Govt set to clean up `messy' tax tribunal system

Bagus BT Saragih, The Jakarta Post, Jakarta | Mon, 04/26/2010 12:11 PM

The recent judicial corruption case involving tax officer Gayus Tambunan has drawn public attention to the tax tribunal system, especially following the publication of data showing that the court often rules in favor of tax payers who appeal.

Legal expert and former Constitutional Court chairman, Jimly Asshiddiqie, said the tax tribunal had many loopholes but it was only a small part of the country's messy judicial system.

"All of the special courts, like the tax tribunal, are a mess. Let's reform the whole system instead of doing it partially," he told The Jakarta Post over the weekend.

Gayus's case has snowballed, bringing down officials at the tax office, the Attorney General's Office and district court with him.

Five prosecutors involved in Gayus's case are scheduled to be questioned by National Police on Monday.

Indonesia's judicial system currently adopts nine special courts: the commercial court, the tax tribunal, the state administrative court, the human rights court, the corruption court, the labor court, the juvenile court, the fisheries court and the religious court.

Jimly said the special courts were initially separated for efficiency but the goal had never been reached, and added the separation should be evaluated.

"Has it succeeded to bring better judicial system, or given more room to abuse the system?" Jimly said.

The tax tribunal is under the Finance Ministry instead of the general judicial system. Consequently, it is not subject to the Supreme Court's and the Judicial Commission's supervision.

Chief justice Harifin Tumpa has said the tax tribunal law was inconsistent with the judicial jurisdiction law and therefore it had become the subject of controversy.

President Susilo Bambang Yu-dhoyono has said the tax tribunal, with loose supervision, could be used as an "arena of collusion".

The Judicial Mafia Taskforce responded to Yudhoyono's statement by meeting with the Judicial Commission last week on the issue.

Taskforce member Mas Achmad Santosa said one way to reform the tax tribunal would be to give the Judicial Commission the authority to supervise tax judges.

"In the next few days, we will meet with all stakeholders, including the taskforce, the Supreme Court, the Judicial Commission, the Finance Ministry, House of Representatives' Commission III on law and human rights, and the Taxation Committee," Mas Achmad said.

Judicial Commission chairman Busyro Muqoddas welcomed the plan.

"The tax tribunal system has been abused by high-ranking tax officers. We must do something," he said.

Director General of Taxation at the Finance Ministry Tjiptardjo admitted the tax tribunal is one of the facets exploited for collusion that is spiralling out of control, as seen in the recent case of tax official Gayus.

Gayus worked at the directorate of objection and appeal, allegedly brokering deals with the tax tribunal.

"As it becomes increasingly difficult to fool the system, corrupt officials are turning to the tax tribunal to continue their illegal practices," Tjiptardjo said.

The House's Commission III, meanwhile, is gearing up to revise the Judicial Commission law.

Commission member Gayus Lumbuun of the Indonesian Democratic Party of Struggle confirmed one item on the agenda would be the expansion of the Judicial Commission's authority to supervise tax judges.

Yunus Husein: Anti-money laundering czar

Rendi A. Witular, The Jakarta Post, Jakarta | Mon, 04/26/2010 9:54 AM

Yunus Husein, chairman PPATK (JP/P.J. Leo)

Amid the widespread corruption permeating through almost all state institutions, few have survived unscathed in keeping vested interests and political meddling at bay.

But one such rare bird is the anti-money laundering watchdog, the Financial Transaction and Report Analysis Center (PPATK).

And it is thanks to its first chairman, Yunus Husein — who set up the institution from scratch in mid-2002 after the passing of the anti-money laundering law, that the institution boasts an exemplary track record in maintaining integrity among its officials.

Eight years on, Yunus’s hard work presents society with an unchallenged legacy, not only of a corruption-free institution but also a money-laundering detection system that has effectively spotted many suspicious transactions stemming from illegal practices.

Yunus’ days at the PPATK are now numbered as he has to relinquish his job in October this year after serving two terms. Each term spanned four years.

Captaining the PPATK is a mammoth task not only for Yunus but also for his successor given law enforcers and politicians’ penchant for tapping into the agency’s findings for their personal gain.

When PPATK spotted suspicious transactions last year involving low-ranking tax official Gayus Tambunan and high-ranking tax official Bahasyim Assifie, the police allegedly used the evidence to seek bribes from the suspects, instead of dragging them to justice.

Yunus once recalled how several lawmakers and case brokers had even colluded with the police to take advantage of PPATK highly classified findings to extort the suspects.

