University of Groningen
Corruption in Indonesia
Sondang Silitonga, Mala
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Sondang Silitonga, M. (2018). Corruption in Indonesia: The Impact of institutional change, norms, and networks. University of Groningen.
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CORRUPTION IN INDONESIA
The Impact of Institutional Change, Norms, and Networks
© Mala Sondang Silitonga ISBN (print): 978-94-034-0323-6 ISBN (digital): 978-94-034-0322-9
All Rights Reserved. No part of this publication may be reproduced in any form or by any means, including scanning, photocopying, or otherwise without prior written permission of the copyright holder.
Printed by: Ridderprint BV, the Netherlands Cover design: Raymond Nainggolan
Funding: This PhD project has been financed by Scholarship for Strengthening the Reforming Institution (SPIRIT), Ministry of National Development Planning/ National Development Planning Agency, Republic of Indonesia.
CORRUPTION IN INDONESIA
The Impact of Institutional Change, Norms, and Networks
PhD thesis
to obtain the degree of PhD at the University of Groningen
on the authority of the Rector Magnificius Prof. E. Sterken
and in accordance with the decision by the College of Deans. The thesis will be defended in public on Thursday 8 February 2018 at 12.45 hours
by
Mala Sondang Silitonga
born on 13 May 1975 in Bandung, Indonesia
© Mala Sondang Silitonga ISBN (print): 978-94-034-0323-6 ISBN (digital): 978-94-034-0322-9
All Rights Reserved. No part of this publication may be reproduced in any form or by any means, including scanning, photocopying, or otherwise without prior written permission of the copyright holder.
Printed by: Ridderprint BV, the Netherlands Cover design: Raymond Nainggolan
Funding: This PhD project has been financed by Scholarship for Strengthening the Reforming Institution (SPIRIT), Ministry of National Development Planning/ National Development Planning Agency, Republic of Indonesia.
CORRUPTION IN INDONESIA
The Impact of Institutional Change, Norms, and Networks
PhD thesis
to obtain the degree of PhD at the University of Groningen
on the authority of the Rector Magnificius Prof. E. Sterken
and in accordance with the decision by the College of Deans. The thesis will be defended in public on Thursday 8 February 2018 at 12.45 hours
by
Mala Sondang Silitonga
born on 13 May 1975 in Bandung, Indonesia
Supervisor Prof. R. P. M. Wittek Co-supervisor Dr. L. Heyse Assessment Committee Prof. A. Flache Prof. C. L. M. Hermes Prof. A. van Witteloostuijn
Table of Contents
1. Introduction ... 9
1.1. Public Sector Corruption in Indonesia ... 9
1.2. Government Attempts to Combat Corruption ... 10
1.2.1. Changing the Government Structure: From a Centralized to Decentralized System ... 11
1.2.2. Anti-corruption Agents... 12
1.2.3. Anti-corruption Laws & Regulations... 14
1.2.4. Implementation and Enforcement Challenges Regarding Anti-corruption Measures ... 17
1.3. Overarching Research Question ... 19
1.4. An Institutional-Relational Perspective on Corruption ... 20
1.4.1. A Relational Approach to Corruption ... 20
1.4.2. A Social-Norms Approach to Corruption ... 22
1.5. Four Empirical Studies ... 23
1.5.1. Chapter 2: Institutional Change and Corruption of Public Leaders... 24
1.5.2. Chapter 3: Institutional Change and the Dyadic Structure of Local Corruption ... 25
1.5.3. Chapter 4: The Changing Structure of Corruption Networks ... 25
1.5.4. Chapter 5: Giving a Good Example? The Effect of Leader and Peer Behavior on Corruption in Senior Civil Servants ... 27
1.6. Study Design and Research Methods ... 27
1.6.1. Newspaper Data, Dyad Census and Role Analysis ... 28
1.6.1.1. Data Sources ... 28
1.6.1.2. Case Sampling and Coding ... 29
1.6.1.3. Coding and Measures ... 30
1.6.1.4. Analytical Strategy ... 31
1.6.2. Vignette Experiment Data and Multilevel Analysis ... 32
1.6.2.1. A Vignette Experiment Applying a Factorial Design ... 32
1.6.2.2. Respondents ... 33
1.6.2.3. Analytical Strategy………... 34
1.6.3. Overview of the Dissertation ... 34
2. Institutional Change and Corruption of Public Leaders: A Social Capital Perspective on Indonesia ... 35
2.1. Introduction ... 36
Supervisor Prof. R. P. M. Wittek Co-supervisor Dr. L. Heyse Assessment Committee Prof. A. Flache Prof. C. L. M. Hermes Prof. A. van Witteloostuijn
