Abdul Khalik and Desy Nurhayati, The Jakarta Post, Jakarta

The government is bracing for a showdown with the House of Representatives next week over a corruption scandal involving some Rp 702 trillion (US$77 billion) of Bank Indonesia Liquidity Support (BLBI) funds.

The State Palace said Friday the government will attend a questioning session scheduled for Tuesday at the House to answer 10 questions about the scandal. The questions were submitted last week to President Susilo Bambang Yudhoyono.

It is unclear whether the President will attend or if he will send one of his ministers. However, presidential spokesman Andi Mallarangeng suggested that Yudhoyono would take the second option.

"We assure you that whoever comes to the interpellation, the government will answer as best as it can," Andi said after a limited Cabinet meeting to prepare for the showdown.

The Friday meeting was attended by Coordinating Minister for the Economy Boediono, Finance Minister Sri Mulyani Indrawati, Coordinating Minister for Political, Legal and Security Affairs Widodo AS, State Secretary Hatta Radjasa, Attorney General Hendarman Supandji and National Police chief Gen. Sutanto.

Lawmakers separately said Friday the questioning motion was aimed at pushing the government to set legal and political certainties for conglomerates accused of stealing BLBI funds and about the amount of money that can be returned to the state.

Deputy House budgeting committee chairman Hari Azhar said the fact that the plan had been agreed upon by all the lawmakers showed their political commitment to ending the uncertainty surrounding the funds.

"We just want the money back, if not all, at least with the reasonable amount. That's all.

"Some of us want the President himself to come, but there is no rule to force him (to attend). So we'll see who will come as we haven't got any notification from the State Palace yet," Hari of the Golkar Party told The Jakarta Post.

Dradjat Wibowo of House Commission XI overseeing financial affairs said there was a political motive behind the questioning motion.

"I don't want to be naive and say that the interpellation move is free from political interests, but as far as the initiators of the move are concerned, we will push the government to return the people's money," he said.

For the first time since 1999, he said, the government would be asked to decide what it legal moves it would take against the fraudulent BLBI debtors and how much money it would recover from them.

"We have proposed in one of our 10 questions we raised in our interpellation letter that the government should make everything clear by August, and if possible get some of the money back," said Drajad from the National Mandate Party (PAN).

Bank Indonesia provided the liquidity support funds (BLBI) to help ailing banks during the Asian monetary crisis in 1997 and 1998.

However, only a very small amount of the Rp 702 trillion lost could be recovered after the crisis.

On Thursday, the Finance Ministry and the House agreed to set the amount of BLBI funds owed by seven of the 40 debtors at only Rp 2.297 trillion. The seven businesspeople were those who came to the presidential office and promised to repay their debts.

The Golkar Party and the Indonesian Democratic Party of Struggle (PDI-P), the two largest House factions, had previously opposed questioning the President because they said it might disclose the alleged flow of funds to both parties.

Several figures from the two parties were believed to have been involved in the disbursement of BLBI funds to eight private banks during the economic crisis.

The PDI-P was also blamed for halting investigations into certain BLBI debtors under the so-called Master of Settlement Agreement.

  Abdul Khalik, The Jakarta Post, Nusa Dua, Bali

Rich and poor nations managed here Thursday to resolve their differences on how to monitor the compliance of states parties to the UN Convention Against Corruption (UNCAC).

They also settled a dispute over how developed countries could provide technical assistance to developing countries in fighting graft.

However, they were still divided over several provisions in the crucial assets recovery resolution in a meeting that was adjourned by midnight.

The negotiations would continue Friday morning.

The assets recovery resolution is intended to address the difficulties of developing countries in claiming back their stolen assets, mostly from developed states.

"We have managed to solve our differences to come up with a resolution on the review of the implementation of UNCAC. It's a visionary resolution, and it will benefit both developing and developed countries," Sajid Bilal, spokesman for the developing countries G-77 group plus China, told The Jakarta Post.

The issues of a mechanism to finance the review activities and a reference to the existing pilot projects for the implementation of the convention were, however, dropped from the resolution.

The resolution specified the terms of reference and characteristics of review, such as transparency, efficiency, inclusivity, non-intrusivity and impartiality.

Senior Indonesian delegation member Eddy Pratomo said the delegates failed to agree on the financing mechanism for the convention's implementation review.

The developing countries wanted the funding sourced from a proposed regular budget of the UN, while the rich states insisted it was to be open to any form of voluntary contributions.

"We will work it out during the intersession period, and finalize it in Doha in 2009," he said.

Eddy said the agreed draft resolution would be tabled in a plenary session Friday for official adoption.

Regarding the issue of technical assistance, both the developed and developing countries only worked out a single draft resolution from France, with the poor states pushing for minor adjustments to it before being tabled at the plenary meeting.

