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Is there evidence of evil intentions?

President Susilo Bambang Yudhoyono said on his speech following the House of Representatives recommendations over the century bank bailout that the bailout policy was the right choice and justifiable. The president said that the decision was taken at the height of the global financial crisis in late 2008 when a quick response had been needed and therefore they should not be subject to criminal charges.

Even the president himself backed his two top aides in a televised speech to the nation by saying Boediono and Sri Mulyani deserved thanks for “outstanding service” in averting a banking crisis. “Indonesia was lucky to have had Sri Mulyani and Boediono in charge when the global financial crisis hit, as both have “spotless track records in terms of competence, credibility, and personal integrity.” He said.

It would be interesting to highlight the president’s statement.

The message from the president is clear: Is it fair that decision makers be subjected to ridicule, shame and even criminal charges when they had the country’s best interest at heart ? The House’s answers might yet result in government’s ability to deliver much-needed policies in the longer term.

Nevertheless, the House of Representatives has chosen to ridicule the Bank Century bailout policy as it had covered up irregularities, violations of banking regulations and criminal laws such as corruption.

Therefore, the decision according to House inquiries committee reccomendations, the bailout decision could be the subject of criminal charges.

Based on doctrine from common law, the ingredient that must be present for there to be  the criminal charges is the“Mens rea” which is translated from the Latin means “guilty mind”. The use of ”Mens Rea” shows that prerequisite the subject of criminal charges related to state of mind.

The concept of mens rea developed in England during the latter part of the common-law era (about the year 1600) when judges began to hold that an act alone could not create criminal liability unless it was accompanied by a guilty state of mind which can be translated as  “evil intention”. Actus non facit reum nisi mens sit rea which means “the act does not make a person guilty unless the mind be also guilty.

Mens rea or the “evil intention” is the mental element that produces criminal liability when combined with “Actus Reus” or can be translated as “guilty act” as a physical element. The word “evil intention” tells what kind of mental state an accused must have to fulfill the prerequisite of the criminal charges.

A fundamental principle of criminal charges is that a crime consists of both a mental and a physical element. Sometimes a law creates criminal liabilities for the commission or omission of a particular act without designating a mens rea. These are called strict liability.

Possibilities that decision to be criminalized still exist. It does not mean that the decision can not be the subject of criminal charges. Prof Hikmahanto Juwana, law professor from University Of Indonesia, once said should the decisions be deemed as a criminal act, the enactment of those decisions must comprised of mens rea or evil intentions behind those decisions.

Once the evil intention on the accusation can not be fulfilled, it could be the reason for exemption from the criminal charges liabilities (schuldduitsluitingsgrond). We generally do not punish people for criminal act if they do something that they could not control.

Our Anti Corruption law is defined by statutes that contain a word and phrase indicating the mens rea requirement that require that a person act knowingly, purposely, or recklessly.

Therefore, the subject of corruption charges requires a mens rea or “evil intention”.

Given that ideas, once again, it would be interesting to ask about Boediono, Sri Mulyani  and officials from KSSK, BI, LPS for their mens rea or “evil intention” behind their decision to rescue troubled Bank Century and its subsequent management of bailout funds, which folded to more than $700 million.

There are deep differences between wrongdoing and delictual action (criminal action).  When the “evil intention” behind the enactment of decision is not fulfilled, it would be merely administrative wrongdoing.

The administratively wrongdoing can not be the subject of criminal charges. If there are administrative mistakes and deviations of the bailout policy, it is the domain of state administration law, and the sanction is merely administrative.

The debate about criminalization of decision has mirrored a deep divide in our nation following the bailout scandal. Is there any so-called “evil intention” behind the disbursement which folds ten times from the original estimate? Are there any criminal acts involved behind the enactment of decision?

President said the decision over century case should not be subject to criminal charges. On the contrary, the decision taken by the House’s plenary where it chose Option C stated that there were criminal violations in the extension of the Bank Century bailout amounting to $700 million.

However, according to our distribution  of power governance system, it is not the president and parliament business to judge over bailout decision.  The House’s right to investigate (hak angket) is not the “trial” for deciding the “evil intention” behind the enactment of decision.

The “idea” of the house’s special committee is to prove the “evil intention” behind the bailout decision. . Those “evil intention” are allegations that there were flows of funds from the bailout disbursement to a certain political party for election campaign.

Moreover, some lawmakers were confidently believe about the “evil intention” occurrence behind the bailout policy. Starting from the recording of a conservation between Sri Mulyani and the disgraced century bank former owner, Robert Tantular at the meeting to  the allegation that there were flow of funds to certain politician.

