Why has the long hunt for Soeharto’s ill-gotten wealth not produced results?

Photo:Office of the Vice President of the Republic of Indonesia

Attempts to return plundered public funds have been going on since the fall of Soeharto’s regime in 1998. As tackling graft becomes a national priority, why has the Soeharto family evaded justice?

Editorial

Soeharto was one of the most corrupt leaders in Indonesian history. He and his family amassed an estimated US$15 billion to US$35 billion during his 32-year dictatorship.

Although he was able to nurture economic growth and stability, these successes were overshadowed by human rights violations and endemic corruption. His family became notorious for controlling state enterprises. His children were handed monopolies across the country’s economic sectors that enabled them to make personal fortunes.

His oldest child, Siti Hardijanti (tutut) was in charge of the toll highways projects, Hutomo Mandala Putra (Tommy) became Indonesia´s top exporter of cloves, Sigit Harjojudanto made fortunes from the privatisation of Jakarta´s tap water and Bambang Trihatmodjo was handed a fleet of oil tankers.

Soeharto’s foundations were the bedrock of his fortune

The long-time dictator established foundations to fund social programs and to alleviate poverty. Through a decree signed by Soeharto in 1996, taxpayers and companies making more than US$40,000 were required to give 2% of their profits to the foundations.

While the charities funded the construction of several schools, hospitals, and mosques, the foundations were mainly used to divert funds to his family and his cronies.

In 1978, Soeharto’s foundations also had an 87% share in Bank Duta. The nation’s second-largest private bank invested heavily in companies that were set up by the Soeharto family.

Supersemar, one of the largest foundations, has faced government scrutiny several times since the fall of Soeharto. In 2008 the attorney general’s office filed a lawsuit against the foundation for misusing funds and diverting them to the family’s businesses. Supersemar was found guilty and was ordered to pay a penalty of Rp 4.4 trillion (US$400 million). The foundation has yet to pay back the full amount.

According to Globe Asia, Soeharto’s children remain amongst Indonesia’s 150 richest people.

Soeharto was untouchable from the beginning till the end

Soeharto died on January 28, 2008, without ever facing justice. Although he was formally charged with corruption on August 4, 2000, the government dropped his case due to his deteriorating health.

On May 24, 1999, Time magazine published an article that revealed information on Soeharto’s wealth in a Swiss bank.  It was also reported that a transfer of US$9 million was made from his Swiss account to Austria, which was considered to be a safer haven for illegal money.  

The article prompted Soeharto’s successor, BJ Habibie, to look into Soeharto’s finances. He instructed the then attorney general, Andi Ghalib, to investigate the ailing former dictator.

However, in October 1999, Andi Ghalib signed the SP3 (termination of investigation warrant), putting an end to the inquest. According to Ghalib was there was no strong evidence linking Soeharto to any wrongdoing.

Many remained unconvinced, including an official in the attorney general’s office who accused Ghalib of being “on a mission to protect Soeharto.”

Soon after his return from Switzerland, a corruption watchdog noticed Ghalib’s own irregular finances. He was accused of receiving money from Soeharto’s cronies, the targets of his investigation. He insisted that the money received was a donation to the Indonesian Wrestling Association, which he led.

Andi Ghalib stepped down as the attorney general but remained active in the government until his death on May 9, 2016, while serving as a member of the People’s Representative Council.

Leaders after Soeharto have promised to go after his wealth

Megawati who served from 2001 to 2004 made little headway despite her fractious past with Soeharto.

Part of the issue was that she was never able to curb corruption within her own government. In fact, a 2003 report by the Indonesian Corruption Watch (ICW) revealed that corruption under Megawati was worse than under Soeharto’s regime. According to Teten Masduki, a coordinator of ICW: “During General Soeharto’s administration, only Soeharto and his cronies were able to commit corruption,” but under Megawati, politicians at all levels of government had their hands in public funds.

Russian President Vladimir Putin and former Indonesian President Megawati Sukarnoputri.
Photo: Kremlin

President Yudhoyono’s 10-year term in office also failed to deliver results. He promised to eradicate corruption in the country, but his own party was also plagued with corruption scandals. Many of his trusted ministers were indicted by the country’s Corruption Eradication Commission (KPK).

Jokowi’s reign so far has also seen minimal progress, despite public demands for action.

The public has little faith in Jokowi’s commitment to tackling graft after his failure to bring justice to the case of Novel Baswedan, a senior investigator of Corruption Eradication Commission’s (KPK), who was attacked in 2017. However, there are signs that some barriers to success are being torn down.

On February 4, 2019, the government signed a Mutual Legal Agreement (MLA) with Switzerland. The agreement will facilitate the tracing and freezing of assets amassed from criminal acts.

Indonesian President Joko Widodo.

According to the Centre for Indonesia Taxation Analysis (CITA) executive director, Yustinus Prastowo: the MLA “opens up the possibility for Indonesia to seek help in tracking wealth, determining the amount and repatriating it to Indonesia.”

The agreement must first be ratified by the House of Representatives, which according to the attorney general, Muhammad Prasetyo, could take time. Furthermore, Prasetyo also said that they would not request assistance from Switzerland anytime soon.

Red tape will continue to stymie recovery efforts. A similar agreement with the UAE, which was signed in 2014, is still awaiting ratification.

Public support for Soeharto’s regime remains

A recent 2018 survey conducted by Indo Barometer saw Indonesians nominate Soeharto as Indonesia’s most successful president.

His role in transforming Indonesia into a modern economy has become his legacy. Pro-Soeharto forces have extolled his economic virtues in recent political campaigns to further manipulate public opinion on his time in office.

Two of Soeharto’s children, Tommy and Titiek are also active in politics. Tommy is the chairman of his party, Partai Berkarya (The Working Party) and Titiek is serving as the party’s head of the advisory body.

Elites linked to the old regime are still embedded in the government

In 1998, Soeharto fell as the head of the government, but his family’s roots remained intact in the Indonesian legislature.  Soeharto-era political leaders still control the political landscape and the economy.

Jokowi has not escaped the grip of the old guard. Many of the high-ranking officials in his administration have a dark past.

The deputy of the national intelligence agency (BIN), Budi Gunawan, has been implicated in several corruption scandals. Jokowi’s Coordinating minister for politics, law and security, Wiranto, was also the General of the Army during Soeharto’s reign.  

Indonesia’s fight to bring back Soeharto’s ill-gains will be a hard battle. Jokowi, after securing re-election, now has the chance to select his new cabinet for the next five years. A new generation of politicians in government is the only way to root out the remnants of the old regime and usher in a new era of Indonesian politics.

Recent reports indicate that Jokowi is planning to include several young ministers in his new cabinet, including the Chairman of the Association of Young Indonesian Businessmen Bahlil Lahadalia. During the first term, Jokowi needed the court opposition parties in exchange for their legislative support. However, after securing a larger mandate in the 2019 elections, Jokowi has more freedom in his cabinet appointments.

The country’s anti-corruption commission could also be a powerful ally. Recent cases show the KPK is independent and willing to bring high-level corrupt officials to justice.

But Indonesia cannot do it alone. It will need the cooperation of other countries. The ratification of the MLA with Switzerland to track and seize assets must be front and centre of Jokowi’s anti-graft efforts. It cannot languish on the back burners of government. It has been more than 20 years since the fall of Soeharto, and the country deserves to recuperate its stolen wealth.