"We just want it to detail what assistance we need," Eddy said.

Although assets recovery remained a tough issue, the developing countries were likely to give up to the draft resolution proposed by the United States after it was revised.

The U.S. had rejected a proposal from the developing countries to establish a consultative group of experts to address all difficulties in recovering stolen assets.

The revised U.S. draft included some items from the proposal of the developing countries, including a provision of an expert group that would have responsibilities different from the consultative group in question.

Earlier, the developing countries had complained the U.S. draft focused too much on the developing countries' weak legal system and their need for technical assistance in recovering their stolen assets.

  Abdul Khalik, The Jakarta Post, Nusa Dua, Bali

Requesting countries' lack of efforts and political will has been largely blamed for failures in tracing and recovering stolen assets from developed nations, a workshop heard Thursday.

"The key problem in asset recovery efforts is not the complicated legal procedures overseas, as is widely perceived or claimed by developing countries," the forum concluded.

The workshop, titled Mutual Legal Assistance (MLA) for Asset Recovery, was part of the ongoing international conference of the State Parties to the United Nations Convention Against Corruption (UNCAC) in Nusa Dua, Bali.

Some conference delegates, including Kuwait and the United States, presented success stories about the repatriation of illegally obtained funds from abroad.

The American delegation said the U.S. had sent back stolen assets worth some US$20 million to the Peruvian government without any complicated legal procedures.

The money was recovered from corruption cases involving former president Alberto Fujimori and his aides.

Kuwait meanwhile managed to recover its stolen assets from Britain after a nine year legal battle with convicted Kuwaiti corrupters.

The repatriated assets, valued at $548 million, were part of over $1 trillion in stolen Kuwaiti money allegedly in kept in Britain.

Speaking at the workshop, Kuwaiti delegate Mohammed al-Moqatei said the repatriation efforts only cost his government 7 percent of the recovered funds.

He said his government employed special investigators to trace and take back the money.

"While the MLA is very useful, we relied on several other means to get assistance, including hiring lawyers. We employed four people to handling the case," al-Moqatei said.

The issue of MLA has been rigorously discussed at the UN-sponsored conference against corruption.

A presentation by Indonesian official Yusfidli Adhyaksana at the workshop, however, revealed that Indonesia had so far achieved a very little in its efforts to get back stolen money from abroad.

He attributed to the failure to limited expertise and political support, including a lack of funds to finance the assets recovery process.

"We have lost 90 percent of litigation cases involving state money," Yusfidli of the Indonesian Attorney General's Office told participants.

He said a "lack of focus and attention" in the repatriation efforts was evidenced by the absence of a special team to do the job, and insufficient expertise in the field, such as language proficiency and skills in drafting a formal request for mutual legal assistance.

"This all hampered our success in recovering assets," he said.

Yusfidli said it was difficult to get legal assistance from foreign countries allegedly storing ill-gotten money from graft suspects or convicts.

Different legal systems including double criminality (referring to the principle that both requesting and hosting countries should criminalize acts), and the requirement that cases need legal court convictions were serious obstacles for Indonesia and other requesting states, he said.

The experiences of both Kuwait and the U.S. have shown it only takes political will, patience and little expertise to make the recovery efforts a success, Yusfidli said.

Another key problem Indonesia has faced, an official said, was a lack of accurate data on the amounts of stolen money it has abroad and in which countries the assets were illegally stored.

Nor was it clear whether the Indonesian government had ever hired special and professional investigators to trace the stolen money.

The U.S. said it was willing to help any countries filing for legal assistance or assets forfeiture as long as the requesting nations stated clearly what they wanted the American government to do, and explained the connection between the request and the criminal case.

"We don't need a long-written request. And I think you should believe that there is someone on the other side of the phone that will answer you if you try," Daniel Claman, a senior counsel of the assets forfeiture and money laundering section at the U.S. Justice Department, told the workshop.

Indonesia has only managed to repatriate $600,000 from Australia over a major corruption case involving the late owner of BHS Bank, Hendra Rahardja, and was waiting for $1 million to be sent home from Hong Kong.

Indonesia has also asked the Swiss government to freeze a total of $14.9 million worth of assets belonging to former Mandiri Bank president director ECW Neloe, currently in a Swiss bank account.

In the two cases, it was both Australia and the Switzerland that had informed Indonesia about the money, rather than Indonesia's pro-active steps to locate it.

Abdul Khalik, The Jakarta Post, Nusa Dua, Bali

Business delegates reaffirmed their commitment to the global campaign against corruption during an international conference here Wednesday.

During the five-day conference, set to end Friday, they said they would establish principles aligned to the fundamental values enshrined in the United Nations Convention Against Corruption (UNCAC).

