Managing Conflict of Interest - Organisation for Economic Co ...

32 Managing Conflict of InterestYeltsin’s Russia, with Suharto (and his family) benefiting hugely fromhis connections with Indonesia’s own “oligarchs” to the detrimentof the nation and his own legitimacy. Suharto and many of his colleaguesin government were hopelessly conflicted through theirclose links with the private sector and their revenue-raising activitiesassociated with the military and other branches of government.Moreover, they exploited these conflicts. Suharto’s family membersand the “oligarchs” effectively “captured the state,” similar to whattranspired in Russia.Suharto was forced out of office in 1998 partly on account ofgrowing resentment of corruption. Since then, Indonesia has madeimpressive strides in terms of institutional reform—the holding ofdirect (and generally clean) elections for president, for provincial andlocal officials, and for national and local parliaments; the strengtheningof the role of these parliaments; the removal of the militaryfrom government; the decentralization of power from Jakarta tolocal governments; and the setting up of an array of new institutionsaimed at reducing corruption and political patronage, e.g. an independentGeneral Elections Commission, a Supreme Audit Agency,an Anti-Corruption Commission, an Anti-Corruption Court, and anOmbudsman’s Office.Yet, progress in actually reducing corruption and in controllingconflicts of interest has been slow. Indonesia has significantlyimproved its WGI ranking on the control of corruption over the pastfew years—but it is still in the bottom quartile at about the samelevel as Russia. There have been hundreds of investigations by theAnti-Corruption Commission and some high-profile convictions; butcorruption remains pervasive. In central government it may havediminished, but this is offset by an increase at local levels as powerhas been devolved from Jakarta. (Businesses complain that havingto pay bribes at the local level creates greater uncertainty thanpaying bribes at the center. However, it is possible that, as in P.R.China, it reduces the risks of “state capture”). The media, with theirnewfound freedom, as well as other civil society organizations, haveplayed a useful role in exposing corruption; but the national parliamenthas been disappointing—indeed, as in Russia, there is routinebribery of MPs by the powerful interests who wish to resist reform.Political leadership on the issue has been variable. PresidentYudhoyono has a reputation for honesty and has been keen tomake progress on the corruption issue; but the same cannot beADB/OECD Anti-Corruption Initiative for Asia and the Pacific