The money laundering charges slapped on Monday by the Corruption Eradication Commission (KPK) on Muhammad Nazaruddin, fondly known as Nazar, a former House member and Democratic Party treasurer, could become a breakthrough in uncovering the string of corruption related to the construction of the US$21.3 million athletes' village in the South Sumatra capital of Palembang and many other government projects.
As a money-laundering suspect, Nazaruddin, who is currently on trial on charges of corruption related to the athletes' village, is required to reveal the sources of the Rp 300 billion ($33.33 million) his companies spent on buying 485 million Garuda Indonesia shares during the national flag carrier's initial public offering early last year.
Nazaruddin cannot simply claim that the Rp 300 billion was derived from the five companies – members of his business conglomerate, the Permai Group – that made the share purchases.
He has to prove with legal documents such as audited financial reports and tax returns that the money really derived from the five companies. To put it simply, this case could open up Nazaruddin's Pandora's box.
Money-laundering suspects cannot fake documents relating to business deals, financial reports and inheritance to prove the legitimacy of their money. That is the beauty of the 2002 anti-money laundering law which was amended in 2010. The burden of proof lies squarely on the suspect or defendant.
The 2010 amendments, among other things, authorize the KPK to investigate and build up money-laundering cases if the predicate crime (the crime from which the laundered money is derived) is corruption.
Many officials previously suspected of money laundering shamelessly claimed that the money that flowed through their bank accounts was the proceeds of the business deals of their wives, husbands or family members or the sales of inherited properties. And they often simply escaped the hands of the anti-money-laundering law because police investigators did not check the suspects' claims against their annual tax returns and other business transactions.
Many corruption cases have been discarded in ordinary district courts (not in the Corruption Court) due to the inability of police or public prosecutors to produce witnesses or legal documents to support the charges. As corruption mostly involves cash transactions, finding adequate evidence is often extremely difficult.
But such acquittals would unlikely occur in money-laundering cases, especially those handled by the KPK and the Corruption Court. This graft buster, we think, is not as technically incompetent or corrupt as the police or the Attorney General's office are in investigating and prosecuting money-laundering cases.
Moreover, Nazaruddin's former financial executives Yulianis and Oktarina Furi had testified in earlier court hearings of other defendants in the athletes' village corruption case that five of Nazaruddin's business groups spent Rp 300 billion on buying Garuda shares through Mandiri Securities.
The witnesses said the money was derived from the fees (rent) the five companies received from government projects.
We believe that if the police, Attorney General's Office and the KPK are all serious in enforcing the anti-money laundering law, this legislation could serve as the nutcracker in uncovering complex white-collar crimes.
The more effective would be the anti-money laundering law because it is now supported by the 2011 law on fund transfers which makes financial transfers much more transparent.