Those allegations were never proved so it turns to “a political idol contest” sessions by posing “unsubstantial questions” apparently just to ensure that they would appear on live television. Based on survey conducted by the chamber of public research on 19-21 Febuary 2010, it reveals 52.5 percent of respondents view that House Inquiry Committee work only for political interest, while only 34.2 percent view that the lawmakers work for the nation’s sake.

But still, despite the House had failed to prove their allegations of evil intention, 325 members of House of Representatives still insist that the government’s decisions to inject the bailout was illegal and there is indication of corruption.

Is it appropriate that the clashes of opinion between the term of “systemic” and “non-systemic threat” as a form of criminal act ? Despite the fact that after the bailout policy was taken, today our state budget is one of the best in the world and one of the best-growing countries who can survive from global crisis.

Although the House ruling isn’t legally binding, the fact that some lawmakers threatened to withhold funding for the state antigraft body if it failed to quickly follow up their recommendations can be considered as a” threat” to justice. The “threats” are not only for the antigraft body, but also for the finance minister. Some lawmakers threatened to boycott Finance Minister Sri Mulyani Indrawati’s appearance at the House of Representatives.

Replying to the house The state antigraft agency has said that they have to abide the principle of legal proof in the criminal process and therefore they need to collect enough pieces of evidence. They would not depend on the findings of the House committee recommendations because the House’s reccomendation lacked compelling evidence and would be difficult to follow up.

Afterall, who has the “evil intention” ? You decide.

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In the Rush to Free Trade, Don’t Put Consumers at Risk

this article was published by Jakarta Globe :

ACFTA will encompass a total of 10 economic regions with 1.7 billion consumers, with a total annual trade volume of approximately $1.23 trillion and a combined gross domestic product of close to 6 trillion U.S. dollars. One can say that the ACFTA is the world’s largest trading bloc in terms of the population covered and the third largest in terms of trading volume.

There are numerous reactions about ACFTA. Some people agree that the implementation of ACFTA would adversely impact Indonesia’s manufacturing and trade performance. Those who are against ACFTA claimed that the free trade agreement may potentially hinder the small & medium businesses, causing millions of labor at risk to be laid off. In short, they are saying that ACFTA will hamper the national economy.  Those who are for it argues that, we cannot avoid free trade, especially, because we have signed the ACFTA agreement in 2002. The signing obliges us to follow the terms of that agreement.

However, given how Indonesia’s economy now is different from how it used to be in 2002, a possible recalculation of the impacts of the ACFTA and not to mention the amount of national pressure against it, Indonesia is seeking to re-negotiate the rates of at least 455 tariff lines, which have the potential to weaken its domestic industries.

The impact of the establishment of ACFTA is very broad. The visible ones are the impacts it is going to have on the flow non-oil imports from China to Indonesia and the loss that small industries in Indonesia are going to suffer. Arguments on that issue or pertaining to it are ubiquitous. What is often near sighted is the fate of the consumers. One might argue that opening a market up can stimulate competition and thus benefit the consumers. But is that always the case?

I believe that consumers are the real “object” of the free trade agreement. They are the ones that will face a market that is overflowed with Chinese products. This was already the case even before the ACFTA came into force. There are two perspectives in which we can view this condition. First, the agreement could benefit the consumers because they will have more options in choosing which product to buy, but, on the other hand, it could be viewed as a threat because there is the likely possibility for products that have not been tested appropriately  are sold freely in the market.

Even though ACFTA has the ASEAN Coordinating Committee on Standard and Quality (ACCSQ) that regulates the standardization of goods for consumption, it is no secret that China are having difficulties in integrating into their legal system the policy that consumers merit special protection. Case in point; recently, the efforts of Wang Hai, a prominent well-known consumer protection advocate have been curtailed by a variety of legal actions around China that sought to limit Wang’s status because of his efforts that sought out for products and then sued the offending manufacturers and retailers.

Further, back in September 2008, The Indonesian Food and Drugs Monitoring Agency (BPOM) found the poisonous ingredient, melamine, in 28 dairy-based products from China. In that same year, BPOM also banned cosmetic products made by China brands. The cosmetic products were banned after being found to containhazardous substances such as mercury, retinoic acid, hydroquinone and diethyl glycol.

There are also other cases, such as the China milk scandal and the China food safety incidents.

In the free trade, the overflow of the products is inevitable.  It will significantly impact our people as customers. Now, let me ask another question: is our consumer protection law ready to protect the consumer’s rights amidst the free trade era?

