VZCZCXRO5570
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #2146/01 3251100
ZNR UUUUU ZZH
R 201100Z NOV 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 0775
INFO RUEAWJB/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 2749
RUEHBJ/AMEMBASSY BEIJING 5642
RUEHBY/AMEMBASSY CANBERRA 3314
RUEHUL/AMEMBASSY SEOUL 5147
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 04 JAKARTA 002146 
 
MCC FOR AMBASSADOR DANILOVICH AND MORFORD 
MCC FOR MARIA LONGI 
MCC FOR DEPUTY CEO RODNEY BENT 
DEPT FOR E - U/S JEFFERY 
DEPT FOR EEB A/S SULLIVAN 
DEPT FOR EAP DAS MARCIEL AND EB/IFD DAS DAVID NELSON 
DEPT FOR EAP/MTS, EEB/IFD/OIA, INL SNYDER, INL ROESS 
USAID FOR ADMINISTRATOR FORE 
USAID FOR DEPUTY ADMINISTRATOR KUNDER AND ANE WARD 
USAID/ODP FOR KAREN TURNER AND PETER DELP 
USAID/ANE FOR STEPHAN SOLAT 
TREASURY FOR A/S LOWERY 
TREASURY/IA FOR RACHEL BAYLY 
DEPT PASS USTR FOR SCHWAB 
DEPT PASS USTR FOR ELENA BRYAN 
DEPT PASS USTR FOR FRAN HEUGEL 
DEPT PASS USTR FOR AUSTR BARBARA WEISEL 
OMB FOR JACQUELINE STRASSER 
DOJ FOR CRIM AAG SWARTZ 
DOJ/OPDAT FOR ALEXANDRE/LEHMANN/JOHNSON 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV KMCA KCOR ECON KJUS ID
SUBJECT: Institutionalizing anti-corruption reform in Indonesia 
 
JAKARTA 00002146  001.2 OF 004 
 
 
¶1. (SBU) Summary: Indonesia is taking concrete steps to 
institutionalize its fight against corruption, laying the groundwork 
for continued anti-corruption efforts regardless of who wins next 
year's Parliamentary and Presidential elections.  The Corruption 
Eradication Commission, Attorney General's Office, Supreme Court, 
and Indonesian National Police have all instituted tangible 
anti-corruption reform agendas.  These institutions are establishing 
the architecture of better governance in Indonesia.  High-level 
corruption prosecutions seize headlines, but quiet institutional 
reforms are increasing accountability and transparency in 
governance.  Improvements in combating corruption over the past year 
form a broader reform trend in the past four years.  End Summary. 
 
Corruption Eradication Commission gains more influence 
--------------------------------------------- --------- 
 
¶2. (SBU) The Corruption Eradication Commission (KPK), an independent 
government institution, is leading the campaign to combat corruption 
in Indonesia.  The KPK has expanded authority to conduct corruption 
investigations and try cases in the specialized Anti-Corruption 
Court.  The KPK's seamless leadership transition last January 
highlighted the growing maturity of the institution.  With its five 
new commissioners, the KPK has arrested and prosecuted several 
high-level corruption suspects in 2008.  Parliament has long been 
considered one of the most corrupt, yet also untouchable, 
institutions in Indonesia.  That immunity ended in 2008.  In six 
separate scandals in 2008, the Corruption Eradication Commission 
(KPK) has arrested six Members of Parliament - from both government 
coalition and opposition parties. 
 
¶3. (SBU) Making use of its new wiretapping capacity, the KPK also 
caught a senior AG prosecutor, Urip Tri Gunawan, red-handed with a 
$600,000 bribe in March.  Within six months of the arrest, the 
Anti-Corruption Court convicted and sentenced Urip to 20 years in 
prison, as well as the businessperson who passed the bribe to five 
years in prison.  Another ongoing high-profile case involves Aulia 
Pohon, a former central bank governor who is the father-in-law of 
President Yudhoyono's son.  Pohon has recently been named a suspect 
in a central bank corruption case.  The President has stated that 
the KPK should not be subject to political influence and he has 
honored that commitment. 
 
