Showing posts with label corruption. Show all posts
Showing posts with label corruption. Show all posts

Bribery Act (UK) 2011 is in Force. British Companies Overseas are covered for certain offences

Friday, July 1, 2011

The UK Bribery Act 2011 has just been given royal assent. Some of its offences covers British companies overseas.

s. 12 (5): An offence is committed under section 7 irrespective of whether the acts or omissions which form part of the offence take place in the United Kingdom or elsewhere.


s.7 Failure of commercial organisations to prevent bribery

(1) A relevant commercial organisation (“C”) is guilty of an offence under this
section if a person (“A”) associated with C bribes another person intending—
(a) to obtain or retain business for C, or
(b) to obtain or retain an advantage in the conduct of business for C.

Download the Original version of the Bribery Act here.


The Serious Fraud Office is in charge in enforcing these laws. There has been prosecutions involving Indonesian subsidiaries of an English companies in the past.


A case for legalizing bribery?

Sunday, April 3, 2011


Indian economist Kaushik Basu argued that in order to deter corruption, legal immunity should be given to bribe-giver (but not bribe-taker). That is, when an act of bribery is committed and both of the doers are caught, the bribe giver should be set free and allowed to collect their money, but the bribe taker should be punished.

This is indeed an interesting method for deterring corruption by managing its supply-side. It provides incentives for suppliers (bribe-giver) to report and turn over the bribe-taker to the police. He provides caveats however, that bribe giver may have an interest to manage his or her reputation in the underworld (I can imagine that someone like Ayin will have to be ‘credible’ enough in order to earn trust from the bureaucrat – that is to say, to have some sort of an underworld moral code). He also warn the possibilities that false charges of bribery on behalf of the public officials may rise, but this can be managed by increasing penalties for false charges – somewhat dilemmatic for a lawyer.


Anyway, download the paper here.


H.T. Marginal Revolution

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Data Transfer, the DPR’s Style

Thursday, May 6, 2010

According to Vivanews and Kompas, one trolley worth of documents from the House’s Special Investigative Unit for the Century scandal is ‘missing’ *. 
The Jakarta post reported:

Separately, Gayus Lumbuun from the Indonesian Democratic Party of Struggle (PDI-P) said that the House leaders had to explain what really happened on the documents which should have been completely sent to the KPK.
Deputy House speaker Priyo Budi Santoso from the Golkar Party said he too was surprised by the fact that the KPK had yet to receive all the necessary documents and that the House leaders would investigate into the issue.

Data transfer, our generation’s style:


Data transfer, the DPR’s style:
Mr President, Mr KPK, please enjoy the data… Sorry for being late, we’ve had a little Traffic Jam at Gatot Subroto street


* It turned out that DPR’s secretariat did not send KPK the data because DPR’s House Rules only require that the details are sent to the President and not the KPK.  (Yeah right…)


Corruption allegation in Makassar's water project

Friday, April 23, 2010

The Indonesian Attorney General Office has started to investigate the allegation of corruption in the water sector. The amount money involved is 1 billion IDR. The project, which is fully funded by Makassar's regional budget is supposed to improve Makassar city's water supply. Read more (in Bahasa)


Another 149 companies may be implicated in tax crime?

Monday, April 5, 2010

According to the Jakarta Post:

There are at least 149 companies with tax issues related to Gayus, lawmaker Bambang Soesatyo said Thursday after a meeting with National Police chief Gen. Bambang Hendarso Danuri.
“I have a list [of the problematic firms]. They relate to Gayus’ case, as indicated by Gayus’ bank account transactions,” Bambang said as quoted by Antara. He said the case, which involves Rp 28 billion (US$3.08 million) in Gayus account, was only a part of a larger crime.
Gayus is likely involved in tax crimes along with hundreds of companies, Bambang added.
Chief detective at the National Police Comr. Gen. Ito Sumardi said his detectives had begun investigating into hundreds of companies that evaded tax with Gayus’ assistance.

