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Cash-strapped military recipe for
corruption
By Tony Sitathan
JAKARTA - Adhong is a former junior officer from
the Indonesian Army. He recalls the Suharto era when he
was deployed in Irian Jaya (now West Papua) and Nusa
Tenggara, where sectarian clashes and rivalries between
religious groups was nothing unusual. "Those were
difficult times and we were considered the first crack
troops that [were] relied upon by the government to
suppress any form of social disorder," he recalled.
After his early retirement from active service, he is
now gainfully employed as a security "advisor" to a
nightclub in the heart of Chinatown in East Jakarta.
However, his ties to the military, he revealed,
have not been permanently severed. He relies on former
and active marines and Kopassus (special forces
soldiers) to provide the muscle needed to maintain law
and order in the nightclub. Also, since the nightclub
acts as a massage parlor that offers sexual services,
security on the premises has to be tightly controlled.
He recalled a recent incident where he had to prevent
the neighborhood police from muscling in on army turf.
G Hutagalong, a former security advisor to
popular nightclubs such as Tanamur, which is well known
in Jakarta as a hotspot for tourists, reveals an
intricate web of alliances and shakedowns that permeate
the nightlife in Indonesia. "Each nightclub or
discotheque or even massage parlor has an elaborate
payment system in place for the collection of monies or
monthly dues ... paid to either the police or the armed
forces in return for protection from organized crime
syndicates or unknown external threats. It's a system
that has proved effective in Indonesia and something
almost necessary in maintaining the peace and order of
that area," he said.
It seems a high price to
pay for security that should be guaranteed by the police
who have been sworn to uphold the law. It has been
estimated that larger nightclubs and discos such as 101
Nights and Tanamur have to pay almost 30 percent of
their gross revenues per month for such shakedowns.
In Indonesia, where the average salary for
mid-ranking soldiers ranges from Rp550,000-Rp900,000
(US$60-$100), while high-ranking officers earn about Rp2
million to 6 million ($225-$675), the pay is hardly
sufficient to cope with inflation rates of 8 percent or
more. Illegal activities, then, account for a large
percentage of soldiers' allowances.
A D Asep, a
former colonel in the strategic reserve command based in
South Sulawesi, says the army has been involved in
underground racketeering and other black-market
activities such as distributing narcotics, working with
mafia-type warlords and smuggling electronics goods,
providing young girls for prostitution as well as a host
of other activities. "I would estimate that at least
one-third of accounted army funds are derived from such
activities, although there are also legitimate business
fronts that are led by capable businessmen who act on
behalf of the armed forces," he said. Not all their
business activities are established in the gray areas.
There are also several business fronts run by
private businessmen such as Tommy Winata, the owner of
the Artha Graha Group. The group has diversified
interests in property development, logging and plywood
plants, real-estate development, information technology,
banking and finance, aside from general trading. There
are more than 40 registered businesses and several dozen
other affiliated companies under the Artha Graha
umbrella.
The Artha Graha Group and, more
notably, the Artha Graha Bank made media headlines
recently with the uncalled-for detention of two
high-flying Indian executives from Polaris Software Lab
Ltd (see India ruffled over Indonesia's heavy
hand, December 19, 2002). It was over a
commercial dispute that can be considered a breach of
contract between the bank the software company. Its
heavy-handed use of force in detaining and later placing
the executives under lock and key proved to the public
and the international community just how powerful a
stranglehold this business entity has on the military
and the police in Jakarta.
Also when Tempo, the
weekly business journal, wrote in one of its editions
that the Artha Graha Group stood to gain from the fire
that burned down a garment wholesale center, after it
revealed a plan to rebuild the center for about Rp52
billion, force was used against the journalist who wrote
the story and the magazine's headquarters. "As many as
200 people stormed the Tempo office and hurt several
journalists as well as ransacking the office, despite
the police watching on the sidelines," complained Teguh
Indrawan, a reporter for a rival business magazine.
"This goes to show the callousness of the authorities
that should have immediately arrested such perpetrators
for crime instead of defending them," Teguh asserted.
(See Indonesian magazine fights
for its life - again, March
14.)
Such flagrant abuse of the law has
far-reaching repercussions, especially since the army
has always depended on the goodwill and support of its
people for its very existence. With the General Assembly
still deliberating on increasing state funding for the
armed forces and cutting back its business involvements,
President Megawati Sukarnoputri has sent strong signals
to the army to rely less on its function as a commercial
business facilitator and more on its role of
safeguarding national interests.
Although it's a
hotly debated issue, since the military budget
officially accounts for less than 40 percent of its
required budget, the Indonesian government has to find
ways to balance the books before setting a motion to cut
the army's role in business. Indonesia's military budget
is a little more than $1.4 billion, as compared with
Singapore, which has earmarked more than $4.6 billion,
Thailand has kept aside $2.3 billion, and even Malaysia
has reserved about $1.8 billion to shore up its defense
capabilities.
With Indonesia's population
standing at 230 million while Singapore's is about 4.2
million, it is a defense-budget mismatch by any
standards. So in order to make up for the budget
deficit, the Indonesian army has prided itself on
running its own businesses and being self-sufficient
ever since the days of president Suharto. He is credited
with founding self-funding army-linked companies back in
1955, when he began to work closely with the likes of
Bob Hasan and Sudomo Salim, better known as Liem Sioe
Liong, in the import of agricultural commodities, which
later extended to controlling mining areas, logging
interests, property development, even banking and
finance.
"The army in the Suharto period had its
hands in many different economic pies, and now with his
departure, there are still sizable businesses that are
being channeled under the military," said Edward
Suryanto, a well-known human-rights activist and lawyer
in Jakarta. "There are close to 300 funded
yayasans [charities] set up under the armed
forces to date as well as several other businesses that
have international branches."
Dr Harold Crouch
has spent several years in Jakarta as the head of an
international crisis group, and he describes an
Indonesian military still active in making its own
rules. "The army gets only one-third of its budget from
the Indonesian state. The other two-thirds of the budget
is raised by the military itself - from business
enterprises and from corruption, and the largest source
of military finance is actually from extortion and
illegal activities. Wherever there is illegal mining,
illegal logging, illegal fishing, cattle rustling and
even smuggling, you'll be bound to find military
elements," he said.
It is ironic to find that
the rank and file of the army are still discontented
despite the army's business overtures. The money that it
rakes in never seems to reach those in the lower
echelons of the military, but only the top brass. "The
majority of those in the army are moonlighting to earn a
living," said Adhong. "With living costs in Jakarta
escalating by the day, its no wonder that several of my
former colleagues have to work as security members or
resort to even driving taxis on their off-duty days." It
seems being taken for a ride is a way of life for those
charged with defending their nation.
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