Fostering and enhancing the role of private sector. A prevention way towards corruption eradication in Indonesia
| Published date | 05 October 2015 |
| Pages | 476-491 |
| DOI | https://doi.org/10.1108/JFC-06-2014-0029 |
| Date | 05 October 2015 |
| Author | Anastasia Suhartati Lukito |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Fostering and enhancing the role
of private sector
A prevention way towards corruption
eradication in Indonesia
Anastasia Suhartati Lukito
Faculty of Law, University of Surabaya, Surabaya, Indonesia
Abstract
Purpose – The purpose of this paper is to examine the role of private sector in Indonesia to prevent and
combat corruption practices. The eradication of corruption is not only the government’s problem which
can be solved only by government regulations. The private sector should be involved in and be aware
of these matters because of the huge interest of the business activities concerning national interest as
well as their private interest to achieve highest prot.
Design/methodology/approach – This paper explores the Indonesian laws on corruption
eradication and analyzes the important role of the private sector that needs to be built.
Findings – The role of private sector in the nancial system can be viewed as a non-penal policy,
which has a great impact as a prevention method to combat economic crimes such as corruption. A new
perspective is needed to build, balance and integrate the role of the private sector. As a new perspective
combating corruption, Indonesian Laws on Corruption Eradication is fostering the role of the private
sector in promoting integrity and good corporate governance.
Practical implications – The paper can be a source to explore the eradication of corruption based on
Indonesian perspectives.
Originality/value – This paper contributes by encouraging the private sector to prevent corruption
and bribery practices, which, nowadays, are common in Indonesia.
Keywords Integrity, Private sector, Corruption, Criminal law policy, Role
Paper type Viewpoint
Introduction
In Indonesia, corruption cases not only had an implication toward nancial system
losses but also had a negative impact, which was very damaging, and the existence of
violations of social and economic rights widely inuenced the community. Corruption is
a complex social, political and economic phenomenon that affects many countries,
including Indonesia. Quantitatively, the country’s loss through corruption has exceeded
tolerance limits which can be seen from moral, ethics, morality and law perspectives. In
fact, the characteristics of corruption in Indonesia, as shown in the Road Map
Indonesian Corruption Eradication Commission 2011-2023, are described as very
complex and rooted problems. Thus, eradication needs to be done in a systematic,
integrative and focused manner. Because corruption is an extraordinary crime, its
eradication must be also carried out in an extraordinary manner.
There is widespread skepticism regarding the eradication of corruption in Indonesia,
and the most that can be hoped for is some form of management or containment. Based
on the Corruption Perceptions Index, 2012 by Transparency International, Indonesia
The current issue and full text archive of this journal is available on Emerald Insight at:
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JFC
22,4
476
Journalof Financial Crime
Vol.22 No. 4, 2015
pp.476-491
©Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-06-2014-0029
was ranked equal to 118 as the least transparent out of 174 countries, with a score that
reached 32 (on a scale of 0-100). In particular, most of the corruption cases were
dominated by bribery cases (40,98 per cent) and goods and/or services procurement (37,
81 per cent) (Indonesian Corruption Eradication Commission, 2012). The phenomenon of
corruption plays a large role in Indonesian domestic politics, with political groups
attempting to use such issues to undermine their political opponents. Corruption is so
widespread and corruption is a pressing concern and signicant constraint for foreign
businesses in Indonesia. The Indonesian Government recognizes that corruption
causing an impediment to foreign investment and a huge cost to the national economy.
Corruption undermines democratic institutions, slows economic development and
contributes to governmental instability. The international aspects of bribery and
corruption are related to Indonesian businesses.
Several regulations concerning corruption eradication
Notwithstanding the aforementioned condition, it is of course important to review the
existing provisions of several Indonesian regulations concerning the eradication of
corruption and how to overcome such activities by fostering and enhancing the role of
the private sector in Indonesia. The Indonesian Government has enacted several laws
such as:
• Indonesian Law Number 31 of 1999 on The Eradication of Corruption.
• Indonesian Law Number 20 of 2001 on The Amendment to Law Number 31 of
1999 on the Eradication of Corruption.
• Indonesian Law Number 30 of 2002 on The Eradication Corruption Commission.
• Indonesian Law Number 46 of 2009 on Corruption Criminal Court.
Besides the aforementioned laws, there are also several regulations from the President to
fostering the eradication of corruption such as Presidential Regulation Number 55 of 2012.
Corruption is the act of doing something with an intent to give some advantage
inconsistent with ofcial duty and the rights of others; a duciary’s or ofcial’s use of a
station or ofce to procure some benet either personally or for someone else, contrary
to the rights of others (Garner, 2009). Transparency International had mentioned the
corruption is a major threat facing humanity. Corruption destroys lives and
communities, and it undermines countries and institutions. It generates popular anger
that threatens to further destabilize societies and exacerbate violent conicts.
Corruption is dened by the World Bank and Transparency International as the misuse
of public ofce for private gain (The World Bank, 1997). As such, it involves the
improper and unlawful behavior of public service ofcials, both politicians and civil
servants, whose positions create opportunities for the diversion of money and assets
from government to themselves and their accomplices. Bribery cases are the most
obvious evidence of corruption. However, the consequences of corruption are more
pervasive and profound than these bribes suggest. Corruption diverts leads funding,
resulting in services of poor quality or that which are simply unavailable.
The denition of corruption crime stated in Article 2 Indonesian Law Number 31 of
1999 as described as follows:
Anybody who illegally commits an act to enrich himself or another person or a corporation
which may cause loss to the state nance or state economy, shall be sentenced to life
477
Enhancing the
role of private
sector
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