Indonesia Chafes at Graft ‘Safe Haven’ in Singapore

JAKARTA

SINGAPORE promotes itself as a model of financial integrity. But, officials in Jakarta say, the wealthy city-state is a haven for some of the most corrupt Indonesians and their ill-gotten gains.

Singapore denies that it turns a blind eye to dirty money and says that if sufficient evidence is provided, it is ready to take “swift and necessary action” against corruption suspects.

But Indonesia’s Deputy Attorney General Darmono said: “Singapore is the most strategic country for corruptors to run away to.

“It’s geographically the closest to Indonesia and the policy of the Singaporean government enables corruptors to live there,” he told AFP.

Precise information on the extent of the illegal wealth allegedly smuggled out of Indonesia to Singapore is hard to find due to the small republic’s strict bank secrecy laws and the sensitivity of the subject.

But a report by Indonesia’s financial intelligence unit in late 2006 said around 200 fugitives from Indonesian state debt were residing there.

Three years ago extradition requests were lodged with Singapore for 15 corruption suspects, but the process has stalled due to complications surrounding a 2007 extradition treaty, Indonesian officials said.

In a recent update to lawmakers, Darmono said most of 18 suspects currently subject to extradition requests over corruption were hiding in the city-state.

Another 10 had fled abroad, mostly to Singapore, but were not subject to extradition requests, he added.

The suspects include bankers who siphoned off hundreds of millions of dollars in state bailout funds during the 1997-1998 Asian financial crisis, and tycoons of illegal logging, according to official and independent sources.

“They are living the life there. Their lifestyle in Singapore is above the average,” Indonesia Corruption Watch activist Emerson Yuntho said.

Arif Havas Oegroseno, director general for law and international treaties at the foreign ministry, said the proceeds from corruption were more than enough to fund lavish lifestyles in Singapore.

“As they’ve invested huge sums of stolen money, which are increasing in value over time, they no longer need to work,” he said.

The Indonesian Supreme Court convicted businessman Djoko Sugiarto Tjandra on June 11 last year for embezzling Rp546 billion (US$60 million) of state funds linked to bank bailouts in 1999.

Like other suspects before him, he fled to Singapore on the eve of his conviction and is now the target of Indonesia’s latest request for extradition, Attorney General Hendarman Supandji said.

A spokeswoman for Singapore’s Attorney-General’s Chambers did not comment on Tjandra’s case.

“Requests for mutual legal assistance are confidential,” she said.

On March 25, Indonesian officials reported that Gayus Tambunan, a 30-year-old tax official wanted in connection with a suspicious Rp25 billion in his bank account, had fled the country for Singapore.

He was apprehended there a few days later by Indonesian police, prompting questions from officials and journalists in Jakarta about why this suspect was so easy to repatriate when others continued to live freely in Singapore.

“Businessmen have a wide reach to anywhere; they have no boundaries. Civil servants have limited reach,” explained Attorney General Supandji.

Another fugitive is Anggoro Widjojo, a businessman who police allege bribed officials to win a forestry ministry contract.

He initially fled to China but police and graft investigators said that when they wanted to talk to him last year, he was in Singapore.

Indonesia’s anti-corruption watchdog – the Corruption Eradication Commission – accuses him of launching a long-distance campaign through his Jakarta-based brother, Anggodo, to frame investigators probing his case.

“Our concern is that Indonesia often makes the list of countries with high corruption levels. But there are other countries with low corruption levels that become the places of residence for Indonesian corruptors,” Oegroseno said.

Indonesian economist and politician Dradjad Wibowo estimated that up to $120 billion worth of “grey money” from Indonesia had flowed through Singapore, despite that state’s clear laws against money laundering.

“More than half of that money is funds from corruption, finance-related crime or other crimes such as illegal logging,” he said.

“We hope Singapore will show goodwill but it can’t claim to be one of the world’s cleanest and best governed countries while still existing as a bolthole for Indonesian corruptors.”

The situation has stoked frustration among senior Indonesian officials for years, but they appear to be reluctant to speak out about it for fear of riling Singapore’s leadership.