Table of Contents
1. Introduction ... 9
1.1. Public Sector Corruption in Indonesia ... 9
1.2. Government Attempts to Combat Corruption ... 10
1.2.1. Changing the Government Structure: From a Centralized to Decentralized System ... 11
1.2.2. Anti-corruption Agents... 12
1.2.3. Anti-corruption Laws & Regulations... 14
1.2.4. Implementation and Enforcement Challenges Regarding Anti-corruption Measures ... 17
1.3. Overarching Research Question ... 19
1.4. An Institutional-Relational Perspective on Corruption ... 20
1.4.1. A Relational Approach to Corruption ... 20
1.4.2. A Social-Norms Approach to Corruption ... 22
1.5. Four Empirical Studies ... 23
1.5.1. Chapter 2: Institutional Change and Corruption of Public Leaders... 24
1.5.2. Chapter 3: Institutional Change and the Dyadic Structure of Local Corruption ... 25
1.5.3. Chapter 4: The Changing Structure of Corruption Networks ... 25
1.5.4. Chapter 5: Giving a Good Example? The Effect of Leader and Peer Behavior on Corruption in Senior Civil Servants ... 27
1.6. Study Design and Research Methods ... 27
1.6.1. Newspaper Data, Dyad Census and Role Analysis ... 28
1.6.1.1. Data Sources ... 28
1.6.1.2. Case Sampling and Coding ... 29
1.6.1.3. Coding and Measures ... 30
1.6.1.4. Analytical Strategy ... 31
1.6.2. Vignette Experiment Data and Multilevel Analysis ... 32
1.6.2.1. A Vignette Experiment Applying a Factorial Design ... 32
1.6.2.2. Respondents ... 33
1.6.2.3. Analytical Strategy………... 34
1.6.3. Overview of the Dissertation ... 34
2. Institutional Change and Corruption of Public Leaders: A Social Capital Perspective on Indonesia ... 35
2.1. Introduction ... 36
2.2.1. Types of Corruption ... 39
2.2.2. Centralized Autocratic Regimes and Decentralized Democratic Regimes ... 39
2.2.3. Institutional Change and its General Implications for Corruption ... 41
2.2.4. Institutional Change and Social Capital Traits of Corruption Structures ... 42
2.2.4.1. Corruption Actors ... 42
2.2.4.2. Types of Relation ... 43
2.3. Data and Research Design ... 44
2.4. Results ... 46
2.4.1. Types of Corruption ... 47
2.4.2. Number and Types of Corruption Actors... 49
2.4.3. Type and Nature of Relations ... 51
2.4.3.1. Dyadic and Triadic Relations ... 52
2.4.3.2. Formal and Informal Relations ... 53
2.4.3.3. Multiplex Relations ... 53
2.5. Discussion and Conclusion ... 54
3. Institutional Change in Indonesia and the Dyadic Structure of Local Corruption Cases ... 57
3.1. Introduction ... 58
3.2. Decentralization and Democratization in Indonesia ... 59
3.3. The Benefits of Embedding Corrupt Exchanges with Resourceful Partners ... 61
3.3.1. Embeddedness in Organizational Relations: Formal Authority ... 62
3.3.2. Effect of Institutional Change on Corruption through Organizational Relations ... 62
3.3.3. Embeddedness in Informal Relations: Kinship and Friendship ... 64
3.3.4. Effect of Institutional Change on Corruption through Informal Relations ... 65
3.4. Research Design and Data ... 66
3.4.1. Data Sources: Newspaper Reports Crosschecked with Official Government Documentation ... 66
3.4.2. Case Sampling and Coding ... 67
3.4.3. Coding and Measures ... 68
3.4.4. Analytical Strategy ... 69
3.5. Results ... 72
3.5.1. Descriptive Statistics ... 72
3.5.2. Results of Significance Tests ... 74
3.6. Discussion and Conclusion ... 75
4. Social Embeddedness of Corruption in Indonesia: A Role Structure Analysis ... 79
4.1. Introduction ... 80
4.2. Social Embeddedness and Corruption ... 81
4.3. A Role Structure Approach to Corruption ... 83
4.3.1. Relational Embeddedness: Four Relational Models ... 83
4.3.2. Structural Embeddedness: Three Types of Third-Party Intermediaries ... 85
4.3.3. Institutional Embeddedness: The Impact of Decentralization on Role Structure Change in Corruption Networks ... 86
4.4. Data and Method ... 88
4.4.1. Data Collection ... 88
4.4.2. Measurement ... 90
4.4.3. Actor and Dyad-Level Descriptives ... 90
4.4.4. Analytical Strategy ... 92
4.5. Role Structures: Descriptive Results and Case Illustrations ... 92
4.5.1. Illustration of a Non-compound Model: Corruption Through Work Relations Between Peers ... 94
4.5.2. Illustration of a Compound Model: Corruption Embedded in Hierarchical and Kin/Friendship Relations ... 95
4.6. Role Structures: Change ... 97
4.6.1. Relational Embeddedness ... 97