¶4. (U) Increased personnel, a focus on capacity building, and 
strategic partnerships help to explain the rising operational tempo 
and growing institutional strength at the KPK.  The KPK has nearly 
doubled the number of investigators (111 now) and prosecutors (28 
now) since 2005.  The KPK's long-term strategy balances prosecution 
and prevention.  The KPK is on track to conduct more investigations 
in 2008 than any previous year and is maintaining the prosecution 
case load.  Regarding prevention, the KPK is leading wider 
government reform, including working with the Supreme Court to 
better account for case fees and promote better governance and case 
management with the support of the USAID-managed MCC Threshold 
Program.  The KPK has signed a number of cooperative MOUs with 
international law enforcement and anti-corruption bodies, the most 
recent one with the U.S. Federal Bureau of Investigation.  These 
agreements help codify and institutionalize the KPK's role in 
Indonesia.  One potential threat to the KPK is the pending 
Anti-Corruption Court bill.  If Parliament does not pass this bill 
by December 2009, the KPK will be forced to prosecute its cases in 
the normal court system, not the specialized Anti-Corruption Court. 
 
JAKARTA 00002146  002.2 OF 004 
 
 
 
AGO establishes new anti-corruption task force 
--------------------------------------------- - 
 
¶5. (SBU) While the KPK is the headline independent government body 
tasked to lead corruption, the Attorney General's Office is the 
larger, more permanent institutional presence.  The Attorney 
General's Office and police handle over 95% of all corruption cases 
nationwide whereas the KPK handles fewer than 5%.  After being 
rocked by an internal corruption scandal in March 2008, the Attorney 
General's Office has made changes to strengthen its anti-corruption 
efforts.  The Attorney General appointed the widely respected senior 
prosecutor Marwan Effendy to spearhead his anti-corruption efforts. 
Effendy moved quickly to establish a 50-prosecutor anti-corruption 
task force to investigate and prosecute high-level corruption cases. 
 The Task Force has already embarked on two dozen investigations and 
prosecutions, including this month's arrest of the former Governor 
of West Nusa Tenggara, the arrest of a Director General at the 
Ministry of Law and Human Rights, and an investigation into 
corruption at various Indonesian embassies. 
 
¶6. (SBU) The Attorney General is also spreading this task force 
concept nationwide.  The AGO Anti-Corruption Task Force is 
establishing  mini task forces in each of the 31 Indonesian High 
Prosecution offices, committing over 1,000 prosecutors to the fight 
against corruption.  These local anti-corruption task forces will be 
formally announced on November 24, and will ultimately report to the 
head of the national Anti-Corruption Task Force.  Effendy has also 
told us that he is working to shorten the approval process to bring 
corruption cases to court, which prosecutors see as a bureaucratic 
obstacle and political opportunity to hinder corruption 
prosecutions. 
 
¶7. (SBU) The Attorney General's Office launched a more wide-ranging 
bureaucratic reform process in September 2008.  Its plan includes a 
comprehensive staffing assessment, followed by the development of 
job evaluations, job descriptions, and new remuneration structures. 
The AGO will present its findings to the Ministry for State Reform 
and then the Ministry of Finance for approval in early 2009. 
 
Judiciary improves transparency and accountability 
--------------------------------------------- ----- 
 
¶8. (SBU) The Supreme Court has made progress on three overarching 
judicial sector reforms: enhancing court transparency; training 
judges on a new Code of Conduct; and initiating bureaucratic reform. 
 In August 2007, the Supreme Court issued a Transparency Decree that 
mandated that all Court decisions be posted online.  The Court has 
posted nearly 7,000 cases to date and is adding more cases daily. 
Previously, Court decisions were not publicly available.  The 
Transparency Decree is a fundamental shift to improve accountability 
of the Indonesian judicial system, according to legal reform 
experts. 
The Transparency Decree also requires the publishing of court budget 
and fee information.  To date, approximately 250 courts maintain 
individual websites, with 200 providing access to budgetary and 
financial information on their websites. 
 
¶9. (SBU) The Supreme Court adopted a new Code of Conduct in 2006. 
To date, the Court has trained over 2,000 judges in this new Code of 
Conduct, which will now be used for new candidate judge training as 
 
JAKARTA 00002146  003.2 OF 004 
 
 
well.  The Court has also begun to release disciplinary information 
on judges who are found to be in violation of the Code as well as 
other disciplinary matters.  And in June 2008, the Court began 
requiring senior court personnel to submit wealth reports to be 
eligible for promotion. 
 
