To be reported on September 11, 2014 and thereafter

The corruption scandal in the ESDM sector was revealed again. This time the suspect is the number one person in the Ministry of Energy and Mineral Resources (ESDM), Jero Wacik (JW), with total state losses estimated at 9.9 billion Rupiah. In a press statement released by the KPK last Wednesday, JW was suspected of corruption through engineering the Minister of Operational Funds (DOM), raising revenues through the kickback of procuring projects in the Ministry of Energy and Mineral Resources, collecting funds from partners of certain programs in the ESDM sector, and hold fictitious activities/meetings in the ESDM environment.

JW is the 4th official in the ESDM environment who was declared a suspect by the KPK, within the past 1 year. Previously, the Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Rudi Rubiandini, had been sentenced to seven years and fined Rp200 million for the case of receiving bribes and money laundering. Following Secretary-General of the Ministry of Energy and Mineral Resources, Waryono Karno has also been a suspect in the case of bribery and corruption in the use of ministry funds. And finally, the Chair of the House of Representatives Commission VII in charge of the ESDM sector, Sutan Bhatoegana was also a suspect in the case of Rudi Rubiandini’s bribery case to the DPR.

Fabby Tumiwa, chairperson of the Publish What You Pay Indonesia steering agency and Director of the Institute for Essential Services Reform (IESR) said: “the case that happened to JW and several people related to the oil and gas and ESDM sector is the tip of the iceberg from the dilapidation of governance in the Ministry of Energy and Mineral Resources and the ESDM sector broad energy “. The JW case further adds to the series of previous KPK findings which launch a potential state loss from the mineral and coal mining sector from the Non-Tax State Revenue (PNBP) figure of Rp 35.6 trillion and 1.79 million US dollars or equivalent to Rp 17.9 trillion.

Maryati Abdullah, National Coordinator of Publish What You Pay Indonesia, added: “The case alleged by JW is a fundamental issue concerning the integrity of a Minister that reflects the institutional integrity of the Ministry of Energy and Mineral Resources as a whole”. Specifically, in the Minister of Finance Regulation (PMK) No.3 / PMK 06/2006, the principles and mechanism for using the Minister’s Operational Funds are regulated. “So even though the Minister has discretion in its use, it does not mean that it can be used for personal interests, because by definition the DOM is provided to support the Minister’s operational activities relating to representation, service, security, and the cost of ease of other activities to expedite the implementation of the Minister’s duties” she added. “As a Budget User (PA), the Minister also appoints a KPA (Budget User Authority), which is an official appointed by the Minister as the person responsible for managing the DOM.

The rise of corruption cases and the practice of rent-seeking in the extractive sector is a bad precedent for governance. The extractive sector, which should have been supporting the improvement of people’s welfare, has instead become a niche for some people. Therefore, Publish What You Pay Indonesia which is a coalition of 38 NGOs in Indonesia states:

1. Fully support the process of investigating corruption cases in the ESDM sector carried out by the KPK and other law enforcers both in the executive and legislative branches.
2. Encouraging law enforcement for violations that occur in the mining sector such as the granting of illegal mining permits, overlapping land use and licensing areas, non-compliance in paying taxes and state revenues, shipping of production through illegal channels and other modes related to the extractive mining industry.
3. Encourage and increase the level of transparency in the oil and gas extractive and mining industry sectors, by encouraging the disclosure of permit/contract data, opening oil and gas production and mining data in real-time, transparency of oil and gas cost recovery and the flow of state revenue from the extractive sector, oil sales tracking system crude and fuel procurement, as well as increasing the scope of Indonesian EITI (Extractive Industries Transparency Initiative) reporting which is currently led by the Indonesian Ministry of Economic Affairs.
4. Requesting President-elect Jokowi-Jusuf Kalla-in carrying out his prerogative to elect the Minister of Energy and Mineral Resources who have integrity, free from affiliation and co-optation of the interests of the ESDM sector, as well as bold and decisive to reform and clean up the EMR sector from corrupt practices and governance the bad one.

Jakarta, 11 September 2014
Publish What You Pay Indonesia,

Maryati Abdullah
National Coordinator