Indonesian Export Financing Institution (LPEI). Sri Mulyani is said to have been furious because of the magnitude of the losses from companies allegedly involved in fraudulent activities in high-value commodity sectors on the international market, such as palm oil, coal, and nickel. No suspects have yet been named.
The finance minister’s report is said to be divided into three parts consisting of 24 problematic companies or exporters, of which four are involved in palm oil plantations, coal mining, nickel, and shipping that allegedly have cost the government an estimated Rp2.5 trillion in revenue losses.
The report is a follow-up to an investigation by a team formed by the minister of finance to examine all problematic loans at LPEI, an institution established by the Indonesian government to support the implementation of national export financing activities with the authority to determine export financing schemes, restructure export financing, and carry out capital investment. The four companies are LPEI debtors. Officials at the four are said to be suspected of conspiring with officials at LPEI to commit fraud.
As in applying for credit in banking, LPEI officials assess businessmen’s financial reports, then examine the assets pledged as collateral to ensure that the debtor has the wherewithal to pay their obligations so that even if the business fails, there is a clear exit strategy. In the case at LPEI, the strict system was allegedly not implemented.
Eko Listiyanto, a researcher from the Institute for Development of Economics and Finance (INDEF), said that businesses in the mining sector, such as nickel, coal, and palm oil, are prone to legal violations because they are usually controlled by businessmen who are close to the authorities so they can pressure government officials to distribute credit assistance. He suggested that lending to entrepreneurs or exporters in the natural resources sector should be further tightened in the future to prevent state losses resulting from fraudulent practices.