Frequent Corruption Investigations of Indonesian State-Owned Enterprises May Be a Good Sign

Indonesia's state-owned enterprises ("SOEs") continue to struggle with serious claims of endemic corruption and mismanagement. While the Indonesian Corruption Eradication Commission ("KPK") has yet to reveal details of its most recent high-profile case, which involves allegations of fictitious procurement expenses paid by Telkom Group, spokesmen have said that tens of millions of USD may have been siphoned from the telecommunications firm's budget. 

The Telkom Group case follows other major scandals at SOEs that came to light this year.  The KPK is currently investigating PT Taspen, a state-owned insurer that specializes in civil service pensions, for fictitious procurement of goods and services and, earlier this month, state-owned pharmaceutical company PT Indofarma revealed that it is investigating fraud at a subsidiary that failed to properly report nearly USD 30 million in proceeds.

The succession of SOE corruption investigations concerns some, while other argue it is a sign that State-Owned Enterprises Minister Erick Thohir takes corruption seriously. In boldly confronting SOE corruption, Thohir's “SOE Clean-Up” program has improved governance and professionalism, according to an April 2024 report from Maarif Institute Senior Researcher Endang Tirtana.  In March 2023, Universitas Brawijaya awarded Thohir an honorary degree for his transformation strategy for SOEs, citing the success of the SOE Clean-Up program. With many political observers expecting incoming President Prabowo Subianto to keep Thohir in the cabinet, it seems likely that the SOE corruption investigations will continue apace.