Commentary: Permissiveness
on big cash deals, holdings
spur malfeasance

Vincent Lingga, The Jakarta Post, Jakarta | Commentary | Thu, August 22 2013, 9:58 AM
What stuck in our throat after last week’s arrest of Rudi Rubiandini — who was then chief of the upstream oil regulatory body (SKKMigas) — was the easy way in which senior officials, and even a Cabinet minister, accepted the discovery of stashes of big sums of cash.

There seemed to be no outcry, nor surprise, about the concealment of hundreds of thousands of dollars in briefcases, bank deposit boxes and shopping bags. 

“The money could simply be operational funds,” noted Energy and Mineral Resources Minister Jero Wacik in reference to US$200,000 found stuffed inside a suitcase at the office of the ministry’s secretary-general, Wayono Karno. This spontaneous, almost off-hand, remark really insults the public intelligence. 

Jero, a prominent member of the ruling Democratic Party, seemed unsurprised by the booty unearthed during the unscheduled search by the Corruption Eradication Commission (KPK). The sweep at his ministry followed on the heels of Rubiandini’s arrest. 

Even in the face of $700,000 in bank notes found at his home Rubiandini strongly denied corruption.

“I didn’t commit any act of corruption. I only accepted gratifications,” said Rubiandini, a — formerly — highly respected professor at the prestigious Bandung Institute of Technology.

He showed no sense of remorse.

Two days after his arrest, KPK officials seized another $320,000, also in cash, from his deposit box at state-owned Bank Mandiri, as well as another $20,000 and S$60,000 and 180 grams of gold at a strong box in his office at SKKMigas.

A local executive from Singapore-registered Kernel Oil Ltd has also been implicated in the delivery of the huge sums of money; accordingly, it is of no surprise to learn that Kernel Oil also happened to have accounts at Bank Mandiri. 

We should uphold the principle of presumption of innocence until proven guilty. 

However, in whatever way we see or define it, the accumulation of such a huge amount of cash could have been motivated by some malicious intent to commit malfeasance — if not corruption, it could be tax evasion or money laundering. Whatever the case may be, they all breach the law.

Banks, and their ATMs, operate across this vast archipelago and technology has made electronic transactions quite easy and relatively safe, so, why squirrel away such a large amount of rupiahs — let alone foreign currencies?

Many huge, dubious, cash deals involving dirty money derived from unlawful practices have escaped the attention of the Financial Transaction Reports and Analysis Centre (PPATK), which is in charge of enforcing the 2002 Anti-Money Laundering Law.

Not for wont of trying though — the PPATK claims to have filed thousands of reports on suspicious financial transactions to the National Police, the Attorney General’s Office and the KPK, but very few ended up in courts.

Welcome to the land where big-cash transactions are still the norm rather than the exception and money laundering is the game in town.

Cash deals remain the preferred mode of transaction for corruptors and other big criminals because the absence of a paper trail ensures they stay off the radar of tax officials.

Even lawyers, those supposedly “well-versed” in the Anti-Money Laundering Law, consider it the norm for officials or police officers to live beyond their official means.

Look at how the high-calibre team of defense lawyers for former police Insp. Gen. Djoko Susilo, currently on trial over charges of corruption in the procurement of driving simulators, which cost the state millions of dollars in losses, shamelessly paraded more than half a dozen witnesses in front of the court in support of his innocence.

Subekti Hadianto, one of the witnesses, claimed Djoko invested Rp 200 million in his jewelry business, which until 2010 alone produced total profits of Rp 14.5 billion that he had handed over to Djoko. But when one of the judges asked Subekti to produce documents to support his claims, he said all the transactions had been done in cash without any documents.

Other witnesses claimed to have been engaged in property and credit deals with Djoko worth billions of rupiah, but again all the deals were made in cash without any documents.

Yet, the defense lawyers still gave them their day in the court last month to support Djoko’s claims that his huge assets were the result of legitimate businesses.

Large sums of dirty money can still easily be laundered because not all financial institutions, property developers or car dealers report transactions worth more than Rp 500 million to PPATK.

The central bank has imposed a “know-your-customer” code of conduct on banks to help detect transactions that do not fit with the profile of their clients, but keen competition for deposits or big customers often prompts banks and other companies to compromise on the code for fear of losing big customers.