Indonesia's reputation for corruption in not in doubt: it comes 114th out of 177 in Transparency International's ranking. For more than a decade, the Corruption Eradication Commission (KPK) has been putting high-level officials away for long jail terms. But any judicial body which boasts of having a 100% conviction rate is likely to have made some mistakes.
Having recently succeeded in putting the head of the Constitutional Court in prison for life and given lesser sentences to ministers close to President Susilo Bambang Yudhoyono, the KPK has returned to one of its long-term targets: the central bank. Since 1998, most of the senior members of Bank Indonesia have spent some time in jail or have survived long periods with this threat hanging over them. The causes have been various, but an ongoing issue has been the 2008 rescue of a failing bank, Bank Century.
In the context of the global financial crisis, it was feared at that time that the collapse of even a smallish bank would set off a chain reaction of runs on banks. With Bank Century saved by the injection of lender-of-last-resort funds, Indonesia sailed through the 2008 crisis with GDP growth maintained at over 6%. Many would regard the support for Bank Century as an insurance premium well worth paying, especially recalling the damage of the 1997-98 financial crisis.
But in any case the issue here is whether public servants should face criminal charges (and long jail sentences) when their policy decisions are harshly judged after the event.
One member of the Bank Indonesia board (which made the decision to rescue Bank Century) has just been given a ten-year jail sentence. While his case is complicated by other factors, the KPK has indicated that it will now turn to the other members of the Bank Indonesia board*, including current Vice President Boediono (who was Bank Indonesia Governor in 2008) and one of president-elect Jokowi's suggested names for finance minister.
The KPK has gone so far beyond its proper role here that 35 leading citizens — lawyers, former ministers, politicians — wrote an 'amicus curiae' ('friends of the court') letter to the KPK. Respected senior legal figure Todong Mulya Lubis said that 'If public policy is criminalised, many public officials will be afraid to take decisions'.
Indeed. It is already clear that Bank Indonesia will not attempt another lender-of-last-resort operation, should it be needed. Indonesia goes into a volatile period in global markets, with its own financial sector in a fragile state, without the most basic of crisis-management instruments. The new president begins his term with a commitment to combat corruption, but with the KPK already so politicised that an urgent task will be to discipline the KPK itself.
* Disclosure: some of these people are personal friends.
Photo by Flickr user Ikhlasul Amal.