4.6.2. Structural Embeddedness ... 99
4.6.2.1. Changes in Third-Party Types ...100
4.6.2.2. Changes in Third-Party Relational Models ...101
4.6. Discussion and Conclusion ...103
4.7. Appendix ...106
5. Giving a Good Example? The Effect of Leader and Peer Behavior on Corruption in Indonesian Senior Civil Servants ...111
5.1. Introduction ...112
5.2. From Monitoring and Sanctioning to Goal Framing ...114
5.2.1. Monitoring and Sanctioning ... 114
5.2.2. Goal-Framing Theory ... 115
5.2.2.1. Peer Behavior ...116
5.2.2.2. Leader Behavior ...117
5.2.2.3. The Effect of Peer and Leader Behavior ...117
5.2.3. The Combined Effect of Monitoring and Sanctioning and Compliant (Noncompliant) Leader and Peer Behavior ... 118
5.2.4. Other Factors Influencing Senior Civil Servants’ Willingness to Not Accept Bribes ... 118
5.3. Data, Operationalization and Methodology ...119
5.3.1. Data: Target Group and Selection of Respondents ... 119
5.3.1.1. Target Group ...119
2.2.1. Types of Corruption ... 39
2.2.2. Centralized Autocratic Regimes and Decentralized Democratic Regimes ... 39
2.2.3. Institutional Change and its General Implications for Corruption ... 41
2.2.4. Institutional Change and Social Capital Traits of Corruption Structures ... 42
2.2.4.1. Corruption Actors ... 42
2.2.4.2. Types of Relation ... 43
2.3. Data and Research Design ... 44
2.4. Results ... 46
2.4.1. Types of Corruption ... 47
2.4.2. Number and Types of Corruption Actors... 49
2.4.3. Type and Nature of Relations ... 51
2.4.3.1. Dyadic and Triadic Relations ... 52
2.4.3.2. Formal and Informal Relations ... 53
2.4.3.3. Multiplex Relations ... 53
2.5. Discussion and Conclusion ... 54
3. Institutional Change in Indonesia and the Dyadic Structure of Local Corruption Cases ... 57
3.1. Introduction ... 58
3.2. Decentralization and Democratization in Indonesia ... 59
3.3. The Benefits of Embedding Corrupt Exchanges with Resourceful Partners ... 61
3.3.1. Embeddedness in Organizational Relations: Formal Authority ... 62
3.3.2. Effect of Institutional Change on Corruption through Organizational Relations ... 62
3.3.3. Embeddedness in Informal Relations: Kinship and Friendship ... 64
3.3.4. Effect of Institutional Change on Corruption through Informal Relations ... 65
3.4. Research Design and Data ... 66
3.4.1. Data Sources: Newspaper Reports Crosschecked with Official Government Documentation ... 66
3.4.2. Case Sampling and Coding ... 67
3.4.3. Coding and Measures ... 68
3.4.4. Analytical Strategy ... 69
3.5. Results ... 72
3.5.1. Descriptive Statistics ... 72
3.5.2. Results of Significance Tests ... 74
3.6. Discussion and Conclusion ... 75
4. Social Embeddedness of Corruption in Indonesia: A Role Structure Analysis ... 79
4.1. Introduction ... 80
4.2. Social Embeddedness and Corruption ... 81
4.3. A Role Structure Approach to Corruption ... 83
4.3.1. Relational Embeddedness: Four Relational Models ... 83
4.3.2. Structural Embeddedness: Three Types of Third-Party Intermediaries ... 85
4.3.3. Institutional Embeddedness: The Impact of Decentralization on Role Structure Change in Corruption Networks ... 86
4.4. Data and Method ... 88
4.4.1. Data Collection ... 88
4.4.2. Measurement ... 90
4.4.3. Actor and Dyad-Level Descriptives ... 90
4.4.4. Analytical Strategy ... 92
4.5. Role Structures: Descriptive Results and Case Illustrations ... 92
4.5.1. Illustration of a Non-compound Model: Corruption Through Work Relations Between Peers ... 94
4.5.2. Illustration of a Compound Model: Corruption Embedded in Hierarchical and Kin/Friendship Relations ... 95
4.6. Role Structures: Change ... 97
4.6.1. Relational Embeddedness ... 97
4.6.2. Structural Embeddedness ... 99
4.6.2.1. Changes in Third-Party Types ...100
4.6.2.2. Changes in Third-Party Relational Models ...101
4.6. Discussion and Conclusion ...103
4.7. Appendix ...106
5. Giving a Good Example? The Effect of Leader and Peer Behavior on Corruption in Indonesian Senior Civil Servants ...111
5.1. Introduction ...112
5.2. From Monitoring and Sanctioning to Goal Framing ...114
5.2.1. Monitoring and Sanctioning ... 114
5.2.2. Goal-Framing Theory ... 115
5.2.2.1. Peer Behavior ...116
5.2.2.2. Leader Behavior ...117
5.2.2.3. The Effect of Peer and Leader Behavior ...117
5.2.3. The Combined Effect of Monitoring and Sanctioning and Compliant (Noncompliant) Leader and Peer Behavior ... 118