While the police are authorized to follow up and receive PPATK findings, few of those findings have actually found their way into a court of law, according to Yunus.

To force the police to seriously combat money laundering, Yunus once tried to apply pressure on them in mid-2005 by revealing the existence of suspicious bank savings owned by 15 mid- and high-ranking police officers worth more than Rp 1 trillion (US$109 million) in total.

Although the findings were reported to then police chief Gen. Sutanto, no investigation was ever initiated to solve the case and bring corrupt officers before the law.

Instead of expressing gratitude, the police threatened Yunus over his remarks on the findings.

“I’m not frustrated with law enforcers. What matter most is that I’ve done my part well,” said Yunus in a recent interview.

It takes courage for Yunus to confront recalcitrant law enforcers as death threats have not been uncommon.

Yunus’ own former deputy Comr. Gen. Susno Duadji reportedly threatened Yunus last year over PPATK’s decision to pass on suspicious transactions in his bank accounts to the Corruption Eradication Commission (KPK). Susno was the police chief detective at the time, and was being targeted by the KPK.

In a recorded meeting in mid-last year, Susno lashed at Yunus behind his back before the KPK leaders, saying the PPATK findings should be submitted first to the police, not to the KPK.

“Well, we are friends now. Pak Susno has even sought our assistance in the case involving law enforcers and Gayus,” said Yunus. Susno came to Yunus because of the latter’s role as a member of the Judicial Mafia Taskforce.

Since taking a role in the taskforce early this year, Yunus’ fight against corruption has witnessed a new twist as PPATK findings submitted to the police have never been more intensively investigated than now.

After the Gayus case, PPATK findings have also been increasingly sought by other ministries, especially the Finance Ministry, to detect corrupt officials.

“It’s good that people are now taking our work seriously,” said Yunus, who loves playing table tennis and badminton after office hours.

Yunus, born in Mataram, West Nusa Tenggara, on Dec. 29, 1956, started his career in a banking inspection position with the central bank between 1982 and 1985 and then joined its legal affairs team until 1999.

He was deputy to the central bank’s legal director between 2001 and 2002 before the then Coordinating Minister for Security and Political Affairs, Susilo Bambang Yudhoyono, proposed to then president Megawati Soekarnoputri that Yunus be the first PPATK chairman.

In 2006, President Yudhoyono reappointed Yunus for a second term until 2010 due to his proven integrity and independence.

Unconfirmed reports have circulated that Yunus might be one of the candidates that Yudhoyono will propose to lawmakers to fill the vacant KPK chairman job.

Yunus, who is known for his modest lifestyle, denied ever knowing about this proposal, or even dreaming of it.

“I don’t expect that… In life, I have no other intention than to work as well as possible wherever that is. That’s it,” he said.

How Long Will Singapore Mean Safety?

Jakarta Globe, April 26, 2010

If one asks who in these modern times still believes in miracles, two members of Indonesia’s presidentially appointed Judicial Mafia Eradication Task Force would raise their hands.

Asked by the National Police to join efforts to try locate fugitive rogue tax official Gayus Tambunan who was believed to have fled to Singapore, the two members, Mas Achmad Santosa and Deny Indrayana, were daunted by the task at hand.

But fate winked in their favor, and the two tell how they spotted Gayus at a mall popular with Indonesians on the busy shopping stretch of Orchard Road.

The now-infamous mid-level tax official with millions of dollars in his bank accounts was persuaded to return home to face the law. The fact that his passport was revoked as it was found to have been fraudulently obtained helped.

Still, it was a rare break, as Singapore is also infamous: as a safe haven for Indonesian tycoons on the run and assorted graft suspects. And a skeptical public here tends to believe that Indonesia has no real interest in bringing them back. After all, while Singapore and Indonesia are good neighbors and members of the same regional organizations, and an extradition treaty was signed in 2007, it is as good as useless, because even three years on it has yet to be ratified by Indonesian lawmakers, ostensibly over a defense co-operation clause.

The Gayus case has rekindled the debate, however, and as a Jakarta Globe investigation highlights, public pressure is mounting to get the treaty ratified.

Full story here.

Goldman emails show need for reform, Dodd, Shelby say

MarketWatch, by Deborah Levine

A television at the NYSE showed the effect of fraud charges on Goldman Sach’s stock price on on Friday. (AFP Photo/Getty Images)

NEW YORK (MarketWatch) -- Emails at Goldman Sachs Group Inc. released by a Senate subcommittee show just how much financial reform is needed, two leading senators said on Sunday.