The lack of standardization system demonstrates the concerns that our consumer – end customers, the person at the end of the supply chain as stated by law – is vulnerable for the direct impact of free trade if our government does not pay attention to these issues. Consumers are often powerless when dealing with big corporations. Therefore our government needs to ensure there exist a comprehensive set of laws and its implementation that protects the consumers.

In the sense of consumer protections, the law is required to cover the disparity that exist in bargaining power between consumers and merchants if there are any disputes on the products. The disputes would occur if the standardization system failed to filter the products.

My point is simple: the consumer laws have to be a vehicle for expressing consumer’s right. We need to protect our people, so they will not become a “victim” of free trade.

Take Prita’s case as a clear example to show the disparity that exists: Prita was sued and held in custody for libel by Omni International Hospital in Tangerang for complaining in an e-mail.

Indonesia’s Consumer Protection Law has been around since 1999. The Law was enthusiastically crafted, but not well prepared, during the reformasi hysteria. As a result, the Law is full of contradictions within itself and with other laws.

An excellent example about the laxity of our consumer protection law: the costs for individual consumers to litigate fraud and warranty disputes were often prohibitive.

Flaws on the law, the lack of socialization and implementation about the law itself poses significant risks for consumers as a free trade object. The Consumers Dispute Resolution Agency (BPSK) that was established as mandated in the Law is arguably toothless. They lack the adequate authority to decide over consumer disputes. It is lacking due to the flaws of our consumer’s protection law.

The merchants could easily dismiss the agency’s authority to decide over the disputes. As a result, the consumers will need to access and express their rights through ordinary court (district court), which is far more complicated.

When the cost of legal enforcement exceeds the expected recovery, it will become a universal hurdle to enforcement methods The complexities, uncertainty, and lengthiness of formal legal proceedings in Indonesia add setbacks for consumer protection.

Weaknesses in the existing court system, when coupled with the weaknesses in the state-controlled enforcement apparatus will undermine the potential for effectively enforcing consumer rights. As I have established, consumer rights at a time of free trade becomes even more important.

As a comparison, in other countries such as United States, Hong Kong, Canada, the United Kingdom, and South Africa, their judicial system enables consumers to express and access their rights through the Small Claims Court. In this court, consumers can easily file a petition and express their rights without the complicated process of an ordinary court.  Small claims court recognizes the disparity in bargaining power between consumers and the merchant.

Furthermore, the lack of private consumer organizations is detrimental to our consumers. We need more independent consumer protection groups in order to protect the consumers and in the same time demand responsibility from the government and the merchants. We need them to serve as watchdogs for the interest of consumers.

We need to improve our Customer Protection Law. We need a set of laws that protect consumers and should they need to settle their disputes, we need to provide them a legal recourse through a court that is much simpler, like the Small Claims Court system. The government also needs to educate the consumers about their rights and how to properly access it. I concede the point that we must be ready for ACFTA. It is not just about the government but also consumers need to “preparing” themselves to face the free trade. They need to educate themselves about their right and responsibility as a consumer.

The world will only continue to open up and intertwined. But in doing so, let us not forget our consumers.

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Sports Key to Social Change and Solidarity

This article was published by Jakarta Globe, 26 January 2010

The loss by our national team in the “must-win” match against Oman points once again to the lack of development of sports in Indonesia. The country’s national football team, known as PSSI, performed poorly in 2009 in all age groups. The under-23 team did not win a single medal at the Southeast Asian Games in Laos, while the under-19 team failed to bring home the prize from AFC U-19. This is a distressing situation for football-mad Indonesians.

It’s a common belief that we lack the funds to cultivate our football players and enable them to consistently perform on the international stage. But how can we compete when even our leading coaches are under-paid? Benny Dollo, the coach of PSSI, has to hold down a second job as a director at Persija, a situation that must hinder his ability to focus and dedicate his expertise 100 percent to a PSSI team that is desperately in need of a win. This cannot be compared to the Guus Hiddink situation whereby he was able to coach both South Korea and PSV Eindhoven in 2002 and Chelsea and Russia in 2009. Hiddink is dealing with teams that are well-developed and supported by professional coaching staff and players. Very unlike the conditions here.

In the past, former coach Ivan Kolev and his aides have faced late wages. Renowned Sriwijaya FC coach Rahmad Darmawan refused to handle PSSI as an expression of the discontent with the low pay offered. What would be the expected outcome from this situation? For one, PSSI has missed out on the continental championship for the first time since 1996. Poor budgeting is most negative factor that contributes to PSSI’s inability to enhance Indonesia’s reputation even at the South East Asia level.

The country’s poor performance in football is a sad reflection of our national sports performance program, which is enshrined in the Sport Law. Something must change.

