JAKARTA – Highly regarded by the international financial community, Indonesian Finance Minister Sri Mulyani Indrawati may be the most valued member of President Joko Widodo’s Cabinet.
But in recent weeks, her ministry has become embroiled in a widening corruption scandal that threatens to put a stain on her hard-won reputation.
Beginning with a mid-ranking official in the South Jakarta tax office, whose son was found to be driving a US$106,000 utility vehicle, investigators are now homing in on other staffers from the tax and customs directorates perceived to be living beyond their means.
They are getting some help. Social media users have been naming and shaming officials whose families have foolishly boasted about their luxurious lifestyles on their online accounts, apparently thinking they are immune from scrutiny.
If the penny hadn’t dropped already, President Joko Widodo felt compelled to instruct bureaucrats to lead modest lives and not make a public display of their wealth, which often doesn’t correspond with what they are required to report.
“I want us and everyone below us to stress this: don’t show off your power. Don’t show off your wealth, especially by posting on Instagram and other social media platforms,” Widodo told senior Cabinet members.
The government is worried that unless it is seen to be cracking down on corrupt revenue officials, taxpayers may feel justified in refusing to meet their obligations in a country where the tax-to-gross domestic product (GDP) ratio is only 10.4%, already one of the lowest in the Asia-Pacific region.
Indonesia collected 1.7 quadrillion rupiah (US$113.45 billion) in taxes in 2022, the highest in the past four years. Income tax (998 trillion rupiah or $66.2 billion) and value-added tax (688 trillion rupiah/$45.6 billion) made up 64.1% of the collection, followed by non-tax revenue from natural resources (269 trillion rupiah/$17.7 billion) and excise (227 trillion rupiah/$15 billion).
The latest tax scandal erupted only two months after Transparency International (TI) issued its 2022 Corruption Perception Index (CPI), which scored Indonesia 34 out of 100, its lowest ranking since 2014 when Widodo came to power.
The European watchdog blamed the fall in perceived government cleanliness on changes to the law, which placed the once-admired Anti-Corruption Agency (KPK) under the executive branch, thereby reducing its independence in pursuing graft cases.
“Political corruption including bribery, gratuities and conflicts of interest between officials’ duties and business interests remain rampant,” said TI’s Indonesian researcher, Wawan Heru Suyatmiko.
Indonesia also fell 14 places to 110th out of 180 in controlling systematic corruption within its borders. Matching that assessment, Indonesia’s place on the World Bank’s control of corruption index declined by 7.69 points between 2017 and 2021.
Analysts are skeptical the anti-corruption campaign can be maintained and say it is unfair to point a finger at Indrawati, who came out as a graft fighter in her first term in office but less so in her second as other priorities took precedence.
The Financial Transaction Reports and Analysis Center (PPATK), Indonesia’s anti-money laundering agency, has identified illegal transactions among finance officials worth 300 trillion rupiah ($20 billion) going back over the past 14 years.
Its findings supported previous statements from political coordinating minister Mahfud MD, who contended that most of the money-laundering transactions were the work of 460 tax and customs officials occupying what are regarded as “wet” positions.
A former Constitutional Court justice, Mahfud has increasingly inserted himself into controversial issues in recent months, including making a sharp attack on district court judges who recently sought to delay the 2024 presidential and legislative elections.
It is not clear why the Finance Ministry did not act on the incriminating reports, some of which pre-date Indrawati’s appointment to the Cabinet in July 2016 after spending six years as a managing director at the World Bank in Washington.
“It’s not an indictment of her,” says one tax consultant, noting her lack of allies in the ministry and wider government. “It’s more about Indonesia. You can’t fight City Hall. It’s about her being expected to fight a battle she could never win.”
The ministry’s failure to eradicate corruption has caused widespread public anger. In addition to being the target of a reform program dating back to 2006, finance officials generally receive higher salaries than their colleagues in the rest of the bureaucracy.
The KPK says it has discovered that 134 tax officials owned shares in 280 companies, many of them tax consultancies or firms suspected to be engaged in concealing illegal funds.
The assets were not included in their official State Wealth Report (LHKPN) because current civil service regulations only require them to disclose the value of the shares – if they file a report at all.
Thanks to social media, the net has widened with eagle-eyed netizens homing in on the relatives of officials who have an irresistible urge to boast about their free-spending lifestyles, a practice known as “flexing.”
Riau provincial secretary Hariyanto was forced to call a press conference to try and explain that his wife’s designer handbags were fakes but that did not seem to cover the expensive clothing and shoes she wore in Instagram posts.
Trying to explain away his wife’s globe-trotting, Hariyanto claimed that she and her friends pooled their money, stayed in inexpensive serviced apartments and traveled on public transport.
Another civil servant, Esha Rahmansah Abrar, was suspended by the State Secretariat and is now the subject of a KPK probe after his wife’s Twitter posts showed she owned a sporty $26,000 MG5 GT car and several 24-carat gold bars.
Abrar also reportedly owns a swanky home in the western suburb of Bekasi, difficult to explain for an official who earns a base salary of about five million rupiah ($327), even if routine allowances inflate that figure by about four times.
Another target has been Sudarman Harjasaputra, head of the National Land Agency’s East Jakarta office, whose fashionable 37-year-old wife, Vidya Piscarita, has been flaunting her collection of designer bags and jet-setting lifestyle.
Harjasaputra had already triggered an investigation by noting assets of 14.7 billion rupiah ($963,000) in his wealth report, mostly in the form of land and buildings. But Piscarita, a dentist and part-time model, had women agog by showing off a Hermes Birkin Sellier handbag valued at $25,000.
That wasn’t all. Photographs posted on Instagram, which have since been taken down, showed her posing in front of Gucci and other designer stores, the Eiffel Tower and the Austrian Alps, in one case draped in several expensive bags.
For the Eiffel Tower shot, she was dressed in a slinky full-length black gown identified on social media as a $17,000 number from the workshop of Lebanese designer Elie Saab, whose top-of-the-range dresses sell for up to $300,000.
The penchant for elite Indonesians to show off their ill-gotten wealth reached a new height in 1996 when the tone-deaf wife of corrupt businessman Eddie Tansil appeared at his trial wearing a red velvet dress with a golden dollar motif emblazoned on the front.
After being sentenced to 17 years imprisonment for embezzling $420 million in loans from a state bank, Tansil bribed his way out of Jakarta’s maximum security Cipinang penitentiary and is now in China where he is safe from extradition. His well-dressed wife is with him.