Yesterday, Adnan Buyung has agreed to take on the case on the condition that Gayus opens up. Today, detikcom quoted Constitutional Court chief judge Mahfud MD saying that there is another major corruption case 'ready to blow'. 

Looking at the list, some of the 149 companies are indeed giant businesses with strong political connections.
What do you think?

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The Pertamina Bribery Case: R v Innospec Limited

Saturday, April 3, 2010

As you might be aware, the Indonesian Commission for the Eradication of Corruption (KPK) recently investigated the alleged bribery of former Indonesian's Pertamina (State owned oil company) top officials for delaying the enforcement of TEL-free gasoline policy and securing the TEL supply contract to Pertamina. 

The bribery was allegedly conducted by Innospec subsidiary in Indonesia through a series of ad-hoc funds and financial engineering. Some of the important points in the UK's Serious Fraud Office document:
65. It is not known how many ad hoc funds there were, nor responses for one off payments, though there is reference to a number within documentation provided to the SFO by Innospec. These additional payments were variously referred to as the “Lead Defense”4 fund; “Lim WS account”5; “compensation fund”6; “extraordinary costs”7; “cumulative costs”8; “special funds”9; “promotion fund”10 or “exceptional promotional work”11; “special bonus”12; “cranes” 13 and the “Rachmat Sudibyo fund”.
 66. This fund was conceived and largely operated during a period predating the Indictment. In the first instance between 2000 until his departure in August 2002, a recipient of ad hoc bribes was Rachmat Sudibyo (“Sudibyo”). The “Rachmat Sudibyo Fund” was a corrupt vehicle to pay Sudibyo, the Indonesian Director General of Oil and Gas at the Ministry of Energy and Mineral Resources. He was in post until August 2002, whereupon he was appointed Chairman of BPMigas – the newly established oil and gas authority.
69. The Special Committee retained KPMG to examine all payments made to PTSI. KPMG found two large payments, one in 2001 ($265,000) and one on 8 January 2002 ($295,150) with invoices stating that they were: “For payment all Pertamina/Migas & Lemigas Personnel (sic) travel, hotel, daily expenses overseas during the year 2001 spent in promotion of OCTEL’s products, as earlier agreed.”.

76. Innospec’s agents therefore made corrupt payments to public officials at Pertamina which were not dependent upon or related to specific orders for TEL being made. Corrupt payments were made as general sweeteners “to clear the air”, through various mechanisms including the agents’ general commission, to “buy of [sic] some Pertamina people”, to maintain or increase market share.

77. Furthermore, Innospec’s agents also requested further funds in order to make corrupt payments to a rival agent – Wisnu – who had apparently been tasked with marketing Chinese-sourced TEL to Pertamina.

83. In 2003 and 2004, Innospec’s agent, Sebastian, targeted Suroso, who became the Refinery Director of Pertamina. It is believed that this position was second only to the President or CEO of Pertamina. In effect Suroso had authority, at least until 2005, to sign and agree purchase orders on behalf of Pertamina. Even after the creation of MIGAS, individual refineries and Pertamina more generally had certain autonomy to enter into contracts with particular suppliers.

Read the full document at the SFO's web here.

The UK's Innospec had pleaded guilty to the offence. The UK's DoJ is currently carrying criminal investigation into the matter.

KPK - BP Migas; Conflict of Interest?

Sunday, October 11, 2009

The Jakarta Globe reported:

In a move to address persistent allegations of corruption in the multibillion dollar oil and gas sector, the Energy and Mineral Resources Ministry on Friday appointed an officer of the Corruption Eradication Commission to the board of directors of upstream oil and gas regulator BPMigas.

Lambok Hamonangan, the director of gratuity oversight at the commission, better known as the KPK, was inaugurated as BPMigas’s deputy for evaluation and legal advocacy, a newly created position.

Mind my ignorance, but wouldn't this leads to conflict of interest?

