JAKARTA – Publish What You Pay (PWYP) Indonesia considers, the stipulation of the Governor of Southeast Sulawesi with the initials NA as a suspect of corruption over alleged mining licenses is evidence that mining permit mechanisms are prone to corrupt practices. As reported, NA has become a suspect for allegedly issuing a Mining Area Reserve Approval Decree, an Exploration Mining Business Permit (IUP) and Exploration Approval Decree for an Exploration Mining Business Permit into a Production Operation Mining Business License to PT AHB as a company conducting nickel mining in Buton Regency and Bombana, Southeast Sulawesi. The decree was allegedly issued not in accordance with applicable regulations.
Based on the analysis of PWYP Indonesia through a study of data generated from the Coordination and Supervision (Korsup) of the Corruption Eradication Commission together with the Ministry of Energy and Mineral Resources and related parties, covering all regions rich in mineral and coal resources (provinces, districts/regents) in Indonesia. From the data, there are identified potential gaps in the stages and processes of mining permits, since the process of land conversion, granting of Mining Business Permit (WIUP), backup/exploration permit, until the issuance of production permit.
Indications of potential corruption and its findings include:
(1) There are WIUP and IUP in forest areas that are prohibited for mining activities, such as conservation forests and protected forests (specifically protected forests with open-pit mining models). Korsup KPK together with the Ministry of Environment and Forestry (LHK) recorded the entire IUP in forest areas in Indonesia (26 million hectares), 1.37 million hectares are still in Conservation Forest Areas, and 4.93 million hectares are in Forest Areas Protected-open pit mining.
(2) There are companies that do not have a Taxpayer Identification Number (TIN) but still obtain an IUP. Though companies holding IUPs should have good eligibility, one of which is demonstrated through TIN ownership. The Directorate General of Taxes noted, the 2010-2012 IUP tax period recorded was only 7,834 IUPs, and of the total number of IUPs that had a TIN only around 76% or 5,984 IUPs. This means that 24% do not have a TIN.
(3) There are companies that are not committed to deposit reclamation and post-mining guarantee funds but still obtain IUP. Yet according to the provisions, commitment and allocation of guarantee funds from companies is a prerequisite for obtaining a mining production operation permit.
(4) There is an indication of overlapping permits (both between the same commodity, and different commodities such as between an oil palm permit and a mining permit). Korsup KPK found this overlapping problem to be the majority of the causes of the Non-Clean and Clear status of an IUP, which currently reaches 4023 IUP out of a total of 10,388 IUPs throughout Indonesia.
(5) Arrears of tax payments and state revenues that are not monitored and billed properly. As a result, state revenue has stalled and could potentially cause state losses if the arrears are not billed. Data from the Ministry of Energy and Mineral Resources noted that up to now arrears from both work contract holders and IUP holders amounted to 25 Trillion Rupiah.
Agung Budiono, Advocacy Manager for Energy Korsup PWYP Indonesia said, the four examples of the situation above, are the entrance points that are suspected to be a gap for potential corruption, either through kickback (commission), bribery, or other modes of corruption. “PWYP Indonesia assesses that the KPK needs to immediately drag the parties related to the case, especially also the owner of a nickel mining company that is suspected to be the commission giver, PT AHB. Because this is corruption involving the private sector, bribe-givers should also be further investigated, “added Agung in Jakarta, (26/8).
In addition, Agung added, the disclosure of the NA case also showed that there were still many gaps in corruption in the mining sector business chain. “The KPK has conducted Coordination and Supervision in the Mineral and Coal Sector for the past three years, some recommendations have been carried out by the local government and the Directorate General of Mineral and Coal. But there are still many that have not been followed up and addressed, “he explained. This case, according to him, is an early warning for other regional governments not to commit irregularities and immediately implement the Korsup Minerba KPK recommendation.
Yani Taufik, Director of the Southeast Sulawesi Coastal and Inland Community Development Institute (LEPMIL) said that the situation and suspected cases of corruption around mining permits if left unchecked would lead to rampant mining activities that were not in accordance with applicable regulations and standards. As a result, not a few losses will be experienced by the region, including no less important is environmental damage – both on land and the coastal area.
To reduce and prevent cases like this from happening again, continued Yani, the government and related stakeholders should encourage transparency in activities in the mining sector by optimizing the duties and roles of the Regional Information Management Officer (PPID) that has been mandated by the Law. “In an era of openness like this, licensing mechanisms should be openly monitored to avoid gaps in corruption,” said Yani.
Implementation of Beneficial Ownership
PWYP Indonesia National Coordinator, Maryati Abdullah, said that in the future the KPK must also have the courage to investigate the bribery company. “In the case of NA, the company also contributed greatly, there is no possibility of bribery if there is no factor from the company. The KPK must have the courage to investigate the owner of PT AHB, “said Maryati.
The NA corruption case, according to Maryati, emphasized the urgency of implementing a beneficial ownership policy or opening up who the real owner of the company was to immediately apply. The policy can be an entry point in uncovering corruption cases involving the private sector. “This beneficial ownership policy prevents the misuse of companies with legal status for illegal purposes such as tax evasion and evasion, money laundering, bribery, and corruption,” Maryati said.
Maryati revealed, it needed concrete steps that could increase public awareness of this beneficial ownership issue. In addition, it is also important to oversee the implementation of the Extractive Industries Transparency Initiative (EITI) which encourages the application of beneficial ownership for the extractive industry sector. “KPK being one of the institutions involved in the G20 working group has also discussed this issue with other institutions such as PPTAK, DG Tax, and OJK. The government needs to be serious in following up on the implementation of the beneficial ownership rule,” she emphasized.