IN WAKE OF BRIBERY SCANDAL, ATTORNEY GENERAL

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000595 SIPDIS AIDAC SIPDIS DEPT FOR EAP, EAP/MTS, EAP/MLS, INL FOR BOULDIN/BEUHLER DEPT FOR EEB/IFD/OMA DOJ/OPDAT FOR LEHMANN/ALEXANDRE SINGAPORE FOR BAKER TREASURY FOR IA-BAUKOL NSC FOR EPHU E.O. 12958: DECL: 03/25/2018 TAGS: PGOV KJUS KCOR ID SUBJECT: IN WAKE OF BRIBERY SCANDAL, ATTORNEY GENERAL DEMOTES TOP AIDES REF: A. JAKARTA 460 ¶B. JAKARTA 357 JAKARTA 00000595 001.2 OF 002 Classified By: Pol/C Joseph Legend Novak, reasons 1.4(b+d). ¶1. (C) SUMMARY: Attorney General Supandji has demoted a top deputy and a senior prosecutor in an attempt to limit the damage to his department from a recent bribery scandal. The two men were questioned at length by the Corruption Eradication Commission, but have not been named suspects in the bribery case. The shear size of the alleged bribe, and the fact that it was delivered by a well-connected businesswoman, are reaping the whole matter even more publicity. While some observers praised the demotions as necessary to restore the credibility of the AGO, others say that the AG needs to do more. END SUMMARY. DAMAGE CONTROL ¶2. (U) The Attorney General is trying to limit the damage from a recent bribery scandal. AG Hendarman Supandji announced on March 17 the demotion of one of his top aides, Kemas Yahya Rahman, as well as senior prosecutor Muhammad Salim. Under the sanctions imposed by the AG, the two men continue to work for the AGO but no longer occupy their former leadership positions. The AG has hinted at additional personnel changes in Special Crimes Division, the AGO's anti-corruption unit. ¶3. (SBU) Rahman had served as Deputy Attorney General for Special Crimes, one of only six officials that report directly to the AG. Salim had served under Rahman as senior prosecutor in charge of supervising corruption investigations at the AGO. (Note: A long-time Mission contact, Salim led the prosecution against the perpetrators of the 2002 Bali bombing.) On March 25, Salim was assigned to the AG's expert staff, a significant demotion, and replaced by a senior prosecutor from Sumatra. A replacement for Rahman has yet to be announced, but will also likely come from outside the Special Crimes Division. A SENSATIONAL CASE ¶4. (SBU) The fall of the two men came in the wake of a scandal involving the Bank Indonesia Liquidity Assistance (BLBI) program (ref B). Earlier in March, lead BLBI 
investigator Urip Tri Gunawan, who served under Salim, was arrested on suspicion of taking a USD $660,000 bribe (ref A). The arrest came just two days after the investigation into the BLBI-linked Bank Dagang Negara Indonesia (BDNI),which Gunawan had been leading, was declared closed for lack of evidence. While neither Rahman nor Salim have been named suspects in the bribery case, AG Supandji told reporters that the two men were no longer "credible" and cited the need to restore public confidence in the AGO as justification for their demotion. ¶5. (SBU) The Corruption Eradication Commission (KPK) made the initial arrest and continues to lead the bribery investigation. KPK investigators have already questioned Rahman and Salim at length, and announced their intentions to question nine other prosecutors. A WELL-CONNECTED SUSPECT ¶6. (SBU) The KPK has also arrested the woman who allegedly delivered the bribe, Artalyta Suryani. A well-connected businesswoman, Suryani was a former neighbor and long-time friend of BDNI owner Sjamsul Nursalim, in whose home Suryani apparently delivered the money to Gunawan just prior to their arrest. According to media accounts, the 2007 wedding of Suryani's son was attended by a veritable who's-who of Indonesia's political elite, including President Yudhoyono, Speaker of the Parliament Agung Laksono, former President JAKARTA 00000595 002.2 OF 002 Abdurrahman Wahid, and former Golkar party chief Akbar Tandjung. Suryani was also a regular visitor at the AGO. REOPENING THE BDNI CASE? ¶7. (U) Despite the swirling controversy surrounding Gunawan's arrest, AG Supandji continues to state that there is no clear link between the alleged bribe and the suspension of the BDNI investigation. As a result, he has thus far refused requests to reopen the case. However, representatives from the AGO, the police and the KPK are scheduled to meet on March 27 to review the status of all major corruption cases that are ongoing, including the BLBI case. Observers speculate that the meeting may result in the case being reopened. IS IT ENOUGH? ¶8. (C) The demotion of the two officials has been praised by some observers. Others have called for tougher action, however, including reopening the BDNI investigation and the outright firing of Rahman and Salim. The AG's reluctance to reopen the suspended investigation may simply reflect a lack of hard evidence of wrongdoing by Nursalim, rather than an attempt to cover up missteps by prosecutors, as detractors claim. ¶9. (C) The decision to demote--rather than fire--the two senior officials is harder to explain. While close associates at the AGO insist that Salim was not involved in the bribery scheme, at the very least the scandal raises questions about his competence as a supervisor. Rahman may face more music: he recently denied a Tempo magazine report that he was one of five prosecutors who recently vacationed on Suryani's private island off the coast of Sumatra. Given the seriousness of the allegations and the attendant publicity, it will take more than a few demotions to restore the credibility of the AGO. HUME