Laode M. Syarif, the deputy chairman of the Corruption Eradication Commission (KPK) warns state-owned companies to be wary of Chinese investment. (Antara Photo/Sigid Kurniawan)

Be Wary of Chinese Investment, KPK Warns


MAY 10, 2019

Jakarta. Executives of state-owned enterprises must approach any investment offer from China with extreme caution as Chinese investors tend to use bribes to get projects, Laode M. Syarif, the deputy chairman of the Corruption Eradication Commission, or KPK, said on Thursday. 

According to the 2018 Global Fraud Report, China has more bribery and corruption cases than any other country in the world. Indonesia is sixth on the list. 

"The data show that Chinese businesses often use bribes to get projects. When they say they want to make an investment, we must approach them with caution," Syarif told more than 400 SOE executives in a seminar at KPK's headquarters in Jakarta. SOE Minister Rini Soemarno was also in attendance. 

Under Indonesia's Corruption Law, receiving any sort of gratification constitutes a crime for SOE executives. It is not a crime for their peers in private companies to receive gratification, though they might violate their company's code-of-conduct.

Syarif said investors from China tend to bribe their way into projects in foreign countries more than their European or US counterparts.

"If a European or American investor gets caught bribing officials in a foreign country, they will suffer punishment back home. That doesn't happen in China, or Indonesia," Syarif said.  

Two years ago, Rolls Royce paid 671 million pound sterlings ($873 million) to settle with a UK court after admitting of bribing executives at Indonesia's flag carrier Garuda Indonesia. 

KPK is currently investigating a bribery case involving a consortium of China Huadian Engineering and state-owned utility company Perusahaan Listrik Negara (PLN). 

The anti-graft agency has named several officials as suspects in the case, including PLN chief executive Sofyan Basyir. They have also barred an executive from the Chinese company from leaving Indonesia. 

Syarif said only two things can stop foreign investors from using bribery to win projects: strong enforcement of regulations and strong internal supervision.

"Everything must be done according to existing regulations in Indonesia. We should also have anti-bribery management in place. We welcome investors, as long as they don't try to bribe people and strive for transparency," he said.