ATTORNEY GENERAL UNDER FIRE AFTER ARREST OF TOP PROSECUTOR

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000460 SIPDIS SIPDIS DEPT FOR EAP, EAP/MTS, INR/EAP, INL FOR BOULDIN DEPT FOR EEB/IFD/OMA DOJ/OPDAT FOR LEHMANN/ALEXANDRE/JOHNSON SINGAPORE FOR BAKER TREASURY FOR IA-BAUKOL DEPT PASS FEDERAL RESERVE SAN FRANCISCO FOR FINEMAN DEPT PAS EXIM BANK DEPT PASSUSTR FOR BWEISEL, KEHLERS CQ FOR E.PHU E.O. 12958: DECL: 03/06/2018 TAGS: PGOV KJUS KCOR ID SUBJECT: ATTORNEY GENERAL UNDER FIRE AFTER ARREST OF TOP PROSECUTOR REF: A. JAKARTA 357 ¶B. 07 JAKARTA 3349 ¶C. 07 JAKARTA 3320 ¶D. 07 JAKARTA 2229 JAKARTA 00000460 001.2 OF 002 Classified By: Pol/C JosephLegend Novak, reasons 1.4(b+d). ¶1. (C) SUMMARY The Attorney General's Office (AGO) has come uner intense public scrutiny after the arrest of a tp anti-corruption prosecutor. The prosecutor wa in possession of USD $6"00,000 when he was arresed by Corruption Eradication Commission (KPK) inestigators. The arrest came just after the AGO anounced the suspension of a high profile corrupton investigation (lled by the arrested prosecutor) due to lack of evidence. The arrest is a major success for the KPK, but represents a blow to the efforts of the Attorney General to make his office into a credible anti-corruption force. END SUMMARY. PROSECUTOR CAUGHT RED-HANDED ¶2. (U) In a highly publicized move, Corruption Eradication Commission (KPK) investigators arrested one of the Attorney General's Office's (AGO) leading corruption prosecutors on March 2. Prosecutor Urip Tri Gunawan was in possession of USD $600,000 at the time of his arrest on suspicion of taking a bribe. On March 3, KPK investigators searched Gunawan's office for additional evidence. A second suspect--whom investigators believe delivered the bribe--was also arrested. ¶3. (SBU) Gunawan was the lead prosecutor in the investigation of Bank Dagang Negara Indonesia (BDNI),one of three banks under scrutiny in a complex financial case surrounding the Bank Indonesia Liquidity Assistance (BLBI) program (ref A). The BLBI investigation team was set up by AG Supandji soon after he took up his post in May 2007 and was the centerpiece of his anti-corruption agenda (refs C-D). Just two days prior to Gunawan's arrest, the AGO announced that it was suspending the investigation into BDNI and a second bank, BCA, due to lack of evidence. (Note: BDNI was liquidated after the financial crisis in 1998, while BCA is one of Indonesia's top five commercial banks.) The KPK is looking into whether the bribe allegedly paid to Gunawan is related to the decision to suspend the investigations. AGO UNDER FIRE ¶4. (SBU) The arrest has added fuel to a growing firestorm of criticism which began several months ago around the GOI's handling of the BLBI case (ref A). AG Supandji was visibly shaken over the arrest and has pledged to support the KPK's investigation. Appearing before the Indonesian legislature's (DPR) Law Commission on March 5, Supandji said he accepted that corruption and abuse of power were likely to have been involved in the decision to suspend the BLBI investigations, and directed a Deputy AG to open an internal investigation. ¶5. (SBU) Prominent members of the Commission, urged him to go further by immediately suspending the Deputy AG for Special Crimes, Kemas Yahya Rahman, and Gunawan's immediate supervisor, Muhammad Salim, both of whom have been called in for questioning by the KPK. Many observers are also calling for the KPK to take over the BLBI investigation. KPK UP, AGO CIRCLING THE WAGONS ¶6. (C) The arrest is a major success for the KPK and its new chief, Antasari Azhar. A former AGO prosecutor himself, Azhar's appointment was heavily criticized by NGOs who questioned his commitment to the anti-corruption effort and his willingness to take on his former law enforcement JAKARTA 00000460 002.2 OF 002 colleagues (ref B). An Embassy contact told us that Azhar was not close to AG Supandji or Gunawan, but was part of what he described as a different "faction" at the AGO. Whatever the reasons are, the KPK has moved quickly on this case and is looking professional in doing so. ¶7. (C) For the Attorney General, however, who had made anti-corruption efforts--and the BLBI scandal in particular--his top priority, the arrest of Gunawan is a serious blow. The credibility of the AGO as an anti-corruption fighter has been tarnished, and it seems likely that other heads will roll. While the AG appears to be taking the right steps (and is not accused of any corrupt activities himself),prosecutors are circling the wagons; on March 5 many BLBI prosecutors started switching off their cell phones, reportedly out of fear that their calls were being monitored by the KPK. ¶8. (C) More broadly, the GOI's political opponents in the DPR and elsewhere are sure to use the developing situation to criticize the President's anti-corruption campaign as ineffective. With the legal process only just beginning, the scandal will likely generate headlines in the days and weeks to come. HUME