Jakarta, IO – Those who study development, especially in the Third World, will certainly be familiar with the term “resource curse”. Instead of becoming advanced, prosperous countries, nations endowed with immense natural resources (coal, oil, natural gas, timber, valuable metals and minerals, among others) are ironically mired in poverty – in other words, they come to symbolize the “paradox of plenty”.
The most recent headline-grabbing case of illegal tin mining legalized through alleged collusion between state-owned tin-mining giant PT Timah and the private sector has once more revealed how prone the natural resource sector is to corruption. Several so-called “crazy rich” individuals have been named suspects by the Attorney General’s Office (Kejagung). According to the prosecutors, the corruption case caused massive environmental damage to the tune of a whopping Rp271 trillion!
Of course, it needs to be understood that the above mentioned figure is not a state loss in the conventional sense as per Law 31/1999 (Anticorruption Law). Rather, it takes into account the environmental and economic losses as well as recovery costs that must be borne by the government due to the unlawful exploitation of mining concession areas. In fact, the law itself stipulates that biodiversity loss constitutes loss of public funds/assets. However, there are not many legal avenues to incriminate perpetrators of graft with articles related to this type of violation.
One of the legal actions taken by Kejagung in a similar case concerned the corruption case involving Surya Darmadi, owner of PT Duta Palma Group, who colluded with local political elites to encroach on forests to be converted into oil palm plantations. Based on Kejagung’s calculations, the illegal activity caused Rp39.7 trillion in state economic loss.
At Jakarta Corruption Court at first instance and on appeal, the panel of judges favored the prosecution. However, efforts to incriminate Surya Darmadi failed because the Supreme Court (MA) overturned the verdict, absolving Surya Darmadi from paying Rp39.7 trillion in damage to the state. It seems that Kejagung is trying to pursue the illegal tin mining activity case by arguing that it has caused staggering loss of state funds.
Corruption-prone extractive industry
While the number of corruption cases in the natural resource sector is not as many as those in the government procurement sector, the former is deemed very lucrative to enrich certain groups with access and control. In Indonesia, there are a number of conglomerates (oligarchies) that became filthy rich from their ventures in the sector, such as Prajogo Pangestu, Low Thuck Kwong, and Dewi Kam who are listed in Indonesia’s 10 Richest 2024.
The lure of massive fortunes in the mining sector has created loopholes in public resource management, one being conflicts of interest in government. It is no secret that several elites and public officials in Jakarta are directly or indirectly involved in the mining sector, notably Coordinating Economic Minister Airlangga Hartarto, Coordinating Maritime Affairs and Investment Minister Luhut Binsar Panjaitan and SOE Minister Erick Thohir, according to the Indonesia Corruption Watch (ICW). Their concurrent roles as policymakers and players in the sector means that the problems with corruption and irregularities in this industry will never cease. According to ICW research published in 2023, several members of the Job Creation Law task force, both in executive and legislative, have business interests in the extractive sector.
At the local level, there are also several entrepreneurs who have big influence over policymaking in Jakarta, for example coal and palm oil magnate Haji Isam of Jhonlin Group in South Kalimantan. He is close not only with several cabinet members but also President Joko “Jokowi” Wibowo. This can be seen when the president personally inaugurated his biodiesel and sugar factory in 2021. Furthermore, he was formerly the deputy treasurer of the Jokowi-Ma’ruf campaign in 2019.
This mutualistic symbiotic relationship between the national and local political elites and mining entrepreneurs can easily be established because the natural resources business is so lucrative that it is willing to spend vast funds on campaigns of aspiring or incumbent state officials to secure their interests. Small wonder that during Kejagung’s raid of the residence of Harvey Moeis of PT Refined Bangka Tin, one of the suspects in the corruption allegations related to tin trading permits, the prosecutors seized Rp76 billion in cash denominated in different currencies, gold bars and other valuables. The investigative team also raided the residence of another suspect, PT QSE manager Helena Lim, and seized cash and valuables worth Rp33 billion.
The political elites’ need for fresh funds is nothing new. In the context of electoral democracy which to some extent is influenced by the practice of pork barrel politics, cash can be raised quickly and this often flies under the radar of financial supervisory agencies because they are hard to detect. Moreover, the requirement for political parties to report their annual budget and campaign funding has not been impactful in helping create healthy and clean elections. It is thus unsurprising that the push from various quarters, including the Financial Reports and Analysis Center (PPATK), for the enactment of regulations to restrict cash transactions, was rejected outright by the political elites. In fact, PPATK data shows that suspicious cash transactions in the 2024 elections reached Rp51 trillion.