Is an extradition treaty with Singapore the magic bullet?

The Straits Times, March 7, 2007
By John McBeth, Senior Writer

JAKARTA'S ANTI-GRAFT BATTLE
Is an extradition treaty with Singapore the magic bullet?



JAKARTA - LAST January, Indonesia's Tempo newsweekly ran a clandestine interview with fugitive whistle-blower and self-confessed embezzler Vicentius Sutanto in which he accused his former Singapore-based employer, billionaire Indonesian businessman Sukanto Tanoto, of tax evasion and fraud.

TAUFIEQUARACHMAN RUKI: The top graftbuster is accused of involvement in a corruption case.

The cover story, packed with details Mr Sutanto provided on everything from bank account numbers to money flows, caused a huge stir in Indonesian corporate circles and left many businessmen wondering whether the allegations would be followed up by law enforcement agencies.

In fact, sources involved in the case say the Anti-Corruption Commission (KPK), the Attorney-General's Office and the police are now conducting an investigation that could potentially become the centrepiece of Singapore's already difficult negotiations with Indonesia over the signing of a much-debated extradition treaty.

The former financial controller of the Asian Agri Group, a subsidiary of Mr Sukanto's Raja Garuda Mas business empire, Mr Sutanto used a fake passport to flee to Singapore late last year, claiming he was in fear for his life for embezzling US$3.1 million (S$4.7 million) from the company.

Some time after he talked to Tempo, he was escorted back to Jakarta by KPK officials and delivered into police custody. It is not clear whether he is there for his own protection or whether he is facing fraud charges himself, but the sources say he is the key witness in the Sukanto inquiry.

The same sources told The Straits Times that while police and prosecutors are pursuing the tax evasion and fraud allegations, KPK investigators are looking into the possible involvement of Indonesian revenue officials in a case involving back taxes and fines worth up to US$100 million.

SUKANTO TANOTO: The billionaire businessman faces allegations by a former employee of tax evasion and fraud.

The fraud charge centres on suspicions that Mr Sukanto used a shadow company to buy back his own assets at a discounted price from the Indonesian Bank Restructuring Agency (Ibra), the body set up to sell off what was left of companies that went to the wall during the 1997-98 financial crisis.

He would not be the only businessman accused of doing that. 'They all did it, perhaps even 99 per cent of them,' said one former Ibra official. 'They set up special purpose vehicles many times over, which makes it very difficult for anyone to trace.'

Whether Indonesia's reputedly richest man is indicted or not, the investigation threatens to add new momentum to Indonesia's demands for a swift conclusion to the treaty negotiations, with Vice-President Jusuf Kalla the latest to join the chorus of criticism over perceived Singapore foot-dragging.

Coming at a time when President Susilo Bambang Yudhoyono's anti-graft drive appears to have run out of steam, the renewed pressure on Singapore may well stem from the President looking for a few high-profile scalps ahead of the 2009 presidential election.

In public statements, Indonesian officials have increasingly characterised the treaty as crucial to the war on corruption, a position only bolstered by a recent Merrill Lynch survey estimating that a third of Singapore's 55,000 richest people are of Indonesian origin, with a collective nest egg of US$87 billion.

'Of course it is important,' said KPK commissioner Erry Hardjapamekas, pointing to what he called a 'good working relationship' with Singapore's Corrupt Practices Investigation Bureau. Then he added with a wry smile: 'But we do understand Singapore's problem.'

Singaporean officials noted, in their defence, that as long as there is sufficient evidence to prove wrongdoing, suspects can be sent back to Jakarta without an extradition treaty.

Indonesia and the United States do not have one, yet the Federal Bureau of Investigation had no hesitation in extraditing businessman David Nusa Wijaya, who was arrested in San Francisco early last year after being on the run for two years in a US$140 million embezzlement case.

Later, the US Embassy said in a statement: 'The US government understands that returning fugitives and stolen assets from abroad in corruption cases is a top law enforcement priority in Indonesia and looks forward to cooperating with Indonesia in other cases in the future.'

Australia and Indonesia do have an extradition treaty, but that did nothing to speed up the return of fugitive banker Hendro Rahdja, sentenced in 1999 to life imprisonment in absentia for stealing US$300 million in central bank liquidity funds. He died of cancer in Sydney two years later before the extradition warrant could be signed.

Blaming Singapore does not get around the fact that Indonesia has a lot of work to do itself to prevent internal back-biting and demonstrate it has the political will to pursue cases against the rich and famous - even those hiding in plain sight.

SUHARTO: The Attorney-General's Office is suing the former president for the return of US$330 million in charity funds.

Only now is the Attorney-General's Office pursuing a civil case against former president Suharto, seeking to recover as much as US$330 million in charity funds that he allegedly used to enrich friends and family during his years in power.

Prosecutors are also collecting evidence to prove that his son, Tommy, laundered US$46.7 million he allegedly stashed in a French bank. It will be presented to a court in Guernsey, which is already trying a case filed by Tommy against Bank BNP Paribas for refusing to release as much as 75 million euros (S$151 million) from his account.

On a second European front, President Yudhoyono and visiting Swiss President Micheline Calmy-Rey recently agreed to enhance legal cooperation between the two countries to track down and retrieve assets stolen before and after Suharto's 1998 downfall.

Meanwhile, the KPK is being forced to fight its own battles. Facing further interrogation over a corruption case when he was justice minister in 2004, State Secretary Yusril Mahendra has levelled similar accusations against KPK chairman Taufiequarachman Ruki in the purchase of secret eavesdropping equipment.

More ominously, a Justice Ministry drafting team has threatened to dismantle the country's three-year-old Anti-Corruption Court in a move that would almost certainly render the KPK toothless. The team was put to work after the Constitutional Court ruled recently that the anti-graft court promoted dualism in the judicial system.

Why it wants to scrap the court altogether and turn graft cases over to district courts is unclear, but Mr Hardjapamekas said the KPK will be leading the fight to draft new legislation that will provide a proper legal basis for the court - as the constitutional panel suggested.

The chairman of the team, Mr Andi Hamzah, claimed the 21 ad hoc judges - lawyers, prosecutors and retired judges who make up 60 per cent of the current court - do not know their job. But he seemed to be reflecting the main problem in the court, which is the jealousy that exists between the career and ad hoc judges.

There may be other reasons as well. According to insiders, Mr Hamzah himself failed to pass a fit and proper interview to serve as an adviser to the KPK.

The latest setbacks come after a year in which the KPK doubled its staff to more than 460, including 98 investigators. 'We are now more ready to grab the big fish,' said Mr Hardjapamekas.

'We have more resources, technology, methodology and networking to make successful prosecutions.'

But he also acknowledged that while President Yudhoyono is personally supportive, much of the momentum has been lost because his ministers and other agencies are failing to keep pace.

'Cooperation is slow between the KPK, the police and the Attorney-General's Office,' he pointed out.

'Technically, they do not understand that togetherness is important in fighting corruption.'