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Author Topic: Crown Capital Eco Management International Relations - Tales of the unlikely off  (Read 727 times)

frankiefrost8

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The Corruption Eradication Commission (KPK) recently named Prosperous Justice Party (PKS) chairman Luthfi Hasan Ishaaq a graft suspect, shocking the entire nation not only because the move against a party chief was unprecedented but also because of the party’s clean reputation.

Luthfi was allegedly involved in beef-import bribery where evidence suggests that he had misused his power as a political party chairman and a House of Representatives member to give privileges to certain parties for importing
beef by means of, among other things, recommendation to the agriculture minister.

Now that the next election is just around the corner, many believe this one incident will irreparably damage any chance the PKS had of winning.

Essentially, politicians are supposed to be the “agent” for the “principal” (citizens) in which the former must act on behalf of the latter.

Regarding this relationship, many experts believe that corruption occurs when the abuse of public resources by the “agent” to gain personal benefits takes place. Criminologist Donald R. Cressey used the term “trust violators” to depict such agents who misuse their principals’ trust for their own ends.

Luthfi, according to the KPK deputy chairman Bambang Widjojanto, is accused of “selling” his power as a party leader to unlawfully influence government officials in their decisions regarding the distribution of beef-import quotas.

For this “service” it is alleged that he was rewarded handsomely by third parties in the form of bribe money.

In anti-fraud studies, this is commonly known as a “rent seeking” transaction where someone with power provides an illegal service and sells his “product” to third parties for personal or group gains.

The “rent”, or in many cases, “political rent”, itself is associated with the “net benefits” the bribers obtain from engaging in an illegal transaction with corrupt politicians.

In the beef import case, for example, the alleged bribers were willing to pay a huge amount of money to the alleged bribees since the latter were presumably believed by the former to be able to assist them in obtaining financial benefits from beef importation.

The perceived “rent” in this case is the difference between the money paid for bribing and that acquired as a result of the importing activities. To be able to participate in the “bribery market”, a corrupt politician needs to have the ability to provide assets — or related benefits (e.g. huge business revenue) to the potential bribers.

This is where the “cost-benefit” consideration plays its role. Both bribers and bribees need to be sure that the costs of engaging in the bribery transaction, including the risk of being caught, will be outweighed by the benefits of doing so.

As happened in previous corruption cases, many were surprised when the KPK named a seemingly clean high-ranking politician a suspect.

Nevertheless, anti-fraud studies all around the world have established that unlike other types of crime, fraud is often perpetrated by apparently “unlikely” offenders.

Evidence suggests that major fraud cases around the world have commonly involved well-mannered and educated men of high social status, some of whom may appear outwardly religious.

The “why” element of fraud has long been studied by behaviorists to determine factors that may cause otherwise honest men to succumb to the temptation of fraud.

The desire for “living a luxurious life” has been identified by many studies as the most common reason to commit fraud.

Anti-fraud experts argue that the issue of corruption often circles around the issue of assets. Living a luxurious life, for example, also means that one must be in possession of a large amount of assets.

It is evident in many corruption cases in Indonesia that the offenders have possessed assets far beyond that which they could possibly earn from their jobs.

For this matter, assets are also an important focus in any fraud investigation where investigators will first identify the suspects’ “income from unknown sources” using, for example, the “net worth” analysis, and then investigate their true sources to assess the possibility that some or maybe all of them are from fraudulent activities.

As part of the so-called “fraud triangle”, rationalization has been known as one of the important “why” elements of many fraud cases. Essentially, at least before getting caught and sent to prison, fraud offenders generally believe that they are not committing any crime. Even after their arrest, some fraud offenders still believe that they have been wrongfully charged.

Based on studies, fraud rationalization often stems from within the offenders’ own organizations in the form of, for example, organizational culture.

Psychologists have identified a number of key psychological drivers to fraud among which is blind obedience to authority, where a person obediently submits to his superiors, no matter how corrupt they are, above everything else.

In many fraud cases, such an obedient person may be used as an interlocutor to facilitate bribery transactions and chances are that they too will likely believe that what they do is justified.

As evinced by many corruption cases here, interlocutors often become the first suspects who then lead investigators to the masterminds.

Finally, everybody needs to understand that fraud currently is a serious problem in Indonesia.

For citizens, with regard to the coming election, they need to be more critical in seeing the corruption problem and how current and future leaders promise to address it as part of their campaigns.

Citizens also need to realize that they too are part of the fight against corruption and that their support for the authorities will properly address the problem.

Each element of society has its role to play in creating a hostile environment for corruption and other fraud in Indonesia so that our future generations will have a chance to live in a fraud-free nation.