The government has yet to put in place the fundamental principles that will enable the creation of a sustainable sport development program that grooms potential athletes from an early age. The state, through the Ministry of Youth Affairs and Sport, which plays a vital role in the development of all major sports, has only allocated 0.1 percent (Rp 857 billion or $19.7 million) of the state budget for sports. National Sports Committee of Indonesia (KONI) chairwoman, Rita Subowo, has complained about the small budget and limited infrastructure provided by the state. The results are that we have produced very few champions in major international sports.

Our government doesn’t mind spending Rp 126.8 billion of state funds to provide cabinet members with luxury Toyota Crown Royal Saloons and another billion for the new deputy minister facilities and perks. Better our government spend the taxpayers’ money on sports development improvements. In light of this, I would suggest that our government still views sports development as a less than significant issue.

Perhaps the it fails to recognize the importance of sports in society. Apart from giving the country a sense of national pride, sports plays a crucial role in contributing to social change. It can uplift and unify. Countries that have winning teams and consistently produce champions often have a greater sense of purpose and direction. A case in point is Iraq’s unlikely win in the 2007 Asian Cup, which showed how a national football team could spark a rare source of shared joy in an otherwise sectarian, war-weary nation. According to former Iraq coach Jorvan Viera, his team never mixed politics and football even though it was made up of both Sunni and Shiite members.

History has shown the capacity of sport to contribute to social change and strengthen societies. It has changed individuals’ lives and, more importantly, contributed to and facilitated larger social change within and across societies. Nelson Mandela once said: “Sport is very important for building character because when you’re involved in sport, your individual character comes out, your determination, your ability to be part of the team and the acceptance of the collective effort is extremely important in developing your country as well as patriotism.”

Moreover, in a diverse country like Indonesia, the possibilities that exist within sports are those that can bridge the diversity cultures of our nation. Sports can be used as a tool to foster social capital through building relationships, networking and making connections in order to strengthen our solidarity as a nation. Take our national football team as an example. We have Boas Solossa and Ricardo Salampessy from Papua, Bambang Pamungkas from Java, Saktiawan Sinaga from Sumatra and Syamsul Chaeruddin from Sulawesi. Even though they come from different cultures and societies across the archipelago, they don a uniform that symbolizes unity. This shows that sports has a profound role in nation building.

Sports is indeed about connection. Whether we are fans or coaches or players, most of us engage in sports with other people. In a number of ways, sports has long been an agent for social change. Our Sport Law, which states that sports is a tool to be used to strengthen our solidarity and unity, is no more than empty rhetoric without any action from the government.

It is time to move on from the heartbreaking defeat suffered by our football teams and other poor performances. The government needs to act to change these sad facts. The first items on the to-do list: please recognize that sports can be used as an agent for social change and a means for increasing national solidarity. Then increase the budget for sports development and build sufficient training camps in all regions in order to groom potential athletes at an early age. The bottom line is we need qualified people running our sports organizations.

The possibilities of sports as an agent for social change are encapsulated in the words of Kenyan athlete Kip Keino, a former Olympian: “I believe that sport is one of the tools that can unite the country. Sport is something different from fighting in war and it can make a difference. We can change this world by using sport as a tool.”

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Bygone Bank Bailouts: Please Don’t Make It Any Worse, Dear Lawmakers

this article was published by Jakarta Globe on 27 December 2009 ( )

Vice President Boediono and US Federal Reserve Chairman Ben Bernanke share several similarities. During the global economic crisis both held prominent positions as chief of the central bank of their respective countries. During their terms, both made the decision to employ government bailouts in order to save the economy.

Both the Fed and our central bank are independent government agencies that enact and implement monetary policies. Both have immense influence over many monetary issues, such as inflation, unemployment, strength of funds and even the strength of your own wallet.

They also have full authority to control monetary policies in order to safeguard the monetary systems of their countries. Bernanke disbursed a total of $11.6 trillion in bailout money to rescue tottering US financial institutions. Meanwhile Boediono disbursed a $699 million bailout to the ailing Bank Century, now Bank Mutiara. Both men claim to have made their decisions in order to save their countries’ financial systems and avoid bigger crises.

In the case of Indonesia, the reason for providing bailout funds was because it was feared that if Bank Century was not saved, other banks would collapse, triggering a domino effect that would result in an even worse financial situation.

Even though Bank Century was a small bank with marginal assets it was predicted that if the bank were to collapse it would initiate a greater financial crisis. Boediono’s actions would suggest the belief that economic stability does not depend only on “Too Big to Fail” Banks.

However, despite the good intentions of his bailout decision, Boediono is now facing an investigation by a House of Representatives special committee.

