CORRUPTION UPDATE -- SUSPECTS NAMED IN HIGHLY

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000208

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E.O. 12958: DECL: 01/31/2018
TAGS: PGOV KJUS KCOR KMCA ID
SUBJECT: CORRUPTION UPDATE -- SUSPECTS NAMED IN HIGHLY
PUBLICIZED CENTRAL BANK CASE

REF: A. 07 JAKARTA 3378


B. 07 JAKARTA 3349

C. 07 JAKARTA 3326

D. 07 JAKARTA 2974

E. 07 JAKARTA 2229

JAKARTA 00000208 001.2 OF 002


Classified By: POL/C Joseph Legend Novak, reasons 1.4(b+d).


1. (C) SUMMARY: The Corruption Eradication Commission (KPK)
named the current Bank Indonesia Governor a suspect in a case
involving the alleged diversion of funds to legislators. In
other news: evidence has surfaced that several officials
received bribes related to the procurement of fire trucks;
the heirs of recently deceased former president Suharto will
inherit a civil suit due to a judge's ruling; and, the GOI
has scored a victory in its long running effort to recover
stolen assets stashed overseas. END SUMMARY.

CENTRAL BANK CHIEF INDICTED


2. (SBU) In a highly publicized case, the Corruption
Eradication Commission (KPK) formally declared Bank Indonesia
(BI) Governor Burhanuddin Abdullah a suspect in a corruption
case involving the diversion of bank funds (ref A). Two
other BI officials have also been named suspects. According
to KPK statements, the three men authorized the diversion of
over USD 10 million in bank funds to private lawyers and
members of Parliament (DPR). The money was apparently
intended to win passage of legislation favorable to BI in
Parliament and to defend BI officials from corruption
allegations related to the Bank Indonesia Liquidity
Assistance scandal (ref C).


3. (C) While no legislators have been questioned to date,
newly-installed KPK Chief Antasari Azhar intimated that one
current and one former member of the DPR are currently under
scrutiny. The DPR connection makes this a key case for
Antasari, whose selection as KPK Chief was opposed by
anti-corruption activists who feared that he would be
susceptible to political influence (ref B). The indictment
of a parliamentarian, should one occur, would give a
significant boost to the reputation of the KPK's new leaders.


WHERE THERE'S SMOKE...


4. (U) In a separate case, evidence has emerged that a
former minister is among those who received kickbacks in the
purchase of fire trucks by regional governments. According
to reports, in 2002 the Ministry of Home Affairs issued a
document naming PT Istana Sarana Raya as the sole approved
vendor of fire trucks to the provinces. Eleven regional
governments proceeded to purchase trucks from the company,
despite the fact that they were priced well above the market
rate.


5. (U) According to KPK investigators, a company official
made payments to more than a dozen Ministry and regional
officials in 2004. One of the largest payments, about USD
$40,000, went towards the purchase of a home that was later
occupied by the then Minister of Home Affairs Hari Sabarno.
A former mayor has already been named a suspect in the case,
and the KPK has questioned several sitting and former
governors.

SUHARTO'S HEIRS TO BE SUED


6. (SBU) There has been a key court ruling in the aftermath
of former president Suharto's January 27 death. The
presiding judge in a civil suit against Suharto ruled that
his heirs would inherit the suit. The judge ordered that a
religious court make a legal determination regarding the

JAKARTA 00000208 002.2 OF 002


identity of the heirs. Prosecutors are attempting to recover
USD $420 million in state funds they say were illegally
diverted to Suharto's Supersemar foundation (ref D).

RECOVERING STOLEN ASSETS


7. (U) Indonesia took a small step forward in its efforts to
recover stolen state assets stashed overseas. The Ministry
of Law and Human Rights announced the recovery of USD $3
million that had been stolen by Hendra Rahardja and Adrian
Kiki Aryawan. The two former bank directors were convicted
on corruption charges several years ago, but it took the GOI
some time to recover the funds, which had been deposited into
an Australian bank.


8. (U) The news gives hope that the GOI will succeed in
recovering additional assets, including some USD $15 million
held in Switzerland by convicted corruptor ECW Neloe and USD
$50 million in Britain belonging to Tommy Suharto, son of the
former president (ref E). The KPK has made asset recovery a
top priority, and it is a key theme of the Second Conference
of State Parties on the UN Convention Against Corruption
(UNCAC),which Indonesia is currently hosting in Bali.

HUME