A brewing tax scandal in Indonesia, which has revealed over $20 billion in suspicious transactions over 14 years, is casting a shadow on President Joko Widodo’s campaign to root out corruption in government as public anger mounts.
(Bloomberg) — A brewing tax scandal in Indonesia, which has revealed over $20 billion in suspicious transactions over 14 years, is casting a shadow on President Joko Widodo’s campaign to root out corruption in government as public anger mounts.
A state financial watchdog earlier this week identified questionable dealings related to criminal offenses at the Finance Ministry from 2009 through 2023 and similar cases have been found in other ministries. It was last month that Jokowi, as the president is known, pledged stronger action after Indonesia slid down the ranks on a corruption index.
Focus has turned to two-time Finance Minister and trusted Jokowi ally Sri Mulyani Indrawati, who is facing calls on social media to resign. While she wasn’t implicated in the scandal, Indrawati, a former World Bank Managing Director, has gone on a media blitz, seeking to restore public trust in the institution and maintain tax compliance before the filing deadline at the end of this month.
In one interview, she shed tears while pledging to investigate the issue thoroughly. “What we need and must do is make sure that we do our best. Sometimes even the best is not always enough to withstand a disaster,” she said.
The case comes at a crucial juncture for Jokowi who is trying to draw foreign companies and funds to invest in a $34 billion new capital project. Indonesia has struggled with longstanding corruption with government officials often asking for bribes to speed up projects and approve permits.
“If the government doesn’t clean up corruption, it will certainly affect the interest of foreign investors because they want to see transparency,” said Arya Fernandes, a political analyst at Jakarta-based Center for Strategic and International Studies. “There needs to be a thorough revamping of the system to ensure this does not happen again in the future.”
There is also the question of why the finance ministry never responded to the financial watchdog after it sent the ministry multiple reports of the suspicious transactions dating back to 2009, said Coordinating Minister for Political, Legal and Security Affairs Mahfud MD on Wednesday.
The deals involved 460 people, mainly in the tax and customs agencies, and were never closely tracked, he added.
Pricey Jeep Spurs Twitter Backlash Against Indonesia Tax Office
Public furor erupted last week after videos and photos of the lavish lifestyles of tax and customs officials circulated on social media, prompting questions of how they could afford such luxury on a civil servant’s wage.
A regional head of a customs office was removed on Wednesday after Indonesians spotted social media posts of his daughter modeling a Balenciaga outfit, estimated to cost about 22 million rupiah. Last week, a tax official was dismissed after he was found guilty of failing to declare his assets and evading taxes. The action came after photos and videos of his son flaunting a Jeep Wrangler Rubicon and Harley-Davidson motorbike surfaced on social media.
The government is probing another 69 civil servants for allegedly having questionable assets.
–With assistance from Claire Jiao.
(Updates throughout)
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