The emails, released Saturday, show executives and other employees at Goldman Sachs knew that the firm was making money on the collapse of the housing market, largely by betting on the failure of mortgage securitizations and derivatives like the ones it bundled and sold to investors, whose failure led to the financial crisis.

"There is something terribly wrong about a country like ours where you make billions of dollars by making nothing and producing nothing but taking advantage of an economic situation, Sen. Christopher Dodd, D-Conn., said Sunday on Meet the Press.

His comments follow emails released by a Senate subcommittee ahead of a hearing Tuesday on the financial crisis. See release from Senate.

Goldman Sachs (GS 157.40, -1.65, -1.04%) Chairman and Chief Executive Officer Lloyd Blankfein and other current and former company personnel are scheduled to testify at Tuesday's hearing.

"These emails show that, in fact, Goldman made a lot of money by betting against the mortgage market," Sen. Carl Levin, D-Mich., said in the release.

The emails add to evidence that point to a need for more regulation of the financial system, including more transparency about derivatives like the ones Goldman apparently shorted.

Read more on Dodd, Shelby.

"We've got to end once and for all the casino atmosphere on Wall Street where they're gambling basically on synthetic ideas and so forth with somebody else's money, putting banks and the whole banking system at risk and producing nothing," Sen. Richard Shelby, R-Ala., said Sunday.

Deborah Levine is a MarketWatch reporter, based in New York.

Goldman Sachs CEO Lloyd Blankfein attends a speech by U.S. President Barack Obama about financial regulation at Cooper Union in New York April 22, 2010. (Credit: Reuters/Natalie Behri

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"Some on Wall Street forgot that behind every dollar traded or leveraged, there is a family looking to buy a house, pay for an education, open a business or save for retirement.": President Barack Obama

A Top Indonesian Lawyer May Be Honest to a Fault

Jakarta Globe, Norimitsu Onishi, April 24, 2010

The former pistol-packing but still hugely influential - yet controversial - lawyer Hotman Paris Hutapea. (New York Times Photo)

Hotman Paris Hutapea is, by his own reckoning, the freest lawyer in Indonesia. In a country where bribes play an integral part in the legal system, where attorneys and judges usually hide part of their wealth to deflect unwanted attention, Mr. Hutapea has never denied gaming the system.

On the contrary, he has reveled in his success by wearing fat diamond rings and carrying, until laws changed a couple of years ago, a gun in a hip holster. His office buildings here are adorned with signs that scream in big, bold letters: HOTMAN PARIS.

He is a regular on television gossip shows that link him to one starlet or another. Colleagues may prudently choose to drive conservative cars, to court at least.

But Mr. Hutapea hops into his new red Ferrari California — the first one sold in Indonesia, for $630,000 — and parks it right in front of court buildings. To his critics, the car and its owner are a prime symbol of the cancer infecting the legal system; to Mr. Hutapea, the Ferrari amounts to an honest acknowledgment of the system’s imperfections.

“If I say I’m a clean lawyer, I’ll be a hypocrite, that’s all I can say,” he said. “And if other lawyers say they are clean, they will go to jail, they’ll go to hell.”

Not surprisingly, some rival lawyers and watchdog groups have pointed fingers at Mr. Hutapea as the Indonesian government has stepped up efforts to clean up the legal system and rid it of the so-called judicial mafia.

In a byzantine world populated by corrupt officials and middlemen, money is often funneled to prosecutors and judges to reduce a charge or tip a verdict.

Asked whether he had ever given money to prosecutors or judges, Mr. Hutapea answered: “I cannot comment on that. I don’t want to comment on that because all I’m saying is that there is no lawyer on earth who is clean. That’s all I can say. I think you know how to make a conclusion from that.”

To him, there is no sin greater than hypocrisy. And charges of hypocrisy lie at the heart of a long-running feud that offers a peek into Indonesia’s complicated jurisprudence.

The quarrel has pitted him against Todung Mulya Lubis, another high-profile lawyer but one with impeccable credentials: a critic of Suharto, the longtime autocrat; a holder of Master of Law degrees from Harvard and Berkeley; a supporter of many human rights organizations and the chairman of Transparency International's office in Indonesia.

The feud, Mr. Lubis said in a brief conversation last month, represented a struggle between “the dark knight” and “the white knight.” But things are never that clear-cut in Indonesia. Mr. Lubis was disbarred for life by one bar association and suspended by another association he had helped found.

Mr. Hutapea, meanwhile, has never received the gentlest slap on the wrist. On a recent morning, Mr. Hutapea, 50, sat down for an interview at his law office, inside a large meeting room with walls blanketed by framed newspaper articles featuring him. He brought out several photo albums showing him attending weddings and other social events with his top clients, mostly ethnic Chinese Indonesians who own many of Indonesia’s biggest conglomerates.

Nothing from his early life had prepared him for this one.

He grew up in a village in Sumatra in a Protestant family of 10 children; his father ran a local bus business. They were Bataks, an ethnic group famous in Indonesia for giving their children random names. A brother was named Washington, after the American president. Also known for their feistiness and argumentation skills, Bataks — including Mr. Hutapea’s rival, Mr. Lubis — are heavily represented among the nation’s top lawyers.

Mr. Hutapea whizzed through law school in Bandung, in Java, before making it here to the capital. He served a one-year stint at Indonesia’s central bank, which recruited top university graduates.

To hear him tell it, the detour set him on the right path. “After one year there, I realized that it was impossible to get rich there,” he said. He looked at the cars driven by colleagues 20 years older. “Come on, 20 years, and still using a Kijang,” he said, referring to a Toyota minivan that is a symbol of Indonesia’s aspiring middle class.

He jumped to a top law firm here, specializing in international corporate law. In the wake of the Asian financial crisis in the late 1990s, he became the nation’s most sought-after attorney by companies trying to fend off creditors.

But it was after the fall of Suharto in 1998, in the newly democratic Indonesia, that Mr. Hutapea started his own practice. He seized on an unfettered news media’s fascination with new wealth and celebrities. He hired popular actresses as personal assistants and featured them prominently in court. He represented celebrities in trials pro bono.

Still, he insisted he worked hard for his success. “Who opens the office every morning?” he asked, calling a young lawyer into the meeting room. “You, sir,” the young man answered. “What time?” “Six a.m.” “When all the lawyers are still holding their mistresses or wives, I’m already working,” Mr. Hutapea said.

Not that he seems to have anything against mistresses. He is a “very good father,” said Mr. Hutapea, who has three children. “Relatively good husband,” he added, repeating a punch line he has often used in interviews.

But Mr. Hutapea turned angry when the subject turned to his battle with Mr. Lubis. Their fight stemmed from a case in 2006 when they represented opposing sides in a corporate trial. Mr. Lubis defended the Salim Group, the conglomerate most closely associated with Suharto, which was being sued by Mr. Hutapea’s client, another conglomerate named Makindo.

Bur until 2004, Mr. Lubis had led a government investigation into the Salim Group and other companies that, hit hard by the Asian financial crisis, were unable to repay their government debts. So Mr. Hutapea accused Mr. Lubis of a conflict of interest.

In 2008, a bar association permanently disbarred Mr. Lubis, who then helped establish another association that suspended him for six weeks but then allowed him to resume his practice. In an interview last week, Mr. Lubis, 60, said he had complied with a government agreement to wait two years until he represented any of the companies in the audit he had led.

“I play by the rules,” he said, adding that in his 36-year career he had never bribed the police, prosecutors or judges. He said he had always fought for human rights and against corruption by pushing the government to establish the highly respected Corruption Eradication Commission.

“Let the record speak for itself.” Mr. Hutapea accused his rival of hypocrisy. “You cannot be an activist while handling all these big conglomerates,” he said, leaping up and adding: “One of his legs is in hell and the other one is in heaven.”

Mr. Lubis said he had “no hatred” for Mr. Hutapea and that this “chapter is closed.” Mr. Hutapea was not letting go just yet, though. If Mr. Lubis agrees to a public debate, he said, “I will give him one of my big diamond rings.”

As the interview neared its end, Mr. Hutapea began to relax. At 2 p.m., a court was scheduled to deliver the verdict on a big case, which, he said, happened to be “purely clean.” So he would let an associate appear in court instead of going himself for that final extra push. “It’s clean,” he said, “because, first, my client is very stingy, and also he has a very strong case. So no need.” Under different circumstances, he said, “I will be there today, you know, to make sure the decision is right.”

AGO Never Serious About Ending Prosecution of KPK Deputies, Experts Say

Jakarta Globe, Heru Andriyanto, April 23, 2010

A recent court ruling that overturned the decision by prosecutors to discontinue a criminal case against two antigraft officials has raised questions about the competence and intentions of those who originally handled the case.

According to the ruling, the two deputies from the Corruption Eradication Commission (KPK) — Chandra Hamzah and Bibit Samad Rianto — are officially suspects again for abuse of power and extortion.

The South Jakarta Prosecutor’s Office last December issued a letter known as an SKPP to halt the prosecutions, for what it termed “sociological reasons.”

At the time, legal experts suggested that a better, stronger, option would have been to adopt a legal principle left over from Dutch colonial system known as “deponering,” in which prosecutors drop a case in the common interest even if they possess solid evidence against the suspects.

“The attorney general [Hendarman Supandji] should have opted to adopt the legal principle [of deponering] because it completely eliminates any opportunity for the injured party to appeal,” Eddy Hiariej, a criminal law expert from Gadjah Mada University, told the Jakarta Globe on Friday.

Marwan Effendy, the deputy attorney general for special crimes, said prosecutors opted to issue the SKPP as a speedy response to rising public pressure for the case against the KPK officials to be dropped.

“Any delay would have brought us daily criticism. Deponering would have taken longer to prepare because we would have needed to consult first with relevant state agencies,” Marwan said.

“We had no problems with the presidential office, but [House of Representatives] Commission III urged us to bring the case to court. Under the law on court proceedings, the court is barred from rejecting a case, so it was less likely the court would have supported [the application of] deponering in this case.”

Eddy, however, dismissed this argument, saying deponering did not require House approval.

“What the attorney general needed to do was to consult with relevant law enforcement agencies such as the National Police and the KPK,” he said.

Chairul Huda, a law lecturer at Jakarta’s Muhammadiyah University, said the Attorney General’s Office halfheartedly terminated the case because it did not want to lose face after previously declaring it had a strong case against Bibit and Chandra.

“I think the AGO lacked seriousness in dropping the case, because it knew very well that the decision letter from the district prosecutor’s office could easily be dismissed by a court ruling,” he said.

“If they had planned to drop the case for a good cause, they would have picked the most appropriate avenue, namely deponering,” Chairul added.

“Their argument that bringing the case to court would have done more harm than good was baseless, because the law doesn’t recognize such a reason.”

The South Jakarta District Court on Monday ruled that the district prosecutor’s letter was unlawful because the Criminal Procedures Code did not recognize the “sociological reasons” used to drop the charges against the KPK deputies. The judge also said that once prosecutors had declared a criminal case fit for trial, it must be go to court.

The decision favored a motion filed by graft suspect Anggodo Widjojo, who is being detained by the KPK for attempting to bribe its officials and obstructing justice.

Anggodo disputed the termination of the Chandra and Bibit case. He claimed he had paid the two deputies and other officials Rp 5.1 billion ($565,000) through a middleman to halt an investigation into his brother, graft fugitive Anggoro Widjojo.

AGO takes action against prosecutors whose bungling to Gayus acquittal

The Jakarta Post, Jakarta | Thu, 04/22/2010 11:13 PM

The Attorney General Office’s (AGO) announced Thursday the punishments for the 12 prosecutors found to have failed to conduct a proper examination of the corruption case involving tax officer Gayus Tambunan which resulted in his acquittal.

The six members of the prosecution team and six high-ranking prosecution office officials who approved the indictment of Gayus without an adequate legal basis variously face eitherdelayed promotion, demotion or dismissal.

Two members of the prosecution team, Cirus Sinaga and Poltak Manullang, were officially demoted from their positions yesterday for allegedly “engineering” the indictment against Gayus.

Today the AGO handed out “light and moderate” punishment to four members of the team, Fadil Regan, Eka Kurnia Sukmasari, Ika Syafitri Salim, and Nazran Azis, said Junior Attorney General for Monitoring Hamzah Tadja.

“Eka, Ika and Nazran were punished by one year delayed promotion, while Fadil was demoted from his current position for one year,” he told reporters.

Fadil received heavier punishment because he had overlooked indications of corruption in the Gayus case and agreed with Cirus and Poltak to only charge him with embezzlement and money laundering, Hamzah said.

“The other prosecutors had indicated the possibility of corruption in the case, but Fadil refused to take that into account,” he said.

The six high-ranking prosecution office officials also faced lenient sanctions of delayed promotion or only written reprimands, despite the fact they had approved the irregular indictment against Gayus Tambunan.

Hamzah only revealed their initials as KS, PL, NF, ADF, SYN, and MIJ.

The 12 prosecutors had been questioned by AGO following the irregular indictment of Gayus under the 2003 Money Laundering Law and the Criminal Code, carrying a maximum sentence of five years jail, instead of the Corruption Law that carries heavier punishment. The Tangerang District Court then acquitted Gayus last month.

Presidential Instruction Signs SBY to End Nat'l Con

Kompas, Rabu, 21 April 2010 | 13:09 WIB

President Susilo Bambang Yudhoyono (RUMGAPRES/ABROR RIZKI)

TAMPAK SIRING, KOMPAS.com - President Susilo Bambang Yudhoyono is scheduled on Wednesday to close the three-day national working conference and sign a Presidential Instruction on its results. The national working conference was attended by cabinet ministers, provincial governors, DPRD (regional legislative council) chairmen, state enterprises’ chairmen, and government institutions, discussing the national economic development, pro-people’s programs, fair social development, and meeting the MDGs.

On Monday and Tuesday, the participants were divided into four working groups to discuss the four themes discussed in the working meeting. The heads of the working groups Finance Minister Sri Mulyani for economic development, National Education Minister Muhammad Nuh for pro-people programs, Social Affairs Minister Assegaf Aljufrie for fair justice development, and National Development Planning Minister Armida Alisjahbana for MDGs, briefed the press on the results of the group discussions.

Today, before conclusion, the coordinating ministers will report the results of the discussions of each working group, and the President will later give directives and guidelines and close the working meeting. The President will also inaugurate The 12th Jakarta International Handicraft Trade Fair (Inacraft) at the JCC Assembly Hall by way of teleconference.

SBY Says Communication Key to Lifting Regions

Jakarta Globe, Armando Siahaan, April 21, 2010

President Susilo Bambang Yudhoyono shaking with C. Java Governor Bibit Waluyo in Bali. The retreat’s theme was bolstering top-down cooperation in government. (Antara Photo)

In an effort to increase the effectiveness of autonomous local governments, President Susilo Bambang Yudhoyono on Wednesday called for better coordination between the central and regional governments over the next five years of his term.

“The central government should listen more to the regional governments and vice versa,” Yudhoyono said at the close of the three-day government retreat at Tampaksiring Palace in Bali. The Vice president, ministers, governors and members of the private sector were in attendance.

The call for better top-down coordination was a recurring theme throughout the meeting’s four working groups, which included economic development, pro-people programs, welfare distribution and the UN’s Millennium Development Goals.

Hatta Rajasa, the coordinating minister for the economy, said that over the last five years economic growth had been great but the disparity between provinces remained a problem. He said the central government needed to coordinate more with the regional governments for a more even-handed result.

A 2009 second-half report released by the Supreme Audit Agency (BPK) in March, which studied eight districts after the regional autonomy law was introduced in 1999, suggested that the freedom to govern independently of the central government had failed to better some regions.

In addressing marginalized groups of people and their predicaments, Social Affairs Minister Salim Segaf Al Jufrie said the regional governments had failed to allocate adequate budget resources.

Moreover, Armida S Alisjahbana, head of the National Development Planning Agency (Bappenas) said that although the government has been relatively successful in meeting its Millennium Development Goal targets, disparity of results among regions was apparent.

Yudhoyono said that the governors should refer to the national figures as the benchmark of progress.

“If national economic growth reaches 6.5 percent,” provincial governments “must make sure that they also reach that level,” he said.

The meeting came up with a coordination protocol in which the central government and the regional governments would work together with a supervising unit led by a collection of ministries, said Agung Laksono, coordinating minister for people’s welfare.

Arya Fernandez, an analyst with the consulting firm Charta Politika, said that, ideally, regional autonomy would not hinder the government in achieving its goals of economic development and increasing people’s welfare.

He said that the autonomy ends the hierarchical relationship between the central and the regional governments, allowing the latter to create its own on the policy that would support the area’s progress, “as long as [the regional government] shares the same vision with the central government, which is the prosperity of the people.”

Fernandez added that when it came to formulating and implementing policy, the regional governments often didn’t invite public participation, resulting in policies that left many out.

Moreover, he also said that the head of the local government, which is appointed by the support of a political party, was often trapped by their party’s stance, limiting the formulation of their own policy.

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Suspend Papua Graft Probe: Lawmaker

Jakarta Globe, Markus Junianto Sihaloho & Nivell Rayda, April 21, 2010

Appearing to bow to party and corporate interests, a Democratic Party legislator has called for investigators to suspend a probe into a Papua district head who has been linked to a Rp 49 billion ($5.4 million) graft case.

Daday Hudaya, a lawmaker from the House of Representatives’ Commission III, which oversees legal affairs, said on Wednesday that the commission had recommended the investigation into Yusak Yaluwo be put on hold until after a local election in which Yusak would be standing.

Yusak, who was detained by the Corruption Eradication Commission (KPK) for his alleged role in embezzling funds from the regional budget, is the head of Boven Digoel district and has been nominated by the Democratic Party to run for governor of South Papua, a new administrative region that is set to be inaugurated later this year.

“We believe his arrest is a politically motivated ploy by his rivals,” Daday said, adding that he would summon KPK and police officials to clarify the case.

Meanwhile, Antonius Narahawarin, an executive from the Korindo Group, which has major logging concessions in Boven Digoel, said Yusak’s arrest had raised concerns among the business community about the safety of supporters of the candidates in the poll.

Bambang Widodo Umar, a legal analyst from the University of Indonesia, said the KPK was not obliged to follow the House commission’s recommendation.

“As long as the KPK has strong evidence to detain Yusak, it should not bow to the House’s demands,” he said.

KPK spokesman Johan Budi said it would not drop its investigation. “We’re obliged by the 2003 KPK Law to see any ongoing investigation through to completion,” he said.

“And while it would be possible to release Yusak pending the investigation, that would make our job more difficult.”

Related Article:

KPK detains Boven Digoel regent over alleged graft

President opens "Inacraft 2010" in Bali

Antara News, Wednesday, April 21, 2010 16:40 WIB

Tampak Siring (ANTARA News) - President Susilo Bambang Yudhoyono officially opened the 12th Jakarta International Handicraft Trade Fair (Inacraft 2010) at Tampak Siring Palace here on Wednesday.

On the occasion the head of state said the handicraft industry in Indonesia played a strategic role in the country`s economy because it had a big market opportunity and absorbed a great number of manpower.

"The important and strategic theme for the handicraft trade fair this year is from a smart village to a global market, because it is a strategic industry that can absorb a great number of manpower," President Yudhoyono said.

According to the head of state, many parties had a profound interest in handicraft products because of their profitable sale prices and inspiration.

"I am optimistic that various handicraft products in the country can bridge cultural relations among nations around the world," the president said.

Therefore, the head of state reminded the craftsmen to continue to develop their idea, creativity, and improving the quality in the tight global market competition.

Global market, according to the president, would highly respect safe and environmentally-friendly products.

"Handicraft industry can really support the people`s economic power, and therefore we need to improve the design, quality, and packing system, and trademark," the president said.

On the occasion the head of state also asked the craftsmen to have self-confidence following the implementation of Asean Free Trade Area and China-Asean Free Trade Agreement.

"Have self-confidence in the face of Asean Free Trade Area and China-Asean Free Trade Agreement, because the government will make an all-out effort to make a policy to strengthen the national economy," the president said.

President Yudhoyono added that with the free trade area, Indonesia would be able to have wider opportunity in attracting as many investors as possible.

"We are tested to be able to come out of transitional period in the trade era because it is our role to build a profitable but fair world economic architecture," he added.

More tax crimes unfold in Surabaya and Bandung

Achmad Faisal and Indra Harsaputra, The Jakarta Post, Surabaya | Tue, 04/20/2010 9:04 AM |

The Judicial Mafia Taskforce said Monday it would expand its oversight to Bandung and Surabaya following reports of alleged major tax mafia syndicates in the two cities.

Taskforce member Mas Achmad Santosa suspected the tax fraud cases in Bandung and Surabaya could be linked to the case of Gayus Tambunan, who shot to notoriety after allegedly illegally amassing Rp 28 billion in his bank account.

“In the next few days, we will reveal to the public the big picture on these mafia practices. We will not only focus on the Gayus case. Please be patient,” Mas Achmad said.

A janitor was allegedly involved in an Rp 350 billion (US$38.85 million) tax fraud case in Surabaya, East Java. Enang Yahya Untoro was arrested as a suspect on Monday.

Surabaya Police Chief Sr. Comr. Ike Edwin said the police had arrested Enang along with nine members of an alleged tax mafia syndicate.

“We arrested them on Sunday and we are now hunting for another three suspects,” he told The Jakarta Post.

They have been charged with fraud, embezzlement and forgery. If found guilty, they could face a maximum of five years imprisonment.

The police uncovered the case after a company director claimed he received 34 counterfeit tax receipts worth Rp 934 million.

Ike said in the last five years the syndicate had managed to forge tax receipts for 350 companies, embezzling Rp 1 billion from each one.

“We have confiscated Rp 77.5 million, a car, a motorcycle, stamps belonging to a state-owned bank and the tax office, and a tax receipt from a state-owned bank,” he said.

The Surabaya police have asked for assistance from the Financial Transaction and Reports Analysis Center (PPATK), the Supreme Audit Agency and the East Java police concerning possible involvement of law enforcers in the case.

The police in Bandung have reportedly named a tax official at the Pratama Bandung Cicadas tax office as a suspect in a tax fraud case. He is identified as Andri Hardukadi, Andri was detained at Bandung Police detention center since August last year, charged with stealing tax documents and counterfeiting tax invoices.

Ota said that he hoped the findings would trigger leaders of finance and law enforcement institutions to initiate cooperation.

“Finance Minister Sri Mulyani Indrawati should invite leaders of the police, prosecutors, and judicial institutions, to sit together and discuss how to curb the taxation mafia.

“If that happens, we can tackle the root of the problems and raise more tax income,” Mas Achmad said.

A janitor was allegedly involved in a Rp 350 billion (US$38.85 million) tax fraud case in Surabaya, East Java.

Foreign firms to pledge not to give bribes in Russia

BBC News, by Konstantin Rozhnov, Business reporter

There have been several bribery scandals in Russia recently

Dozens of international firms doing business in Russia are to pledge not to offer bribes, in a move aimed at fighting corruption collectively.

The accord, to be signed at an official ceremony on Wednesday, was initiated by the companies, not the Kremlin, said the Russian-German Chamber of Commerce.

Anti-corruption group Transparency International has said bribery in Russia is worth $300bn (£462bn) a year.

Two recent bribery scandals in Russia have involved foreign firms.

The agreement was praised by Russian presidential adviser Arkady Dvorkovich.

"We are glad that foreign companies have heard us and are ready to help us fight corruption," he told Russian business daily Vedomosti.

Among more than 50 predominantly German companies which are set to sign the agreement are Siemens, Deutsche Bank, Deutsche Bahn and Axel Springer AG.

Bribery scandals

Russian President Dmitry Medvedev has declared fighting corruption to be one of the main goals of his presidency.

Last week he signed a decree outlining his government's approach to tackling the problem.

Recently there have been two high-profile bribery scandals in Russia involving international companies.

Russian, German and US authorities are investigating whether US computer company Hewlett-Packard paid millions of dollars in bribes to win a big contract in Russia several years ago.

A spokesperson for Hewlett-Packard said last week that HP would "continue to fully co-operate with the authorities investigating this matter".

"This is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with HP," the spokesperson said.

Also, German carmaker Daimler agreed to pay $185m to settle a US corruption case involving offences committed in Russia.

However, the chairman of the Russian-German Chamber of Commerce, Michael Harms, called it "a coincidence" that international companies would sign the anti-bribery agreement only days after Mr Mededev unveiled the recent official policy and the two bribery scandals became public.

"We have been working on it [the agreement] for half a year, we would not be able to do it just in a week," he told the BBC.

'Corruption racketeering'

Mr Harms said that German companies doing business in Russia were the first to lay down the collective measures against corruption, although the ceremony on Wednesday will also be attended by representatives from European and US businesses.

He admitted that the task of tackling corruption in Russia was a difficult one, but said that it could be achieved "in the long run".

Elena Panfilova, head of Transparency International in Russia, said that the anti-bribery agreement was "good rather than bad".

She added, however, that any company working in Russia could find itself in a situation when it did not want to give bribes but was forced to do so if it wanted to carry on doing business. The agreement would not solve situations such as these, she said.

Robert Mitchell, head of enhanced due diligence for Europe, Middle East and Africa at risk specialist World-Check, said that governments were responsible for dealing with the problem of corrupt officials.

"They [governments] have to practice what they preach," he said.

Mr Mitchell added that the way to try to solve the problem in Russia was to follow in the footsteps of western countries and blacklist individuals and companies who were responsible for receiving bribes.

Different traditions

Traditions different from those in Russia, as well as tougher laws in their home markets, could be the reason why, according to Mr Harms, foreign companies have been much more eager to join the anti-bribery initiative than Russian firms.

Several corruption scandals involving international companies working in Russia became public not as a result of Russian officials' moves, but after prosecutors in Western countries took action.

"Western companies think that even if things remain hidden in Russia, they will be uncovered at home," said Ms Panfilova.

"In Russia, it is a different story."

Most experts agree that foreign companies' readiness not to offer bribes in Russia is a good sign, but it will not be enough to eradicate corruption any time soon.

Mr Harms believes that this time the companies signing the agreement have managed to come up with a mechanism to fight corruption on day-to-day basis.

But critics say it is not yet clear whether declarations of intention will be followed by effective actions.

History shows that in terms of successfully fighting corruption in Russia, not a lot has been achieved so far.

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