Corruption and money laundering causes forest degradation in Indonesia

EoF Press Release / 05 October 2012

Press Release by TII – IWGFF – WWF Indonesia

Jakarta- Three non-governmental organizations consisting of WWF-Indonesia, the Indonesian Working Group on Forest Finance (IWGFF) and Transparency International Indonesia say they are ready to monitor and help eradicate corruption and money laundering in the forestry sector. This was announced during a Public Discussion, "Patterns of Corruption and Money Laundering in Forest Crime," held by the three institutions today (Wednesday, 31/10) at Serambi Salihara, South Jakarta.

According to the Corruption Eradication Commission, corruption and money laundering in the forestry sector has cost the country as much as US$100 billion. Meanwhile, in August 2011, the Ministry of Forestry issued a report that corruption and money laundering in the forestry sector in Borneo has cost the country more than 300 trillion rupiah (~ US$32 million). These two reports demonstrate the weakness of integrity and accountability of government agencies in the forestry sector.

The Secretary General of Transparency International Indonesia, Teten Masduki, said, "The loss of forest cover in Indonesia is a reflection of high levels of management that tends to be bad and corrupt. From research that has been done by TI-Indonesia, corruption occurs in all levels of forest management, ranging from existing regulations, forest management, to law enforcement. "

Indonesia’s decentralization of power [has devolved political authority from the national to the local level over the past 15 years and] has implications for a shift in power relations between the central government and regional governments as well as inter-regional institutions. These changes open up rampant opportunities for 'money politics' – district heads gaining and maintain the support of the legislature, various [untransparent] sources of financing for members of the legislature, payments to political parties. 

The most common desire is to enrich themselves. Opportunities for corruption in the natural resources sector are opened by differences and inconsistencies between regulations issued by the central and local governments, by collusion between the legislative and the executive branches of government, and by a lack of public participation and oversight. In the past 25 years, forest cover in Sumatra has been reduced by half from 25.3 million hectares in 1985 to only 12.5 million hectares in 2009.  The decline in forest cover is much colored by illegal practices ranging from [irregularities in] licensing policy to bribery.

The Director of WWF-Indonesia’s Forest Program, Anwar Purwoto, stated that the systematic destruction of forests through corruption and money laundering was becoming more and more urgent in the tropical forests of Indonesia. "The reduction in forest as wildlife habitat exacerbates the conflict between humans and wildlife, causing the loss of ecosystem balance and often leadoing to disaster. Eventually this will lead to even greater harm, "added Anwar.

The three members of the consortium SIAPII (Strengthening Integrity and Accountability Program II) invites all the parties of administration at central and local levels, employers, and the community to sustain the remaining forest areas by encouraging better forest management. Coordinator of IWGFF, Willem Pattinasarany, said, "The Government of Indonesia's commitment in the UNFCCC 15th 2009 in Copenhagen to reduce emissions by 26% requires the government to abide by those commitments. The trick is to apply the precautionary principle in favor of investment in natural resource management, especially in the forest areas. "

The SIAP II consortium supports financial institutions and banks in designing various guides such as Know Your Customer (KYC) and CDD (Customer Due Diligence) in the forestry sector. "By using KYC and CDD, banks benefit by have clean clients, whereas entrepreneur borrowers benefit from the trust shown by financial institutions in their efforts," said Willem.