JakartaPost-Oct 26
A proposal to narrow the definition of corruption to give state asset fund Danantara more room to take business risks has drawn criticism from experts and activists, who said it may weaken the anticorruption fight without addressing deeper problems hindering the performance of state-owned enterprises. National Economic Council (DEN) chairman Luhut Binsar Pandjaitan announced last Tuesday that the council has proposed to President Prabowo Subianto the idea of decriminalizing financial losses to the state. Illicit enrichment that causes state losses is a corruption offense under the prevailing anticorruption law, along with bribery, embezzlement of public funds, illegal kickbacks and unlawful gratuity. The proposal draws on the United Nations Convention Against Corruption (UNCAC), which Luhut said did not require proof of state financial losses as evidence of corruption, unlike Indonesian law enforcement which has placed significant emphasis on such losses in corruption cases. “[The state losses concept] is burdensome for entities such as Danantara when conducting business because every business activity inevitably carries risks,” Luhut said, stressing that the change would provide legal certainty to attract investment. The proposal quickly drew rebuke from the Corruption Eradication Commission (KPK). Its chairman Setyo Budiyanto said last Wednesday that the provisions on state losses should be retained, arguing that it remained “absolutely necessary in Indonesia to address increasingly complex and sophisticated methods of corruption”. Some politicians from across the political spectrum, including those of pro-government Nasdem Party, Prosperous Justice Party (PKS) and National Awakening Party (PKB), as well as a politician from quasi-opposition Indonesian Democratic Party of Struggle (PDI-P), have also opposed the proposal. The backlash prompted Luhut to walk back the remark, clarifying in a press release that state losses should remain an element of corruption, with reforms instead aimed at clarifying evidentiary standards and expanding the scope of offences under the law. Despite his clarification, debate over the proposed change has continued, with proponents arguing that the existing provisions can expose companies to prosecution over business decisions that result in financial losses, even when those decisions are made in good faith. “Many investors are reluctant to work with SOEs and government institutions for fear of being implicated in corruption cases. Bad loans and insufficient collateral can expose them to corruption charges,” anti-money laundering expert Yunus Husein said. Read more at:
