Tackling corruption in the Indonesian natural resources sector

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14 October 2021

An insight piece by Laode M. Syarif, Executive Director of Partnership for Governance Reform (KEMITRAAN) in Indonesia and Senior Lecturer at Hasanuddin University, Faculty of Law. Dr  Syarif is collaborating with the Exploring Responses to Corruption in Natural Resource Management and Conservation Practice initiative, incubated by the Luc Hoffmann Institute and TNRC.

In countries where corruption is pervasive in governance, working across sectors to report and address corruption holds much potential for anti-corruption actors. This is the case in Indonesia’s natural resources sector. 

In Indonesia, corruption is largely driven by global supply and demand for palm oil, timber, pulp, and minerals. Intricate networks of powerful actors in finance, politics and business make it difficult to identify clear responsibilities and accountabilities for illegal actions.

From 2015 to 2019, I served as Commissioner of the Corruption Eradication Commission (Komisi Pemberantasan Korupsi). The KPK was established in 2003 as an independent public agency to investigate and prosecute corruption cases involving high-ranking public officials and law enforcement officers. 

The impacts of corruption on conservation in Indonesia

The impacts of corrupt activities on our natural ecosystems, resources and local communities are marked. KPK studies conducted during my term as Commissioner revealed that almost 3 million hectares of natural forests had already been illegally cleared to make way for palm oil plantations even though these areas are still registered as natural forests by the government. As a result of both legal and illegal logging, Indonesia has one of the highest rates of deforestation in the world. 

The loss of biodiversity and habitat for endemic fauna and flora is unmistakable as large plantations are often situated within national parks. In addition, soil and water sources are polluted, and local communities’ way of life is impacted as people’s food plantations and livelihoods are destroyed.

The challenges of tackling natural resources corruption in Indonesia

At the central, provincial and local tiers of government, the symptoms of corruption related to conservation show themselves mainly as irregular procurement processes; fast-tracking licensing for plantations and mining; and lack of acknowledgement or enforcement when environmental, forestry or mining laws are violated. 

However, upon deeper examination, the primary challenge remains the intermingling between politics and the private sector, and the related power dynamics and conflict of interest. Many political leaders hail from the private sector and own plantations and mining concessions. The KPK’s experience found that corrupt activities are often difficult to prove because key actors abuse their power by granting licenses to corporations with political connections, thus ‘legalising’ illegal activities. 

Corruption is part of complex and dynamic systems, and those involved have learned from the mistakes of their predecessors. This means that most corrupt activities involving financial exchanges are now conducted outside Indonesia, which makes it difficult for the KPK to trace the flow of money. Furthermore, it is not always possible to publish information about some investigations because those who wish to avoid being detected change their methods and use different jurisdictions where authorities are not prepared to cooperate with investigators. 

The challenge is therefore also about finding ways to use this information to support anti-corruption operational work and overcome constraints that may be imposed by political actors with vested interests.

When the KPK was established, an enabling environment was created by separating it from the Indonesian police and public prosecutor; a specialised system of anti-corruption courts was established, and the KPK was given investigation and prosecution powers. The KPK was also granted substantial autonomy in its human resources management system, and the competence and integrity of its staff were essential to its success.

However, in September 2019, a bill revising Law No.30/2002, the legal foundation for the establishment of the KPK, was passed in just 12 days and without consulting the KPK. The new legislation significantly curtailed the organisation’s independence by placing the KPK under the executive branch of the government. This, together with the withdrawal of political support due to vested interests, has impacted the ability of the KPK to function effectively. 

Sharing learning and innovative action

The KPK worked to enhance transparency and accountability within the Ministry of Environment and Forestry through the establishment of Sistem Monitoring Kehutanan Nasional (National Forest Monitoring System) and Sistem Informasi Penatausahaan Hasil Hutan (Forest Product Administration Information System). It also assisted with establishing Minerba One Map Indonesia (MOMI) under the Ministry of Energy and Mineral Resources and worked with local and provincial governments to improve the registration system for issuing mining licenses. 

The KPK shared its experiences with agencies in Southeast Asia and learned from its counterparts in other countries such as the Independent Commission Against Corruption (ICAC) in Hong Kong, the Corrupt Practices Investigation Bureau (CPIB) in Singapore, the Federal Bureau of Investigation (FBI) in the United States and the Serious Fraud Office (SFO) in the United Kingdom, with whom it partnered on many international investigations. 

Collaborative pathways to action

Tackling the challenges of environmental crimes and illicit resource use can seem overwhelming. I am inspired to be part of the initiative Exploring Responses to Corruption in Natural Resource Management and Conservation Practice because its collaborative approach can help by closing knowledge gaps, growing partnerships and identifying promising avenues for change. 

The content of this thought piece represents the author’s own views and does not necessarily represent the views of the Luc Hoffmann Institute, the Exploring Responses to Corruption in Natural Resource Management and Conservation Practice initiative, nor of any of their collaborating institutions.

Related links:

KPK and the future of combating natural resources corruption in Indonesia
A December 2020 article by Laode M. Syarif, Executive Director of Partnership for Governance Reform (KEMITRAAN) in Indonesia

Tackling forestry corruption in Indonesia: Lessons from KPK prosecutions
A 2020 publication by Sofie Arjon Schütte and Laode M. Syarif for the U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Issue 2020:15)

Spurring new cross-sectoral connections towards anti-corruption responses in conservation
A thought piece by Elizabeth Hart, Chief of Party, Targeting Natural Resource Corruption (TNRC), World Wildlife Fund (WWF-US) and Aled Williams, Senior Advisor at U4 Anti-Corruption Resource Center – Chr. Michelsen Institute, Research Coordinator for TNRC

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