Gecko challenging a crocodile

Sunday, July 26, 2009

NYT posted a story on the recent polemic between the gecko and the crocodile:

“Now our relations are no good because the K.P.K. started picking on their high officials,” said Erry Riyana Hardjapamekas, a former deputy chairman at the commission. “We suspect each other.” More recently, an active high-ranking police official, Susno Duadji, was wiretapped by the commission and caught asking for a $1 million bribe. In an interview with Tempo, the country’s most respected magazine, the police official said he knew he was being wiretapped and played along with the caller; in an allusion to the anticorruption commission and the police, he said, “It’s like a gecko challenging a crocodile.”

Civil societies recently campaigned in support of the 'Gecko'. They called their movement CICAK or Cinta Indonesia Cinta KPK (Love Indonesia, Love the Commission for Eradication of Corruption). Cicak is the Indonesian word for Gecko. As a symbol, they release the above emblem titled: "I am a gecko. I am bold to challenge a crocodile"

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Where is the "wealth of nations"? Answer: Rule of Law

Saturday, October 6, 2007

An interesting story from Reason Magazine:

A Mexican migrant to the U.S. is five times more productive than one who stays home. Why is that? The answer is not the obvious one: This country has more machinery or tools or natural resources. Instead, according to some remarkable but largely ignored research—by the World Bank, of all places—it is because the average American has access to over $418,000 in intangible wealth, while the stay-at-home Mexican's intangible wealth is just $34,000.

But what is intangible wealth, and how on earth is it measured?

...the World Bank finds, "Human capital and the value of institutions (as measured by rule of law) constitute the largest share of wealth in virtually all countries." According to their regression analyses, for example, the rule of law explains 57 percent of countries' intangible capital. Education accounts for 36 percent.

Average per capita wealth in OECD countries is $440,000, consisting of $10,000 in natural capital, $76,000 in produced capital, and a whopping $354,000 in intangible capital. (Switzerland has the highest per capita wealth, at $648,000. The U.S. is fourth at $513,000.)

By comparison, total wealth for the low income countries averages $7,216 per person consisting of $2,075 in natural capital, $1,150 in produced capital and $3,991 in intangible capital. The countries with the lowest per capita wealth are Ethiopia ($1,965), Nigeria ($2,748), and Burundi ($2,859). In fact, some countries are so badly run, that they actually have negative intangible capital. Through rampant corruption and failing school systems, Nigeria and the Democratic Republic of the Congo are destroying their intangible capital and ensuring that their people will be poorer in the future.

It's really about the people, not the nature.

Why are poor countries, poor? Corruption

Monday, July 2, 2007

Reason magazine published a good article explaining why poor countries will remain poor, taking the case of Cameroon:

More important, why can't the Cameroonian people seem to do anything about it? Couldn't Cameroonian communities improve their schools? Wouldn't the benefits easily outweigh the costs? Couldn't Cameroonian businessmen build factories, license technology, seek foreign partners, and make a fortune?

Evidently not. Mancur Olson showed that kleptocracy at the top stunts the growth of poor countries. Having a thief for president doesn't necessarily spell doom; the president might prefer to boost the economy and then take a slice of a bigger pie. But in general, looting will be widespread either because the dictator is not confident of his tenure or because he needs to allow others to steal in order to keep their support.

The rot starts with government, but it afflicts the entire society. There's no point investing in a business because the government will not protect you against thieves. (So you might as well become a thief yourself.) There's no point in paying your phone bill because no court can make you pay. (So there's no point being a phone company.) There's no point setting up an import business because the customs officers will be the ones to benefit. (So the customs office is underfunded and looks even harder for bribes.) There's no point getting an education because jobs are not handed out on merit. (And in any case, you can't borrow money for school fees because the bank can't collect on the loan.)

Law is an agreement, it makes things clear so that people can play in accordance to an agreed rule. Or would we rather use force?

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KPK can no longer prossecute?

Wednesday, February 14, 2007

A friend of mine told me that some people suggested to cut KPK's (Corruption Eradication Commission) authorities in the new draft law so that they will be required to hand in their case to the public prossecutor's office. In the current law, KPK has the authority to prossecute people. So far, I have obtained no documents indicating that this story is true.

