HIGH-PROFILE ARRESTS IN LATEST CORRUPTION SCANDALS

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000739 SIPDIS AIDAC SIPDIS DEPT FOR EAP, EAP/MTS, EAP/MLS, EB, INL FOR BOULDIN/BUHLER DEPT FOR EEB/IFD/OMA DOJ/OPDAT FOR LEHMANN/ALEXANDRE NSC FOR E.PHU E.O. 12958: DECL: 04/11/2018 TAGS: PGOV KJUS KCOR ID SUBJECT: HIGH-PROFILE ARRESTS IN LATEST CORRUPTION SCANDALS REF: A. JAKARTA 720 ¶B. JAKARTA 595 ¶C. JAKARTA 357 ¶D. JAKARTA 208 Classified By: Pol/C Joseph Legend Novak, reasons 1.4(b+d). ¶1. (C) SUMMARY: Anti-corruption investigators have arrested two sitting members of the national legislature (DPR). One M.P. was caught red-handed after receiving what investigators say was a bribe related to a land zoning deal. The arrest followed the apprehension in March of another M.P. on charges of corruption in the purchase of fire trucks. Separately, a Jakarta court sentenced the former head of the State Logistics Agency to ten years in prison. New allegations continue to surface related to Bank Indonesia. The recent arrests indicate that the GOI may be getting more serious about confronting the seemingly endemic corruption involving legislators. END SUMMARY. LAWMAKERS IN HOT WATER ¶2. (U) In a sign of increasing assertiveness, the Corruption Eradication Commission (KPK) has arrested two Indonesian lawmakers in the past three weeks. The latest case involved a dramatic 2:00 a.m. raid on the Ritz Carlton Hotel's premises in Jakarta which netted Al Amin Nasution and four other suspects. Nasution--a member of Parliament (DPR) from the United Development Party (PPP)--was arrested in his car, which was also found to contain IR 71 million (about USD $8000) in cash. ¶3. (U) According to the KPK, the money had been given to Nasution by another suspect, Azirwan, a provincial official from Riau Province in Sumatra. Earlier that day, Nasution had participated in a hearing in which legislators discussed a proposal to convert 200 hectares of Riau's national forest into an office complex. A KPK spokesman told reporters that the payment was part of a larger USD $300,000 bribe that was intended to secure DPR approval of the proposal. ¶4. (U) The arrest comes just three weeks after the KPK's arrest of another DPR member. Saleh Djasit of the Golkar Party is accused of marking up the cost of 20 fire trucks in his previous position as Governor of Riau. The KPK has also questioned Hari Sabarno, a former Minister of Internal Affairs under then president Megawati, in the case. 
According to media reports, the Ministry issued a regulation in 2004 which enabled a single company to monopolize the provision of fire trucks to Indonesia's provincial governments. The cost of the trucks was then marked up, causing losses to the state in the millions of dollars (ref D). IMPORTER KICKBACKS: A FAMILY AFFAIR ¶5. (U) In other corruption-related news, the South Jakarta District Court sentenced to ten years the former head of the State Logistics Agency (Bulog - a state-owned enterprise which runs the GOI's subsidized rice program). Widjanarko Puspoyo was found guilty of having received a USD $1.6 million dollar kickback from a Singaporean rice broker. He was acquitted of a separate charge involving beef imports. Puspoyo's younger brother--whose company helped facilitate the illegal payment --also received a four-year prison term for tax evasion. NEW ALLEGATIONS AT BANK INDONESIA ¶6. (U) Allegations continue to swirl around Bank Indonesia (BI),whose outgoing Governor, Burhanuddin Abdullah, was recently taken into custody by the KPK. (Note: The DPR recently named Boediono, currently Coordinating Minister for the Economy, to replace Burhanuddin as BI chief - ref A.) Burhanuddin and two other suspects are being held in a case JAKARTA 00000739 002 OF 002 alleging that bank funds were illegally paid out to DPR members working on BI legislation in 2003. The KPK had promised to name additional suspects by late March, but no announcement has been made. Burhanuddin complained publicly that other BI officials linked to the scandal had not been arrested and implied that the KPK was being selective in its targets. ¶7. (U) Meanwhile, a new report submitted to the KPK alleges that BI made additional payments to lawmakers in 2006. The report includes a list of alleged recipients which spans nearly all of Indonesia's major parties, including Golkar, PDI-P, PKB and PKS. The KPK has yet to announce whether it will open a formal investigation into the case. However, the head of the DPR's ethics board said it would investigate the allegations. A CASE STUCK IN NEUTRAL ¶8. (U) Controversy continues to surround the decision by the Attorney General's Office to close the investigation into the Bank Indonesia Liquidity Assistance (BLBI) program (ref C). On April 3, an anti-corruption NGO filed a lawsuit demanding that the investigation be reopened in the wake of the arrest of one of the AGO's lead prosecutors (ref B). ¶9. (U) Parenthetically, Indonesia's leading weekly magazine reported that Presidential legal advisor Adnan Buyung Nasution and former Attorney General Abdul Rahman Saleh had met with the nephew of Sjamsul Nursalim--a leading BLBI suspect currently residing in Singapore--on a recent trip there. The trip became public knowledge after the two men were detained and questioned by Singaporean immigration authorities for two hours before being allowed to enter the country. The purpose of the visit remains unclear. TAKING ON BIGGER FISH ¶10. (C) The DPR has been described in a recent survey as Indonesia's most corrupt institution--and it certainly has that reputation. The newfound aggressiveness of the KPK vis-a-vis alleged legislative corruption is thus a positive development and perhaps indicates that the KPK has grown weary of its reputation as a body that only focuses on the "small fish." The action also raises hopes that the KPK will eventually get to the bottom of the BI case as well. ¶11. (C) Publicly, the political parties involved have indicated support for the various investigations but may be less cooperative behind the scenes. In a revealing comment, one lawmaker expressed skepticism that Nasution had been bribed because, he asserted (apparently seriously),it was "impossible anyone would offer a lawmaker an amount of money that small." The KPK will likely face increasing political pressure as it delves deeper into the nefarious activities of legislators. HUME