¶10. (SBU) Judicial reforms are being institutionalized through 
bureaucratic reform.  The court has identified three additional 
bureaucratic reforms: information technology enhancement; handling 
of court fees; and human resources management.  Information 
technology initiatives are designed to improve public service 
delivery and internal human resource capacity.  New requirements on 
court fees will standardize and publish all fees, a basic, yet 
fundamental aspect of court transparency.  Improvements in human 
resources management, one of the most sensitive areas of reform, has 
led to over 800 court personnel job descriptions and performance 
standards being developed in the past year.  A state-of-the-art 
human resources database is also under development.  These tools are 
developing the groundwork for human resources reform, including 
performance management. 
 
Police promote internal discipline to reduce corruption 
--------------------------------------------- --------- 
 
¶11. (SBU) The Indonesian National Police has made internal reform a 
central focus.  In particular, they have dramatically increased 
implementation of their Code of Conduct.  During 2007, the police 
investigated 19,459 police officers for violations of their Code of 
Discipline and Code of Ethics, a 323% increase over 2006 discipline 
cases.  The dramatic increase is a result of a stronger nationwide 
enforcement of internal codes of conduct, enforcement of internal 
investigative procedures, defined investigative responsibilities of 
criminal cases and internal code violations, centralizing of data 
collection, and more accurate reporting.  In addition, the police 
overcame institutional fears of adverse publicity, publicizing 
discipline statistics for the first time.  The police is working to 
institutionalize this progress by moving the Office of Professional 
Security into their Inspector General's Office.  This proposed move 
will give ensure greater independence and resources to the Office of 
Professional Security. 
 
Other institutions joining the fight against corruption 
--------------------------------------------- --------- 
 
¶12. (SBU) The Ministry of Finance, led by the highly regarded Sri 
Mulyani Indrawati, has initiated sweeping reforms within its own 
ministry and with other government institutions.  Within the 
Ministry of Finance, Minister Indrawati transformed the Directorate 
of Tax and Customs, firing hundreds of Customs officials and 
streamlining the operation.  Earlier this year, the KPK - in 
coordination with Minister Indrawati - raided the Tax & Customs 
office at Indonesia's largest port, exposing many corrupt practices 
and cash bribes in desks.  Outside of the Ministry of Finance, 
Minister Indrawati has worked with the Supreme Court to implement 
reform programs that reward the Court with higher compensation for 
carrying out reforms. 
 
¶13. (SBU) President Yudhoyono has also created the Office of 
Government Procurement Policy to tackle the inefficiency and 
problems within the government procurement system, a major source of 
corruption. On the military front, President Yudhoyono appointed 
 
JAKARTA 00002146  004.2 OF 004 
 
 
former KPK Commissioner Erry Hardjapamekas to lead the Defense 
Department's 150-person business divestiture unit.  Under 
Hardjapamekas' leadership, the initiative to divest the military of 
its businesses is moving forward after three years of inaction, 
although long-term success will require significant Defense 
Department budget increases to balance the loss of this major source 
on off-budget revenue. 
 
Institutionalizing the fight against corruption 
--------------------------------------------- -- 
 
¶14. (SBU) Eradicating corruption remains a central pillar of 
President Yudhoyono's overall governing strategy and political 
agenda.  And the institutionalization of policies, resources, and 
organizational capacity means that anti-corruption reform will be a 
legacy of President Yudhoyono, regardless of next year's election 
results.  The KPK is taking a more aggressive stance through its 
increased personnel, record of success, and strong mandate.  The 
Attorney General's Office is initiating important reforms, 
particularly the Anti-Corruption Task Force and bureaucratic 
reforms.  The Supreme Court's Transparency Decree is a fundamental 
step to make the Indonesian legal system more accountable and open. 
Police reform, particularly efforts to improve internal discipline, 
targets another institutional source of corruption.  More challenges 
remain, but there is a growing strength and commitment to 
anti-corruption reform in Indonesia, backed up by increasingly 
capable institutions. 
 
HUME