Competitive bribery and the Corruption Eradication Commission

Competitive bribery and the Corruption Eradication Commission Rangga Cipta  ;  An economist at Samuel Sekuritas Indonesia

JAKARTA POST, 28 Maret 2015

                                                                                                                                     

                                                                                                                                                           

The recent dispute between the Corruption Eradication Commission (KPK) and the National Police — the second-most corrupt organization according to Transparency International Indonesia next to the House of Representatives — has evoked concerns for the future of the anticorruption movement in Indonesia. After the downfall of the New Order regime, the competition in bribery has become more obvious and tighter as there’s no longer a respected supreme leader organizing all the corruption payoffs to his cronies. According to research, competitive bribery leads to a larger total number of corrupt transactions and corruption. In the absence of an independent antigraft body, competitive bribery could be more economically destructive than organized bribery. Organized bribery maximizes total net proceeds from bribery subjects to the required economic growth to maintain stability. During the New Order Era, a feared leader supported by the military’s coercive powers successfully kept bribery from becoming too competitive. Competitive bribery enables corruptors to maximize their individual payoffs and harm political stability as well as economic development. Excessive individual corruption payoffs could redistribute the political power away from the regime while extremely high bribes might discourage new business from opening or taking on less lucrative projects. Organized bribery tends to be less harmful to economic growth because the regime desires a balance between the bribes taken away from the economy and the resources needed for the stable expansion of national wealth. The heavy degradation of national wealth could reduce the total proceeds from bribery and tear down the reign of the leader. Drink the milk, but don’t kill the cow. The end of the New Order in 1998 marked the beginning of the reform era, instantly initiating a higher level of political competition. The political unity that appeared during the New Order proved to be a mere artificial coalition to support organized bribery. In the first open general election in 1999, as many as 45 new political parties participated. The explicit violence that tainted the campaign period was further proof that the race for power was very competitive at that time. The symptom of high political competition is still blindingly evident today. The political alliance known as the Red-and-White Coalition, once a furious opposition, is now on the verge of splintering. Embarrassing political disputes have occurred internally in the Golkar Party, United Development Party (PPP) and National Mandate Party (PAN). Moreover, an open multiparty election has increased the cost of votes. With the absence of engineered elections that could easily assure political power, a corrupt candidate now needs to compete and pay the costs of the campaign and bribing voters. Economic development has generated new social groups, which over time organize themselves to demand better democracy, automatically inflating the initial cost of corruption. The expensive initial cost will maintain a competitive yet greedy attitude once the politicians are elected. Not to mention the primary needs for routine deposits to the political party, the expensive budget for their lavish lifestyle and the savings to retain voters in the next election. Competitive bribery is marked by all corruptors involved tending to maximize individual payoffs. There are smaller incentives for each corruptor to cooperate and to organize bribery especially, in the long term. Tight competition also lessens corruptors’ interest in economic development since there’s no guarantee that their opponents will be not as greedy as them. Some corruptors might be exiled due to political cannibalism but the incentives to corrupt are too high to invite new candidates who are ready to challenge the incumbents. As a result, with competitive bribery, the total amount of bribery payoffs could increase infinitely and at some point will depress economic development. The establishment of an antigraft body in 2002 has changed how the bribery game is conducted. Not only because each corruptor has an effective means to shut down their competitors for quite a long time but also that the business has more bargaining power to fight back against the ruthless bribe-takers. The KPK completes the political cannibalism that naturally appeared from the competitive bribery. The most famous whistleblowing case was when Muhammad Nazaruddin, former treasurer of the Democratic Party, accused a number of Democratic Party members of accepting bribes for large-scale infrastructure projects, including former lawmaker Angelina Sondakh, former youth and sports minister Andi A. Mallarangeng and former chief of the Democratic Party Anas Urbaningrum. Another example was when companies successfully sued the regents of Karawang and Lombok for demanding bribes. Besides facilitating whistleblowers, the KPK also has the power to wiretap and to cooperate with the Financial Transaction Reports and Analysis Centre (PPATK) to sniff out bribery. According to the KPK, 74 politicians were convicted of corruption from 2007 to 2014. Besides politicians, convicted corruptors include high-ranking government officials, judges and governors. Looking at the statistics, the chances of being caught have been getting higher. Although the average of sentences for convicted corrupters is still very low at around two to three years, it’s enough to reduce the destructive level of competitive bribery. The KPK has successfully discouraged corruptors from being too greedy, forcing them to reduce corruption payoffs. Maximizing individual payoffs is no longer a safe option since it increases the possibility of being jailed. The more unequal the distribution of proceeds among the corrupt, the higher the probability of the appearance of whistleblowers. However, the bigger the bribery payoffs to be distributed, the higher the chance of being detected by KPK or sued by the aggrieved party. In the long term, the expansion of corrupt transaction should decline, since many corruptors can no longer afford the lower incentives of bribery relative to the costs and risks attached. Without the KPK having full and independent authority, the game will be reversed and could take Indonesia back to a dark age that could possibly be worse than the New Order Era. The ambitious plans of President Joko “Jokowi” Widodo’s administration to take Indonesia to the next level of economic development will be a failure without consistent efforts to reduce corruption. ●