In my last post, I quoted a Jakarta Post article reporting that the new draft law will "delete" corruption court and future cases will be settled in public courts.


Corruption to be tried in public court?

Tuesday, February 13, 2007

Now the drafters want to try corruption in public courts?:
What a shocking discourse. The team drafting a new anticorruption law is seeking to kill the three-year-old Anticorruption Court, where the enemies of graft work for a clean future. If the House of Representatives, which Transparency International Indonesia singled out in its last year's Corruption Perception Index report as the country's most corrupt institution, eventually endorses the bill, all corruption cases will be tried at a public court.The courageous non-career, ad hoc Anticorruption Court judges will have to find jobs elsewhere, because only the career judges at the public court will be licensed to prosecute.
Told ya to keep an eye. Back to the stone age gentlemen...

Misunderstanding Indonesia's Legal System?

Tuesday, January 23, 2007

Since corruption is still a hot issue, let's talk more of it. I came across with a blog post quoting Tim Lindsey's lecture in Unimelb. I cannot confirm if it is really his writing as the link is dead. Here's the quote:
However, although the Indonesian legal system provides the sorts of rights and protections for the accused that might be expected in Australian courts, they are not always upheld in the same way in practice.

The institutionalised bribery of the Soeharto period left its mark on the judiciary. Corruption is common in many courts around the country, partly because salaries are very low and facilities poor. As money became more persuasive than legal argument in some Indonesian courtrooms, the skills base of many judges and other law enforcement officials also plummeted.

Hmmm, hear-hear. Needless to say more. Sometimes I find it futile to give reasonings and to draft neat contracts when in the end of the day, its Uncle Benjie who speaks.


Four reasons why Constitutional Court's reasoning is not compelling

Thursday, January 18, 2007

In our newspaper Article, we highlighted four reasons why Constitutional Court's reasoning in invalidating Article 53 of the KPK Law was less compelling. The four reasons are:
  • First, there is no evidence whatsoever that regulating the Corruption Court in the same law as the Corruption Eradication Commission (KPK) automatically violates the Constitution. The Constitution only mandates that the composition, membership, appointment and procedural law of the courts existing below the Supreme Court is regulated by a law. The KPK law has fulfilled such requirements and should therefore be consistent with the Constitution.
  • Second, there is no guarantee that "equality before the law" will be observed by simply segregating the corruption court in a new law other than the KPK law. In order to be fully constitutional, the future corruption court must have specific competencies in adjudicating all corruption cases, as part of a "one-roof" system.
  • Third, the Constitutional Court did not clearly establish the link between a violation of the "equality before the law principle" and why the existence of the corruption court under the KPK law violates such a principle. The reference made by the court in justifying its argument is more to "a custom of regulation", and not directly about the Constitution itself. It is a custom in Indonesia that special courts are regulated through specific legislation, but this custom does not imply that it is a Constitutional requirement to regulate specific courts in an exclusive law.
  • Fourth, there is presently no direct constitutional injury suffered by anyone due to these measures, so the dangers as seen by the court are potential, not actual. It is true that there has been discrimination against people in corruption cases -- those who go to ordinary courts are generally treated more lightly compared to those detained by the KPK. However, these are not direct constitutional injuries but merely injuries caused by a corrupt legal system. Had the legal machinery functioned properly, these negative effects could be minimized as the law has already outlined the exact competencies of each institution.

Political parties and the draft law on corruption court

I just received information. The draft law on corruption court will be discussed by the third commission in the House of Representative. Many activist are worried that political parties will exert their influence during the law making process. Other issues will hovers around:
  1. Influence of the Supreme Court to the new Corruption Court
  2. Composition of ad hoc judges at the new Corruption Court and influence from political parties
  3. Extension of Corruption Court to regions and the influence of regional government
I'll let you know if I found other info.