Representatives from the International Chamber of Commerce, the Asia-Pacific Economic Cooperation (APEC), the Organization for Economic Cooperation and Development (OECD) and the Indonesian Chamber of Commerce and Industry attended, as well as those from business watchdogs, including Transparency International and the World Economic Forum (WEF)'s Partnering Against Corruption Initiative (PACI).

They agreed the private sector would fight against corruption of any kind, including bribery and extortion.

"We firmly believe that fighting corruption is a society-wide, shared responsibility, and … support the establishment or strengthening of public anticorruption infrastructure," the business coalition said in a statement issued after a special session of the conference.

Michael Kennedy, head of New York Law Firm, which specializes in private-public corruption cases, said companies worldwide were now in a position to "never tolerate" corruption practices within their operations.

"Fundamentally, the common voice is that corruption is bad for business," he told the forum, which was part of the second session of the conference of the States Parties to UNCAC hosted by the United Nations and Indonesia.

The business meeting served as a forum to discuss ways the private sector would contribute to the successful implementation of UNCAC.

Although the conference emphasized the state's role in combating graft, many said support from the private sector was a key to the successful implementation of the convention, because it covered corruption cases in both the public and private sectors.

Michael Pedersen of the PACI, which oversees 130 company constituents worldwide, including Shell, Newmont, Coca Cola and TNT, concurred with Kennedy.

He said a recent survey by the PACI revealed more companies had implemented internal measures to fight corruption.

"Some 90 percent of the companies we surveyed said they have applied internal regulations to fight corruption," he told The Jakarta Post in an interview Wednesday.

He said there was no other option but to include the private sector and civil society organizations to make the UNCAC effective in eradicating corruption.

Fritz Heimann of General Electric said most companies had agreed on the importance of fighting corruption within their operations and had applied internal regulations to prevent corruption from taking place.

Y.W. Junardy of the Indonesian Marketing Association said many companies had worked with the Corruption Eradication Commission to strengthen their fight against corruption.

But several problems, including different definitions of corruption, should be addressed quickly, several businesspeople agreed.

Facilitation for state officials, for instance, is part of graft, while others have claimed it should be excluded in the definition of corruption, Kennedy said.

Christian Poortman of the Transparency International said all parties had to work toward a unified anti-corruption standard to assure measures were effective.

Several business delegates cited the absence of whistle-blower protection provided by the companies, saying this was an urgent issue for them to address.

The forum also discussed the need to enhance cooperation between large companies, endowed with increasingly effective internal integrity mechanism, and small- and medium-sized enterprises.

Abdul Khalik, The Jakarta Post, Nusa Dua, Bali

The United States is trying to block a proposal from developing countries to establish a consultative group to address difficulties in recovering stolen assets from major or developed states, officials said here Tuesday.

The consultative group, which is included in a draft resolution to be adopted during the conference of the State Parties to the United Nations Convention Against Corruption (UNCAC), is supported by the 130 members of the G-77 and China.

It is a forum that consists of experts and officials from all the regions so that any problems arising from asset recovery efforts within any region can be addressed.

On the second day of the conference, officials involved in the negotiations said, the U.S. came up with a totally different proposal and rejected the establishment of a consultative group.

Instead, the United States is pushing for capacity building programs for officials from developing countries, they said.

"The U.S. only wants us to enhance our capacity, which is good to some extent, but what we want is real action to recover our assets. The consultative group is we think the best way to bridge differences in the legal systems and other problems," said an official, who declined to be identified.

Developing countries have complained about difficulties in requesting mutual legal assistance and taking steps to recover stolen assets, with different legal systems and their lack of funds and expertise cited as the main obstacles.

In legal system differences, for instance, a requesting country can claim one activity as corruption or a crime, but the country storing the money may consider it to be normal practice, leading to difficulty in forging a legal cooperation.

Other officials from developing countries complained that the U.S. and other developed countries were not consistent and being choosy in implementing the UNCAC.

"The negotiations are still going on. We hope the U.S. can accept our proposal," an official said.

Besides the disagreement over the draft resolution on asset recovery, developed and developing countries also are divided over the content of review mechanisms on compliance on the UNCAC.

The U.S., which has ratified the UNCAC, said in a statement that its delegation, headed by Deputy Assistant Secretary of State Elizabeth Verville, would engage in discussions on creating an effective review mechanism for asset recovery, bribery of officials of public international organizations and technical assistance.

It said the ongoing conference would discuss efforts to establish effective asset recovery regimes and to build national capacity to combat corruption.

"The United States' participation in the conference underscores its commitment in preventing and combating corruption. In recent years, the U.S. has contributed more than US$2.5 million to the UNODC (UN Office of Drugs and Crime) toward implementation of the UNCAC.

