Re-understanding corruption in the Indonesian public sector through three behavioral lenses

Author:Hendi Yogi Prabowo, Kathie Cooper
Position:Centre for Forensic Accounting Studies, Islamic University of Indonesia, Yogyakarta, Indonesia
Pages:1028-1062
SUMMARY

Purpose Based on the authors’ study, the purpose of this paper is to better understand why corruption in the Indonesian public sector is so resilient from three behavioral perspectives: the Schemata Theory, the Corruption Normalization Theory and the Moral Development Theory. Design/methodology/approach This paper examines corruption trends and patterns in the Indonesian public sector in the past decade through examination of reports from various institutions as well as other relevant documents regarding corruption-related issues to gain a better understanding of the behavioral mechanisms... (see full summary)

 
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Re-understanding corruption in
the Indonesian public sector
through three behavioral lenses
Hendi Yogi Prabowo
Centre for Forensic Accounting Studies, Islamic University of Indonesia,
Yogyakarta, Indonesia, and
Kathie Cooper
School of Accounting, Economics and Finance, University of Wollongong,
Wollongong, Australia
Abstract
Purpose Based on the authors’ study, the purpose of this paper is to better understand why
corruption in the Indonesian public sector is so resilient from three behavioral perspectives: the
Schemata Theory, the Corruption Normalization Theory and the Moral Development Theory.
Design/methodology/approach This paper examines corruption trends and patterns in the
Indonesian public sector in the past decade through examination of reports from various institutions as
well as other relevant documents regarding corruption-related issues to gain a better understanding of
the behavioral mechanisms underlying the adoption of corruption into organizational and individual
schemata. This paper also uses expert interviews and focus group discussions with relevant experts in
Indonesia and Australia on various corruption-related issues.
Findings – The authors establish that the rampaging corruption in the Indonesian public sector is
an outcome of cumulative decision-making processes by the participants. Such a process is
inuenced by individual and organizational schemata to interpret problems and situations based
on past knowledge and experience. The discussion in this paper highlights the mechanisms of
corruption normalization used to sustain corruption networks especially in the Indonesian public
sector which will be very difcult to break with conventional means such as detection and
prosecution. Essentially, the entire process of normalization will cause moral degradation among
public servants to the point where their actions are driven solely by the fear of punishment and
expectation of personal benets. The three pillars of institutionalization, rationalization and
socialization strengthen one another to make the entire normalization structure so trivially resilient
that short-term-oriented anti-corruption measures may not even put a dent in it. The normalization
structure can be brought down only when it is continuously struck with sufcient force on its
pillars. Corruption will truly perish from Indonesia only when the societal, organizational and
individual schemata have been re-engineered to interpret it as an aberration and not as a norm.
Research limitations/implications – Due to the limited time and resources, the discussion on
the normalization of corruption in Indonesia is focused on corruption within the Indonesian public
institutions by interviewing anti-fraud professionals and scholars. A more complete picture of
corruption normalization in Indonesia can be drawn from interviews with incarcerated corruption
offenders from Indonesian public institutions.
The authors would like to acknowledge the support provided by the Department of Education and
Training Australia for the funding of this study through the 2015 Endeavour Research Fellowship
Award.
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
JFC
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Journalof Financial Crime
Vol.23 No. 4, 2016
pp.1028-1062
©Emerald Group Publishing Limited
1359-0790
DOI 10.1108/JFC-08-2015-0039
Practical implications – This paper contributes to the development of corruption eradication
strategy by deconstructing corruption normalization processes so that the existing resources can
be allocated effectively and efciently into areas that will result in long-term benets.
Originality/value – This paper demonstrates how the seemingly small and insignicant behavioral
factors may constitute “regenerative healing factor” for corruption in Indonesia.
Keywords Leadership, Indonesia, Culture, Corruption, Normalization, Schemata
Paper type Research paper
Introduction
Corruption has been a part of many developing countries, and Indonesia is not an
exception. In the 2014 Corruption Perception Index report, for example, Indonesia was
ranked 107 in the world (Transparency International, 2014). This ranking means
Indonesia is still one of the most corrupt countries in the world. While there are many
denitions of corruption, for purposes of this paper, corruption is dened in accordance
with Indonesia’s Law No. 31 Year 1999 as amended by the Law No 20 Year 2001 on the
Eradication of Corruption. Under Law No. 31 Year 1999 as amended by the Law No 20