Corruption Court: This year's legislative highlight!

Thursday, January 11, 2007

We all know that the Constitutional Court annuled Article 53 of the KPK Law which contains a Corruption Court. Much of its decision has been discussed here. Due to the decision, the House and the Government is politically compelled to enact a new law establishing a Corruption Court. This is going to be an interesting process which everyone must carefully observe:
The corrupt and would-be corrupt will want to have a soft law, while civil society activists will want to strengthen the role of the Corruption Court. If a compromise is reached, we might have a stronger and better judicial system. But if no compromise is reached, corruption eradication will be at serious risk.

An expert told that formation of a special court could be a lengthy and difficult process:

Experience with the establishment of the existing Anticorruption Court as a chamber of the Central Jakarta District Court shows the importance of thorough preparation to ensure the timely availability of the necessary funding and infrastructure.

There is certainly a lot that will need to be discussed in detail, decided on and prepared over the next three years. While doing all this, the overriding common cause should be constantly kept in mind: the eradication of corruption and the promotion of legal certainty and public welfare.

Well, let's keep an eye!

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E-procurement website launched

Saturday, January 6, 2007

For those interested in supplying goods and services to the government without the need of disbursing "extra-cost", try signing up at the govt's e-procurement website. The website is prepared for 2007 goods supply.

e-procurement was sought after leaks and markups was found. In year 2006 alone, around 10 and 50 percent of the state procurement budget had been misappropriated.

The legal basis for the e-procurement is a Presidential Decree issued in 2003 (downloadable here and attachment here, in bahasa).

As I clicked the wesbite however, it only says: "sorry, no packages are opened for auction, yet". Try it yourself here.

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Special Court for the Environment?

Friday, January 5, 2007

Another Court? Well, Walhi activists deems it necessary:

"It's about time the government considers setting up such a court to ensure those responsible for illegal logging do not always escape justice." Chalid believed judges and prosecutors tended to try illegal logging offenses as "ordinary" crimes and gave perpetrators light penalties or acquitted them.

Sounds like a classic Juridification problem to me. If an institution is not functioning properly, set up another institution in addition to the former. If the the new institution doesn't work, set up another institution to supervise the ailing institution. If the supervising institution cannot properly supervise the supervisee, set up another institution as an oversight body. Consider the corruption, how many institutions do we have? We have the BPK, KPKPN, BPKP, inspectorate general in many state organisations, we have the police, we have of course the beloved KPK, we have the courts (there are two, in fact, state court and corruption court and each may have competence to try the case) and we have the state attorneys. Still, corruption is a problem.

Maybe the Walhi activist have another consideration in their mind. But instead of forming a new court, why not reform the judges selection process and adopt ad hoc judges?


Constitutional Court's decision on Corruption gets mixed response

Tuesday, January 2, 2007

Constitutional Court invalidated article 53 of the Law on the Commission on the Eradication of Corruption. Article 53 regulates the establishment and jurisdiction of a Corruption Court. The Constitutional Court said that the Corruption Court is unconstitutional as it violates the legal certainty and equality before the law principle.

Law experts have different views:

State Secretary Yusril Ihza Mahendra said the Constitutional Court's ruling posed a serious judicial problem, as those tried and convicted by the Corruption Court would have grounds for complaint if the court turned out to be unconstitutional. "Article 53 of the law on the KPK is clearly against the Constitution, but its existence has been extended for three years. This will be a problem for those who feel their rights have been violated," he said.

Anti-graft activists on Thursday blasted the Constitutional Court's verdict, calling it a "symbolic victory" for those involved in corruption. "The ruling is nonsense. The Corruption Court does not violate the Constitution. Its existence under the law on the KPK does not have any effect on its independence or impartiality," Bambang Widjojanto, who chairs the ethics department at Indonesian Corruption Watch, said at a news conference.

I also have my own view on the matter, which tends to be in the same position with anti graft activists. I have wrapped an article for the Jakarta Post discussing it. We will discuss it in this blog after it is published.