Indonesia’s Unfolding Corruption Scandal

Recent Features

Features | Politics | Southeast Asia

Indonesia’s Unfolding Corruption Scandal

The scandal could serve as a political turning point for President Joko Widodo.

Indonesia’s Unfolding Corruption Scandal

Activists hold national identity cards during a protest outside the Corruption Eradication Commission (KPK) office in Jakarta, Indonesia on March 12, 2017.

Credit: Antara Foto/Puspa Perwitasari/ via REUTERS

Indonesia’s government continues to be rocked by a corruption scandal that broke in March, when two civil servants went on trial on embezzlement charges linked to the procurement of electronic identification cards (the so-called e-KTP scheme). The scandal dates all the way back to 2009 and Indonesia’s powerful Corruption Eradication Commission (KPK), which has withstood several attempts to defang it in recent years, claims it cost the Indonesian state $170 million in stolen funds. Meanwhile the civil servants KPK has charged in relation to the scheme have implicated 37 senior politicians, businesspeople, and bureaucrats they claim benefited from the scheme, including top members of the ruling Indonesian Democratic Party of Struggle (PDIP). The accused include the justice minister and the speaker of the lower house of parliament.

The news has rocked President Joko “Jokowi” Widodo’s administration, at a time when the president was already under pressure over the blasphemy trial of a key political ally who had once looked to succeed him as governor of Jakarta, Indonesia’s sprawling capital. Jokowi used his term in the governor’s office to earn a reputation as a clean and efficient political leader who could get things done. This enabled him to use his reputation as a springboard into national politics in the 2014 presidential elections, but only after he was backed by the PDIP. The deal with the PDIP’s kingmakers has come back to haunt the president now as his allies, many of whom are old supporters of former president (and daughter of Indonesia’s first post-colonial president) Megawati Sukarnoputri, have long histories as part of Indonesia’s fabulously corrupt political system.

Corruption in Indonesian politics has a long history; until 1999 the military dictatorship of General Suharto presided over an economy in which close friends of the general controlled lucrative state concessions and huge private monopolies, while the general’s family amassed a fortune worth billions of dollars. After the fall of the regime the KPK was set up in 2002 to try and give some teeth to anti-corruption efforts that Indonesian prosecutors and police had noticeably lacked enthusiasm in pursuing. While democratiazation had brought greater political freedoms to many parts of the country after years of Suharto’s oppressive centralization, paradoxically it also provided greater opportunities for local or low-ranking politicians to act in a corrupt fashion. Today the KPK remains one of Indonesia’s most admired and trusted institutions but overall the Southeast Asian country ranked a lowly 90th out of 176 countries in anti-corruption NGO Transparency International’s most recent Corruption Perception’s Index. Ominously for Jokowi’s re-election prospects in 2019, Indonesians identified their parliament as the country’s most corrupt institution.

In their indictment of the two top civil servants accused of embezzlement, KPK prosecutors have focused on the role of elected members of the House of Representatives’ Commission II, which overseas home affairs, in approving the budget that allegedly allowed the two defendants to execute their scheme. The prosecution charges that the budget was allowed to pass after lawmakers supposedly were told they would receive portions of the funds skimmed from the money allocated to the identity cards scheme. The prosecution specifically named House of Representatives Speaker Setya Novanto in connection with the scheme, as well as two former senior PDIP politicians who are being charged in a separate corruption case.

The president is not personally linked to the corruption case against the civil servants or their alleged accomplices in the House of Representatives Commission II, because the scam is alleged to have run during the 2009-2014 period only. However, the scale of the allegations against his political allies are extremely damning. Indonesian media have reported prosecution claims that lawmakers and business people conspired with the pair to embezzle a staggering 49 percent of the $440 million e-KTP project’s budget. The KPK is also still digging into government finances from that period, making it likely that fresh claims will emerge in due course. The only consolation from the president’s point of view is that members of other political parties have also been implicated in the graft allegations that are tarnishing the PDIP’s image.

Jokowi won his election three years ago by promising a clean and efficient administration, untainted by the atrocities and scandals of the past. He beat several army-linked candidates from the Suharto-era establishment to do so, marking a break with other presidents from Indonesia’s recent democratic past, who often had a military background. His arrival was welcomed by many foreign observers as a sign that the country’s democratic culture was becoming more deeply embedded and the push for transparency and accountability in Indonesian politics was gaining ground. How the president handles the fallout from the e-KTP case if the two defendants are found guilty will therefore be a watershed in his administration. On the one hand, he is often seen as dependent on the backing of the PDIP’s leader, ex-president Megawati Sukarnoputri. On the other, much of his popular appeal came from his image as a clean pair of hands, unbeholden to the patronage of a corrupt party system.

The president now faces a delicate balancing act between repudiating any PDIP figures who are found to have acted corruptly and pointing out that they are not unique in having done so. There is little chance that the president’s party can escape the popular perception that its members have often abused their terms in office for personal gain. However, Jokowi could find that for once not being the leader of his own party could be a strength rather than a weakness, since he can truthfully say he was obliged to work with many party figures not of his own choosing. A populist anti-establishment wave is currently sweeping Indonesian politics, as it is in other Asian countries and the developed world. In the last elections Jokowi was only able to ride into office on its coattails with the help of the PDIP. But if he can convince voters he is still their champion in 2019, he might be able to do it as his own man next time.

Neil Thompson is a Contributing Analyst at geostrategic analysis and business consultancy Wikistrat and a blogger at the Foreign Policy Association. His work has appeared in The Diplomat, the Economist Intelligence Unit, the International Security Network, the Independent, and various other publications. He holds an MA in the international relations of East Asia and is presently based in London.