Corruption allegations cloud the Indonesia-Norway billion dollar deal

On 22 September 2010, at the UN General Assembly in New York, Norway and Indonesia plan to upgrade the billion dollar forest deal from a letter of intent to a legally binding agreement. On the same day that this was announced, Reuters reported that Wandojo Siswanto, one of the forestry officials who helped negotiate the Norway deal is a suspect in a multi-million dollar corruption case.

The deputy chairman of Indonesia’s Corruption Eradication Commission (KPK), Chandra M. Hamzah, describes the forest sector as “a source of unlimited corruption.” The KPK is investigating the award of a contract in 2007 to PT Masaro Radiokom as the sole provider of the Forestry Ministry’s radio communications system.

(The story is complicated. The KPK found evidence that Anggoro Widjojo, a director of PT Masaro Radiokom, paid a US$1.9 million bribe to a top official in the Forestry Ministry. The police moved in quickly and arrested two people. Unfortunately, rather than arresting anyone involved in giving or receiving the bribes, the police arrested the KPK’s two deputy chairmen and accused them of conspiring to bury the corruption charges. The KPK deputy chairmen were released after a public outcry. The police lost the public’s trust. So did the Attorney General, whose office was competing with the KPK for the right to prosecute corruption cases. The police chief was suspended. Then arrested. Anggoro Widjojo’s brother was convicted for attempting to bribe KPK leaders. Anggoro’s whereabouts are unknown. The case continues.)

Wandojo Siswanto was named as a suspect in the PT Masaro Radiokom case in September 2009. He awarded the contract to PT Masaro Radiokom without putting it out to tender as required by law. Siswanto blames his staff. “I was advised by my committee that it was conducted every year this way,” he told Reuters. “I need to prove I was just a victim of the situation.” But the KPK estimates that the state lost at least US$7.75 million under the deal. The KPK also alleges that Anggoro Widjojo paid Siswanto a US$10,000 bribe.

Siswanto maintains that he is innocent. He told Reuters that he found the money on his table. “It was just put on my table. I was not brave enough to make a report to the KPK at that time,” he said. He told Reuters that he called Widjojo to ask who the money was for, and what it was for. Then he kept the money for four months, before handing it over to the KPK. He said that he didn’t think it was a bribe, because the money was given after the budget was finalised. “I never asked for that kind of money,” Siswanto said. “The money didn’t make me do something.”

Siswanto has continued his work in the Forestry Ministry. He has a high profile in REDD discussions in Indonesia. He was part of the negotiating team that went to Copenhagen last year (after which he was banned from leaving Indonesia) and was part of the negotiating team for the Norwegian deal. In March 2010, Siswanto announced a review of Indonesia’s laws on REDD, including the possible setting up of a new designated national authority on REDD. And it is Siswanto who said, “If there is agreement on REDD, we could put palm oil plantations to be eligible for that.”

Reuters spoke to Adnan Topan Husodo, deputy coordinator of the NGO Indonesia Corruption Watch, who hit the nail on the head when he said that

while all corruption suspects are innocent until proven guilty, a graft suspect should not have been part of the team that negotiated the deal with Norway.

“The credibility of the team involved in the agreement is at stake,” he said. “This is huge money we are talking about.”

In a statement sent to Reuters, the Norwegian International Climate and Forest Initiative said, “It is an unfortunate fact that there are significant governance challenges, including issues of fiduciary management, in most tropical forest countries.” NICFI acknowledged that “dealing with these challenges is a priority.”

With a legally binding US$1 billion agreement due to be signed tomorrow in New York, there isn’t much time left to deal with “these challenges”.

In an interview with the Jakarta Post last week, Agus Purnomo, Indonesia’s presidential special assistant on climate change, explained that Norway and Indonesia still have to agree where the money will go and how it will be administered: “The first point of discussion is the establishment of an interim financial institution to enable Norway to disburse US$30 million in the first phase this year.”

Norway wants to pay the money to an an international institution, such as the World Bank or the UN-REDD programme. Indonesia wants the money to be managed by local banks.

One thing is clear. The two-year moratorium will not stop deforestation in existing concessions. “We will be obliged to stop issuing new licenses to exploit remaining peatland and natural forest areas.” Purnomo told the Jakarta Post. “However, companies that obtained business licenses before January 2011 will be exempted.”