Trade

Indo party leader arrested over beef import bribery allegations

James Nason, 01/02/2013

The powerful political party that controls Indonesia’s agriculture ministry has been embroiled in a major controversy after corruption investigators arrested its leader this week on charges of accepting bribes in return for manipulating beef import quotas.

Prosperous Justice Party (PKS) chairman Luthfi Hasan Ishaaq resigned from the party yesterday while offices of Indonesia’s agricultural ministry remained sealed off as officials from the Corruption Eradication Commission (KPK) and military personnel further their investigation.

The scandal has created a storm of media headlines in Indonesia in the last 24 hours.

The story broke after Indonesian police arrested a member of Luthfi Hasan Ishaaq’s staff in the Le Meridien Hotel in Central Jakarta on Tuesday night.

The staffer had earlier allegedly met with two directors of one of Indonesia’s largest meat import companies, PT Indoguna Utama, and was found to be in possession of a suitcase containing Rp 1 billion ($A 100,000) in cash. 

In a text message sent at the time of the arrest, KPK Deputy Chairman Bambang Widjojanto said the meat import company was allegedly attempting to buy the influence of lawmakers in charge of Indonesia’s beef quota.

KPK officials said they had also secured a number of documents stored in a black briefcase, and two bank savings books.

At a press conference on Wednesday investigators told the media they had evidence to link Luthfi to the bribe payers.

The PKS chair announced his resignation from the party as he was being detained, according to media reports, but has denied taking bribes.

The Islamic PKS is one of Indonesia’s major political parties, and controls the agriculture ministry in Susilo Banbang Yudyhono’s coalition government.  Agriculture minister Suswono represents the party in the parliament.

PT Indoguna Utama is one of the largest meat import companies in Indonesia.  It commands a major share of Australian and New Zealand meat import quotas, and also holds licenses to import beef from the US.

KPK spokesman Johan Budhi told a press conference how the alleged bribery scheme was believed to have worked.

“In our case expose, we learned that JE and AAE (PT Indoguna directors Juardi Efendi and Arya Abdi Effendi) gave the money to AF (PKS staffer Ahmad Fathanah),” the spokesperson said.

“But we also found strong indications, supported by enough evidence, that AF intended to give the money to the politician identified as LHI (Luthfi Hasan Ishaaq).”

The corruption watchdog’s deputy chairman said Luthfi has “influence over party members in both the House's agriculture commission and the Ministry of Agriculture”.

Lutfhi has denied having taken a bribe during a press conference at the KPK office following his arrest. "Of course that's not true. I will not accept it," he was quoted as saying.

The KPK has a high success rate in its investigations. In 2009 the New York Times reported that in the six years it had then been operating, the commission had investigated, prosecuted and achieved a “100-percent conviction rate” in 86 cases of bribery and graft related to government procurements and budgets.

The PKS party stood at the last election on a platform of anti-corruption, and officials have stated that the party has been framed in this beef import bribery scandal by political opponents eager to smear its anti-corruption stance.

Allegations that the party has manipulated beef import quotas in exchange for bribes have been aimed at the party before, with investigative journal Tempo Magazine alleging in 2011 that meat importers could purchase favour from PKS members in the Ministry of Agriculture.

Other allegations of corruption have also been reported, as highlighted in this Jakarta Post article

Australian beef containers

Last year several Australian exporters endured costly losses when more than 100 containers of frozen beef, imported under permits signed by Indonesia’s minister of trade, were refused entry by quarantine officials, who claimed discrepancies in paper work.

After months of delay and eventual Australian Government attempts to intervene on behalf of exporters, Indonesian officials allowed some of the containers to be released for re-export.

One of the exporters who had 23 containers caught in the freeze, Geoff Bull from Allegro Exports in Fremantle, estimates he lost $1 million as a result of the demurrage, port and re-transport costs incurred as a result the six month long hold up.

He believes there is little doubt that political corruption was behind the move to block the beef at the wharf, and that the public attention the issue received in Indonesia prompted the anti-corruption agency to look more deeply into the meat import situation.

Mr Bull was personally interviewed in Perth late last year about the matter by representatives of BPK, the audit board of the republic of Indonesia, which is believed to work closely with the Corruption Eradication Commission.

“I got the feeling that these people were genuinely trying to get to the root of this corruption,” Mr Bull said of his interview with BPK officials last year.

“Things are changing and Indonesia is now trying to rid itself of this political corruption.”
 

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