Year 2001 on the Eradication of Corruption, there are seven categories of offences that
constitute corruption:
(1) acts that cause losses to the nation;
(2) bribery;
(3) occupational embezzlement;
(4) extortion;
(5) deception;
(6) conict of interests in procurement of goods and services; and
(7) gratication (Ardisasmita, 2006,p.4).
The focus of this paper is rent-seeking practice within the public sector, predominantly
bribery.
As this paper will demonstrate, corruption has been a part of Indonesia for
generations. The 32 years of the Suharto regime is particularly known as the most
highlighted case of corruption in Indonesia where, unlike other nations, widespread
corruption seemed to go hand in hand with the appearance of high growth (Kuncoro,
2006, p. 13). Suharto’s massive fortune was believed to have come from numerous
companies, monopolies and control over vast sectors of the economy in particular
during his three decades in power (Colmey and Liebhold, 1999). The nancial crisis in
1997 revealed the fallacy of Indonesia’s economic strength. While ofcial economic
indicators supported the perception of high growth, the nancial crisis saw the fall of
Indonesia’s currency relative to the US dollar that exposed the vulnerability of the
economy. The increased cost of imports due to exchange rates caused the collapse of
many industries especially the banking sector leading to public unrest and anti-Suharto
demonstrations. Suharto resigned from public ofce in May 1998. Subsequent analysis
of the Suharto regime indicated perceived economic growth was a result of rent-seeking
practices.
This paper will use the schemata theory, the corruption normalization theory and the
moral development theory to identify the current behavioral trend of corruption in the
1029
Corruption in
the Indonesian
public sector
Indonesian public sector and the behavioral factors that make corruption in the
Indonesian public sector so resilient. The data for this study are collected by means of
interviews and focus group discussions with experts and professionals from Australia
and Indonesia as well as document reviews on major corruption cases and
anti-corruption initiatives in Indonesia[1].
The major conclusion of the paper is that even long after the fall of the Suharto
regime, its signature rent-seeking practices as well as corruption normalization
processes still characterize the Indonesian economy at present and has caused multiple
corruption problems. This conclusion is supported by the results of analysis of
corruption cases investigated between 2004 and 2015 by the Corruption Eradication
Commission (KPK) as well as several major political events in Indonesia. Based on data
collected for purposes of this paper, the second conclusion is the resilience of corruption
in the Indonesian public sector is a legacy of the Suharto regime and a product of the 32
years of extensive corruption normalization which made corruption become a part of
Indonesian societal, organizational and individual schemata.
Format of the paper
The next section of this paper discusses the Schemata Theory, the Corruption
Normalization Theory and the Moral Development theory to highlight the connections
and intersections between the theories in relation to their applicability in assessing
corruption. Based on the discussion, a new model is constructed as an analytical tool in
re-understanding corruption in Indonesia from the behavioral perspective. After the
formulation of the model, a general overview of the Suharto regime is discussed to
highlight some characteristics of the regime that caused massive behavioral
transformation in particular in the Indonesian public sector. The current trends and
patterns of corruption are discussed in the subsequent section to provide an overview of
the common types of corruption in the Indonesian public sector and the related
behavioral issues based on the cases investigated by the KPK in the past decade. The
schemata transformation in the New Order regime is then discussed in more detail to
identify the methods used to change the behavior of the Indonesian people to correspond
to the corrupt regime. After the identication of the most prominent behavioral issues
caused by the corruption normalization processes within the New Order regime, the
analytical model is used to assess evidence of the existence and dynamics of corruption
normalization processes within the Indonesian public sector in the Reformation era as
well as possible future improvements of anti-corruption measures in Indonesia. From
the discussion, a conclusion is then drawn regarding corruption normalization within
the Indonesian public sector.
The schemata lens
Behavioral scientists have long been attempting to deconstruct the behavioral processes
that constitute corruption in society in the hope of nding the most appropriate
intervention methods. One way of looking into corruption is through the “schemata”
theory[2]. The early proponent of the concept of schemata was Bartlett (1995, p. 201) who
dened schema as an active organization of past reaction, or of past experiences, which
must always be supposed to be operating in a well-adapted organic response. He also
believed that the schemata are living, constantly developing and are affected by various
sensational experiences (Bartlett, 1995, p. 200). For humans, schemata act as a
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