The main concern of the committee is whether ailing Bank Century would have actually had a contagion effect on other financial institutions. They are thus questioning the appropriateness of the decision.

Contrary to the controversy in Indonesia, many Americans believe that Bernanke’s bailout plan saved the US economy from recession. The trust of the American people in Bernanke was justified when he was elected during the Obama administration for a second term in the Fed’s top post.

Thus, the question of the day is whether the decision to save Bank Century was wise and appropriate.

Former Vice President Jusuf Kalla believes that the bank’s problems were not caused by the financial crisis but were the result of a criminal act. Therefore, if the bank were to eventually collapse, there would be no threat of a greater regional or even global crisis.

The fact is, the former owners of Bank Century simply ran off with funds belonging to the bank’s customers.

Pradjoto, an expert on banking law, has been quoted as saying that the owners of Century Bank were “lucky” and had chosen the “perfect time” to commit their crime during the global financial crisis. They were not caught and and their bank ironically received a fresh injection of capital from the government.

According to our Central Bank Law, Bank Indonesia and the Ministry of Finance hold the authority to determine the course of action for banking institutions in crisis. Boediono, along with Sri Mulyani as the minister of finance, used their authority and decided to bail out Bank Century while Bernanke decided to spend $11.6 trillion to rescue the US economy. Both bailout plans sparked outcry from the public and lawmakers.

US House Financial Services Committee Chairman Barney Frank, for example, said that in the middle of a global crisis lawmakers did not have enough time to debate the merits of the bailout.

But what we must focus on now is the intention and motivation of our bailout plan, which was to save the economy.

What is happening now is that the House’s committee has been hijacked by a number of political special interest groups whose goals are to attack Boediono and Sri Mulyani.

The actions and inquiries of the House committee are thus at risk of resulting in more harm than good.

What will happen should there be a future financial crisis? Or any other kind of crises for that matter? If the government officials who are given the authority to make decisions are later challenged, ridiculed, and faced with criminal charges, who would then be willing to take charge? Who would want to make decisions in order to save our country?

Yes, a government official must be prudent in making decisions, especially decisions related to the economy, but what happens once those prudent decisions, made with good intentions, turn out not exactly as planned?

Is it fair that decision makers be subjected to ridicule, shame and even criminal charges when they had the country’s best interest at heart?

Halim Alamsyah, director of banking research and regulation at the central bank, was quoted by this paper as saying: “If I were asked to make a decision and I knew it would turn out like this, I would not do it.”

How then should a government official make a decision in times such as the 2008 global crisis? What is the measurement for a “good” and “prudent” decision?

Prof Hikmahanto Juwana, a professor of law at the University of Indonesia, said, “What are the distinctions between bad or good in decision making by public officials? Another official in the same post could have made a different decision.”

Is it appropriate that the debate on whether the bailout decision for Bank Century was a “good” or “bad” course of action take in the first place?

Even though it is true that the bank’s near collapse was caused by a criminal act, the government had to act fast and had to choose between saving the economy and proceeding with criminal actions. The government decided that saving the economy was the first priority, which led to the bailout.

According to law, the Indonesia Deposit Insurance Corporation controls Bank Century for three years. That control can be extended for another two years with the purpose of eventually selling the bank for a profit.

In light of this, I would deem the bailout a form of investment by the government. Thus, in addition to hindering the occurrence of a systemic banking crisis, the government may also generate some profit.

Therefore, allegations of corruption are not plausible at this stage, considering Century Bank’s profit, so far, in September 2009 reach Rp.237.7 Billion

With the House’s committee consistently questioning the case — with questions that many believe are politically motivated due to lack of substantial issues — I believe it will undermine the public’s trust in depositing funds in Bank Mutiara, thereby significantly impacting the bank’s business and the government’s investment.

Is the committee aware of these consequences?

The wise thing to do is to wait for the result of the government’s plan for Bank Century (i.e. a return on its “investment”) while legal enforcers concentrate their efforts on the criminal acts and returning any of the bank’s remaining assets to our country.

In the meantime, questions remain. Only Robert Tantular is in custody right now; where are Dewi Tantular, Rafat Ali Rizi and Hesham al Warraq? Why don’t our lawmakers put their efforts into helping law enforcement agencies pursue the perpetrators of criminal acts?

A lack of answers to questions like these means that the bailout decisions by Boediono and Bernanke have resulted in stories with decidedly different endings.

As Rahmat Waluyo, a Finance Ministry official, has said, “The only difference is that Bernanke has been named Time magazine’s Man of the Year while the former central bank governor and the minister of finance have to defend themselves in the biggest political debate this year.”

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