Political party financing in Indonesia is a recipe for corruption
October-December 2013
By: Marcus Mietzner

There is no incentive for donors to hand their contribution to a party treasury — Indonesia offers neither tax deductions nor matching funds to parties for officially registering donations. Thus, most donors give directly to individual politicians rather than to the party as an institution. As such payments are not regulated by law (the legislation only recognizes donations to parties), both donors and recipients feel that they are acting within existing legal boundaries and can, at the same time, avoid the income thresholds set for parties.

But even the small amounts of official donations to party treasuries are not effectively monitored. Audit reports on party and campaign accounts are purely formalistic: auditors only check whether the forms were filled in correctly. No investigative audit takes place. As a result, Indonesia is wasting significant funds on unsubstantial audits, none of which has ever led to legal investigations. Moreover, there are no stipulations that would require parties, candidates or the KPU to publish account statements or audit reports, effectively excluding the population from efforts to enforce transparency.

Transparency and accountability are also obscured by institutional confusion over who is responsible for overseeing party and campaign financing. There are four bodies involved: the KPU, the Election Supervisory Board, the National Police and the BPK. However, none of these bodies has ultimate responsibility for investigations and imposing sanctions. This arrangement runs counter to best practices in other democracies, where a single agency receives complaints, conducts investigations and issues decisions on violations (the Federal Election Commission in the United States, for example).

In Indonesia, the four oversight bodies have deep institutional rivalries; they withhold crucial information from each other that prevents their counterparts from initiating credible legal proceedings on their own. These institutional weaknesses and loopholes have led to a situation in which even the most blatant violations are not investigated. In both the 2004 and 2009 elections, organizations such as Indonesia Corruption Watch delivered detailed reports on fictitious donations, vast discrepancies between official and real expenditures and campaign accounts that included ridiculously low amounts.

For example, PDIP reported campaign expenses of only Rp 38.9 billion for the 2009 legislative elections, but a quick look at AC Nielsen’s report on television advertisements during the campaign period revealed that the party had spent over Rp 100 billion on television ads alone. No action was taken. It seems there is collective agreement among Indonesian parties, law enforcement agencies and the public that existing transparency regulations won’t be enforced because doing so would cause major disruptions in the political process and arguably land every single Indonesian party politician in prison.

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