When Collection Goes Awry

Two months after taking charge of the Home Affairs Department in 2001, Hari Sabarno "discovered" an important source of funds: the central government's share of motor vehicle taxes from the regions. The amounts were really "quite considerable," around Rp40 billion a year. But, according to rules, the money could only be used for tax collection purposes-and because of this therefore it was referred to as "tax collection incentives."

Yet, Hari was facing a tough problem. The operational budget was tight while activities piled up. Hari then held a meeting with his subordinates and the result was a ministerial regulation. This new regulation allowed for the use of tax collection incentives for purposes other than tax collection. Accordingly, the dam burst, and money was channeled into all sorts of things, from the minister's wife's birthdays to the rent of a wedding venue.

Based on the expenditure receipts obtained by Tempo, some Rp255.9 billion was disbursed between 2001 and 2008. The Supreme Audit Agency (BPK) concluded that the flow of these funds was illegal. In July, Indonesia Corruption Watch reported the matter to the Corruption Eradication Commission (KPK). But who were the real actors behind this illegal practice?

October 27, 2009