Thousands of officials and politicians across the country, including 200 executives of state companies, are currently embroiled in corruption investigations, as the government escalates its fight against graft to promote good governance.
Even retired officials cannot necessarily relax and enjoy their pensions if they have "skeletons in the closet", as amply demonstrated by the case of Syafruddin Tumenggung, former chief of the now defunct Indonesian Bank Restructuring Agency, which between February 1998 and February 2004 was the most powerful economic institution in the country with US$75 billion worth of state assets under its management.
Prosecutors have named Syafruddin a suspect in a corruption case surrounding the 2003 sale of assets belonging to sugar company PT Rajawali in Gorontalo province, in the northern part of Sulawesi, which allegedly caused Rp 500 billion ($51 million) in losses to the state.
Certainly, not all of the officials under investigation will eventually be declared suspects. Nor will all of them end up in courts. Nevertheless, the escalated crackdown on corruption has been developing into an increasingly powerful deterrent against malfeasance in the public sector.
However, the concerted, massive anticorruption campaign is not without some negative side effects, as State Minister for State Enterprises Sugiharto acknowledged at a meeting in Medan last Saturday. Sugiharto conceded the corruption investigations had affected the performance of several of the 158 state companies because executives were now hesitant about making decisions, fearing they could be taken to court for mistakes; even mistakes arising from corporate actions done in full accordance with standard operating procedures.
Risks are only the certainty in the business world, especially amid the rapidly changing global economy. If directors are taken to court for mistakes, they will never take any initiative or make creative decisions. We should therefore differentiate between honest mistakes and corruption.
That is why the government has protected all IBRA officials with immunity against damages or lawsuits that may arise in the future in relation to the execution of their duties – with the exception being criminal cases that may subsequently be discovered through investigative or forensic audits.
Without such protection, nobody within IBRA would have been willing to make any decisions regarding the assets under its management because the quality of the distressed assets – mostly in the form of bad loans – was quite low and the economic environment between 1998 and 2000 was unstable and inherent with great risks.
All other state officials also are supposed to be protected against lawsuits as long as they perform their jobs properly and in full accordance with standard operating procedures. Nobody within the government would dare to make any decisions or show any initiative if officials were not indemnified against damages or litigation arising from unintentional policy mistakes or wrong judgments.
We fully support the antigraft drive, but really hope that only after strong legal evidence of corruption is found will officials be put under investigation. Otherwise the overzealous corruption fight could overshoot its real target, debilitating decision-making mechanisms at state companies and agencies and eventually damaging the credibility of the campaign itself.
The case against Syafruddin is especially complex. Even though IBRA sold the sugar company's assets for only Rp 84 billion, or a mere 14 percent of the book value of Rp 600 billion, this asset disposal cannot automatically be declared corruption despite the estimated Rp 500 billion in losses to the state.
As long as the sale was conducted according to the standard operating procedures set by the agency's oversight body – the then Ministerial Financial Sector Policy Committee – neither Syafruddin nor IBRA can be charged with wrongdoing.
After all, during its five-year operational mandate, IBRA was only able to recover an average of less than 25 percent of the book value of distressed assets taken over from closed banks.
However, if the case against Syafruddin is truly airtight, it could eventually open a Pandora's box with regard to the disposal of the billions of dollars worth of assets taken over by IBRA from nationalized and closed banks during the height of the economic crisis in 1998.