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Crime And Corruption In The Spice Islands

The head of Indonesia's anti-corruption agency was arrested Monday for murdering a prominent local businessman. Antasari Azhar, 56, chairman of the Corruption Eradication Commission or KPK, is accused of killing a rival in a love-triangle. The woman is alleged to be a 22-year-old golf caddy who was working at a club in Azhar's neighborhood.

Police say Azhar hired another businessman to arrange the killing, which was carried out by a gunman on a motorcycle who shot the victim in the head through the window of his BMW. Police said they've arrested the others involved in the murder plot.

Azhar claims he's innocent and has hinted that he's being persecuted by interests threatened by his anti-corruption work. Under his watch, those arrested have included key politicians, lawmakers, central bank officials and businessmen. Reports are here and here.

Indonesian President Susilo Bambang Yudhoyono, currently campaigning for re-election, has made the fight against government graft his central theme. He's leading in the polls, with many Indonesians and foreign investors convinced that the government's latest anti-corruption drive is the first-ever sincere attempt to clean up the country. Indonesia's ranking on the Corruption Perception Index has improved recently, from 143 in 2007 to 126 last year.

Azhar has been suspended from the Corruption Eradication Commission and the remaining four members say they'll press ahead. They apparently plan to announce some major investigations they say Azhar had been blocking. His appointment in 2007 drew fire from many who thought he was unqualified. The NGO Indonesia Corruption Watch led the protests. "This is not just based on opinion but based on our investigation; based on our track record report; we think that Antasari has not enough integrity to be KPK's leader," Corruption Watch's Adnan Topa Husodo had said.

Indonesia is one of the world's most important countries and one of the hardest to govern. The former Dutch colony has around 240,000,000 people, including the world's largest Muslim population, spread over an archipelago of 17,000 islands, 6,000 being inhabited. There are more than 550 known languages and dialects in the country, 13 of which have more than a million speakers. It's the third-largest democracy on the planet but only held its first free elections in 1999. In addition to its ingrained corruption, problems include terrorism, poverty, unemployment, inadequate public services, a massive under-funded bureaucracy, mountains of red tape, and opaque government administration at local and national levels.

Despite all that, Indonesia has enormous potential and promise. The country enjoys an amazing resilience -- its economy, for example, grew by more than 5 percent over the past five years and is even doing well in the downturn. Private-sector industrial infrastructure is modern and efficient; exports compete regionally and beyond. The elected leaders since 1999 have largely abandoned protectionism and embraced trade and fiscal freedom, working to develop the huge domestic consumer market to go with its export base.

If Indonesia can ever tame its run-amok corruption -- and that's still a big "if" -- the country might finally take its place as a credible (and perhaps irresistible) investment alternative to China and India.
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Full post as published by The FCPA Blog on May 05, 2009 (boomark / email).