When the frustration does boil over, they accuse Singapore of undermining an Asian neighbour’s fight against corruption – deemed vital to Indonesia’s economic and democratic development – in order to enrich its banking sector.

“The country’s income comes mainly from selling (financial) services, and with more money floating around it has the opportunity to strengthen its economy,” said Darmono, the deputy attorney general.

“It tries to gather as much foreign capital as possible. Unfortunately, the incoming funds include ‘illegal funds.’”

Then-vice-president Jusuf Kalla was blunt in a 2007 interview with the Financial Times. “They’re thinking on the business side… That’s all it is. It strengthens Singapore’s economy,” he said.

Foreign Minister Marty Natalegawa avoids such stridency, but told AFP he planned to hold “informal talks” with Singaporean leaders about the issue later this year.

“What we want to be focusing on is not necessarily the legal instrument but more the political commitment,” he said, referring to the long-delayed extradition treaty.

He added that Indonesia believed Singapore recognised “the importance of dealing with these cases” and helping its neighbour to “enforce its core positions” against corruption.

Singaporean officials bristle at the suggestion the regional financial hub’s integrity is being muddied by illegal loggers, dodgy tax officials and shady businessmen from across the Malacca Strait.

“Singapore takes a serious view of crimes committed in Singapore and will not tolerate any criminal or illicit activities being conducted through Singapore,” the spokeswoman for the state’s Corrupt Practices Investigation Bureau said.

“In regard to foreign corruption fugitives, as long as sufficient evidence is provided to show that money laundering or any other offence has been committed in Singapore, the law enforcement authorities will take swift and necessary action to investigate and/or seize assets.”

Indeed, Transparency International ranks Singapore as one of the cleanest countries in the world – and Indonesia as one of the grubbiest.

Singapore was the world’s third cleanest country on Transparency’s corruption perceptions index for 2009, the only Asian nation in the top 10. Indonesia was a lowly 111th.

Under Singapore’s Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act, any person who knows or suspects that property may have come from criminal conduct is obliged to report this information.

But a 2008 report by the Financial Action Task Force (FATF), an inter-governmental body tasked with developing international policies to fight money laundering and terrorist financing, rated Singapore as only “partially compliant” with its recommendations.

It said “no enforceable powers have been exercised to require financial institutions to apply stringent or additional … counter-measures” in relation to money from countries that do not abide by FATF standards.

Singapore’s money-laundering laws were “not effectively implemented” and there was a focus on domestic cases, leaving foreigners largely unmolested, it said.

The Monetary Authority of Singapore said the report “affirmed the high standards” of Singapore’s anti-money laundering regime and rated the state on a par with Britain and the United States.

“In particular, the integrity of Singapore’s financial system is safeguarded by our rigorous customer due diligence measures as well as clear and efficient process for mutual legal assistance,” a spokeswoman said.

“These procedures are applied to both local as well as foreign customers.”

But in a study released in December on illegal logging in Indonesia, Human Rights Watch described Singapore as a “safe haven” for cashed-up Indonesian corruption fugitives.

It said that while Jakarta bore the main responsibility for requesting assistance and pursuing cases, Singapore had to “ensure that its own banking and anti-money laundering regulations are rigorously enforced”.

Human Rights Watch added that Singapore had an international duty to ensure it did not allow its banking system – the cornerstone of Southeast Asian finance – to be used to wash dirty money.

“Although proud of its strong ratings on fighting corruption domestically, Singapore in particular is often used as a safe haven by business tycoons fleeing law enforcement in Indonesia,” said the report, entitled “Wild Money”.

“Corrupt fugitives from justice continue to reside peacefully and house their assets unmolested in Singapore.”

Indonesia’s parliament has not ratified the extradition treaty because of Singapore’s insistence on linking it to defence ties, officials in Jakarta said.

Foreign Minister Natalegawa said the pact was in “abeyance” due to “complications in the way it was presented and the way the discussions developed”.

“That notwithstanding, there is still room for cooperation between our two governments,” he added.

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