5.2.4. Other Factors Influencing Senior Civil Servants’ Willingness to Not Accept Bribes ... 118
5.3. Data, Operationalization and Methodology ...119
5.3.1. Data: Target Group and Selection of Respondents ... 119
5.3.1.1. Target Group ...119
5.3.2. The Vignette Study ... 122
5.3.2.1. The Distribution of Vignettes ...123
5.3.2.2. Conditions and Operationalization ...126
5.3.3. Method of Analysis ... 127
5.4. Results ...128
5.4.1. Descriptive Statistics ... 128
5.4.2. Multilevel Analysis ... 130
5.5. Discussion and Conclusion ...136
5.5.1. Summary and Discussion of Findings ... 136
5.5.2. Policy Implications ... 138
5.6. Appendix ...140
6. Discussion and Conclusion ...165
6.1. Taking Stock ...165
6.2. Summary of Main Findings ...166
6.2.1. Institutional Change and Corruption in Local Public Leaders ... 166
6.2.2. Institutional Change and the Dyadic Structure of Corruption ... 166
6.2.3. A Role Structure Approach to Corruption Networks ... 167
6.2.4. The Effect of Leader and Peer Behavior on Corruption in Senior Civil Servants ... 168
6.3. Theoretical Implications ...172
6.3.1. Implications of a Relational-Based View on Corruption ... 172
6.3.2. Implications of a Social-Norms Approach on Corruption ... 173
6.4. Methodological Implications and Avenues for Future Research ...174
6.4.1. Newspaper Data ... 174
6.4.2. A Vignette Experiment with a Factorial Design Method ... 175
6.5. Practical Implications ...176
References ...179
Nederlandse Samenvatting...193
English Summary ...199
Acknowledgements ...203
About the Author...205
ICS Dissertation Series ...207
Chapter 1
Introduction
1.1. Public Sector Corruption in Indonesia
The problem of corruption in Indonesia has become a topical issue, especially in the public sector. Public officials, both elected leaders and bureaucrats, are expected to maintain and strengthen public trust in government, but many corrupt officials abuse public power for their personal gain. This is illustrated by the country’s position in the Corruption Perception Index (CPI), published by Transparency International on a yearly basis. In 2016, Indonesia was ranked 90th of 176 countries on the CPI with quite a low score of 37 (on a scale between 100 (very ‘clean’) and 0 (highly corrupt)). Indonesia’s CPI score averaged 25.3 points from 1995 until 2016 (in 2012–2015 the score ranged from 32 to 36), reaching an all-time high of 37 points in 2016 and a record low of 17 points in 1999. Although the increases in this index indicate improved government efforts to eradicate corruption, the scores show that Indonesia still has a serious corruption problem.
With the fall of the 32-year-long Suharto or New Order regime in 1998, government attempts to eradicate corruption increased considerably by implementing various anti-corruption measures. Nevertheless, widespread incidences of grand and petty anti-corruption persist as shown in various media such as newspapers, television, and other electronic media: corrupt public officials and private actors are in the news on an almost daily basis. This coincides with the public perception that corruption has worsened in the country, a recent study by the Center for Strategic and International Studies (CSIS, 2016) concluded. Despite more than 50% of respondents to this study believe that the Indonesian government is serious about eradicating corruption, they think that the number of corruption cases is increasing.1 The Supreme Court of the Republic of Indonesia also
considers corruption a serious problem, rankings it the second-highest national problem after drug problems. According to Indonesian Law No. 31/1999 on the Eradication of the Criminal Act of Corruption, and its amended Law No. 20/2001, widespread corruption in Indonesia creates huge losses in state finance and political economy, violates the social and economic rights of the general public, and hinders national development.
The following sections of this chapter present an overview of the attempts of various local governments in Indonesia to fight corruption in the past decades, including changes in institutional arrangements and efforts to strengthen legal frameworks and anti-corruption bodies. We then identify some challenges in the implementation and
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