CORRUPTION UPDATE -- ANOTHER LEGISLATOR ARRESTED;

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 001306 SIPDIS DEPT FOR EAP, EAP/MTS, EAP/MLS, INL INL FOR SNYDER/BARCLAY DEPT FOR EEB/IFD/OMA DOJ/OPDAT FOR LEHMANN/ALEXANDRE/JOHNSON SINGAPORE FOR BAKER NSC FOR E.PHU E.O. 12958: DECL: 07/07/2018 TAGS: PGOV KJUS KCOR ID SUBJECT: CORRUPTION UPDATE -- ANOTHER LEGISLATOR ARRESTED; FORMER CENTRAL BANK GOVERNOR ON TRIAL REF: JAKARTA 1098 AND PREVIOUS Classified By: Pol/C Joseph L. Novak, reasons 1.4(b+d). ¶1. (C) SUMMARY: The GOI's independent Corruption Eradication Commission (KPK) arrested another Member of Parliament (MP)--the eighth this year--on accusations he assisted a company win a contract worth more than $3 million. In other corruption-related news, the former Governor of the Bank of Indonesia (Central Bank) is on trial for illegally disbursing $11 million in bank funds to former bank directors and MPs. Meanwhile, a scandal at the Attorney General's Office continues to grow with the termination of a second official who faces bribery charges. Over all, the KPK continues to ramp up its activities, an important positive in Indonesia's anti-corruption effort. END SUMMARY. LEGISLATOR NABBED ¶2. (SBU) On June 30, Indonesia's Corruption Eradication Commission (KPK) arrested an MP on charges he had accepted bribes. The arrest of Bulyan Royan, a member of the Reform Star Party, was the eighth arrest of an MP this year. ¶3. (SBU) In making the arrest, the KPK has accused Royan of accepting a bribe from an employee of PT BMKP, a company that manufactures ocean-going boats. Earlier this year, the GOI's Directorate General for Sea Transportation awarded five companies contracts to build four boats each for the Directorate. PT BMKP was one of the winning bidders. The contract is worth over $3 million to the company. When Royan was arrested in a Jakarta shopping mall, he was carrying approximately $75,000 in cash. The KPK is questioning Royan and others about their dealings. The Director General of Sea Transportation has vowed to work with the KPK and to provide any necessary information on the contracting process. FORMER BANK GOVERNOR ON TRIAL ¶4. (SBU) The former Governor of the Bank of Indonesia, Burhamauddin Abdullah, is currently on trial in Jakarta for corruption. Abdullah is charged with misappropriating approximately $11 million in funds that were supposed to assist the bank's liquidity problems in 2003. Instead, approximately $7 million of the funds from the Indonesian Banking Development Foundation were allegedly transferred to individual members of the bank's board of directors and approximately $4 million was allegedly transferred to several Indonesian Members of Parliament serving on Commission IX (for Population, Health, Labor and Transmigration.). ¶5. (U) Abdullah has claimed he is innocent. He stated in court that the decision to transfer the funds had been a collective one, not his alone, and that the transfer in any case was legitimate. The court must now decide if there is sufficient evidence to continue the trial. KEY PROSECUTOR FIRED ¶6. (SBU) On June 25, the Indonesian Attorney General, Hendarman Supandji, fired Deputy Attorney General for State Administration, Untung Uji Santoso. Santoso is the latest member of the AG's office to be implicated in the Bank of Indonesia's Liquidation Fund (BLBI) case that dates back to the Indonesian financial crisis of 1998. Santoso, who was investigating the disappearance of the funds, is accused of taking bribes so that he would recommend that the case be officially closed. So far, Santoso is the second high-level JAKARTA 00001306 002 OF 002 AG official to be charged but will probably not be the last. Deputy Attorney General for Intelligence, Wisnu Subroro, is also expected to be charged soon, according to media reports. THE BAD NEWS IS GOOD NEWS ¶7. (C) Over all, the KPK continues to ramp up its activities, indicating that it is not afraid to do its job. The arrest of eight Members of Parliament this year alone shows that the anti-corruption body is not afraid to go after the legislature. That said, none of them have been convicted as of yet and there has been some grumbling from Parliament that the KPK should reign in its efforts. So far, this type of pressure has not held back the KPK. Re the Attorney General, he has come under real fire to resign due to the accusations involving his office, but so far President Yudhoyono has kept him in his position. HUME