"In addition, over $335 million in the last fiscal year was contributed toward good governance and anti-corruption assistance on the global level," the U.S. statement said.

Switzerland, Britain and France expressed their support Tuesday for efforts to retrieve developing countries' money stored abroad by corruptors, under the Stolen Asset Recovery (StAR) initiative launched by the World Bank and the UNODC.

Support from the three major countries, which are among the world's biggest financial centers, was seen by some as an attempt to counter suspicions from developing countries that developed countries deliberately protect proceeds from corruption activities because the money benefits them.

Speaking before participants from 120 countries attending a ministerial round-table discussion on the sidelines of the anti-corruption conference, Anton Thalmann of Switzerland said his country would keep its financial system clean because managing corruption money under such a system would be counterproductive to the banking business.

"We require our financial institutions to know their customers. They have to know who is behind the money. They will monitor the suspicious transfers and accounts belonging to politically exposed persons … and will freeze them once there is a request," he told the forum.

 Abdul Khalik, The Jakarta Post, Nusa Dua, Bali

The Indonesian legal system, from police and prosecutors to the judicial system, have all been involved in power abuses and bribery, paralyzing efforts to eradicate corruption accross the country, civil society organizations say.

Gadjah Mada University legal expert Denny Indrayana said Indonesia's stagnant position as "the most corrupt nation in the world" could be explained by the failure of its corrupt legal system to prosecute corrupt politicians and businesspeople.

"The legal system is supposed to uphold the law and punish guilty parties," Denny said at a seminar attended by dozens of non-government organizations from across the country, last week in Sanur, Bali.

"By doing so, it would create justice and have a deterrent effect on crime," he said, "but it has failed to carry out its task, leaving most corruption cases unresolved."

The seminar preceded a five-day UN conference on corruption in Nusa Dua, which began on Monday.

Denny, who also chairs the Center for Anti-Corruption Analysis (Pukat), said law enforcers had only managed to net some of the small fish, leaving many high-profile suspects, comprising high-ranking officials, powerful politicians and businesspeople, at large.

"Corruption cases in legislatures, the State Palace, big conglomerates and the legal system have been left untouched. They only aim at people lacking power and money.

"Unless they have the guts to prosecute those in power, we can not hope to eradicate corruption in this country," Denny said.

Bambang Widjoyanto of Indonesian Corruption Watch (ICW) said the "failure of the Supreme Court" as an independent judiciary institution under the leadership of Bagir Manan was because he allowed "external influences and bribery" to determine his court rulings and failed to take action against judges and other court officials implicated or guilty of corruption.

"How can we expect other Indonesian institutions to be clean and transparent if the Supreme Court rejects an audit from the Supreme Audit Agency (BPK) on its account of fees paid by people seeking justice," he said.

He said between 2004 and 2006, despite numerous reports of bribery allegedly involving judges, the Supreme Court has made no moves to bring them to justice.

In its recent report, the Supreme Court said that out of 369 complaints it received from the public on alleged misconduct of court officials, only 43 cases were completed, with no judges punished so far.

In 2005, out of 317 complaints from the public, only 40 legal staff were handed administrative sanctions and no judges faced criminal charges or got fired, while in 2006, some 505 complaints resulted in only 51 staff members being handed administrative sanctions.

"How can the Supreme Court have a deterrent effect on bribery and corruption among its own judges and staff if it is not getting tough?" Bambang said.

He and Denny both said the overhaul of mechanisms for the recruitment of public officials for positions in legal institutions, and increased control of civil society were key factors to cut the vicious cycle of corruption in Indonesia.

"The Indonesian corruption phenomena is a full circle. There are corrupt executives, members of legislature and the judicial system," Denny said.

"To break the cycle, the public must be in direct control of the appointment of top judiciary officials," he said.

"We should groom clean candidates from universities or civil society organizations, and support them while they run for office."

Former judge Dolores L. Espanol of the Philippines also said that the way to break the corruption cycle must be top-down, with top posts in the judicial system being clean and having the courage to initiate massive corruption eradication programs.

"Leaders with honesty and high integrity are a key element in the eradication of corruption. We have chief justice Puno in the Philippines who we believe can make a difference because he has proven his integrity and has begun to punish corrupt judges. We hope that all will follow suit if we have a good leader," she said.

In Indonesia, however, many have doubted the performance of former state prosecutor Antasari Azhar as the current chief of the Corruption Eradication Commission (KPK), given that his election was influenced by political bargaining in the House of Representatives.

Amin Sunaryadi lost in the election for KPK's top post, despite the fact that he received full support from civil society organizations.

"In future we need to be united and demand that a publicly-approved person is elected for such a top job," Bambang said.