Funding pilkada: Illegal campaign financing in Indonesia’s local elections

Abstract

One of the most intriguing features of illegal activity in Indonesia's post-Suharto state has been the unashamed 'transparency' with which political actors have violated existing laws and regulations. Far from developing sophisticated schemes that outsmart investigators and the public, many politicians, entrepreneurs and rent-seekers simply ignore the law and expect that nobody will notice or care. Mostly, the perpetrators can be confident that their actions will be met with apathy, indifference or – as Aspinall and Van Klinken note in their introduction to this book – even 'social approval'. Indeed, there are entire policy fields in which no effective regulation takes place, with relevant laws deliberately overlooked by both violators and state prosecutors. One such policy field is that of political financing in general and campaign funding in particular. Since 1999, Indonesia's electoral laws have set detailed limits for the amount of donations that political parties and individual candidates are allowed to receive, and have obliged them to sub-mit audited reports on income and expenditure to the authorities. However, parties and nominees have developed a habit of reporting only a fraction of their donations and costs, with prosecutors showing little interest in inves-tigating these transgressions. In interviews with the media, politicians have regularly mentioned much higher numbers for the costs of their campaigns than stated in their financial reports, and except for a small number of civil society groups, neither the public nor the state have aggressively questioned these discrepancies (IFES 2004). Apparently, most Indonesians have come to view illicit campaign financing as an inevitable side effect of political activity, and thus are not overly concerned about the legal violations involved. In fact, many political commentators seem to prefer illegal party self-financing to a more effective system of control, which would reduce the overall income of parties and encourage them to request more money from the state. 124 The state and illegality in Indonesia This chapter discusses illegal campaign financing in Indonesia's direct local elections (or pilkada), 1 which have seen a particularly high level of unre-ported donations from lobbyists and wealthy entrepreneurs. At the national level, financial underreporting and illicit fundraising has been rampant as well (Mietzner 2007), but the need for a centralized campaign organization and the scrutiny from Jakarta-based media has had a moderating effect on parties and candidates. In the regions, however, the lack of financial contri-butions from Jakarta, the absence of strong control mechanisms through the media, and the personality-focused nature of direct elections have aggravated the problem significantly. This chapter approaches the issue of illicit financ-ing of campaigns in local ballots in three steps. First, it explains the regulatory framework for political fundraising and spending in Indonesia, outlining the legal parameters which sponsors and politicians alike find so easy to violate. In the second section, this set of legal norms is contrasted with the reality of campaign financing in local elections. Faced with exploding campaign costs and provided with almost no public subsidies, parties and candidates have decided to ignore the official caps on donations that, if adhered to, would dramatically cut into their funding base. Having established the illegality of these actions, the third part of this chapter evaluates the impact of prohibited campaign funds on the quality of democratic institutions and the outcome of elections. While there is sufficient evidence that the current campaign financ-ing system fuels corruption, it does not seem to seriously distort the result of local ballots, as claimed by some authors (Choi 2005; Hadiz 2007). Finally, I explain how the inherent pragmatism of the Indonesian elite vis-à-vis illegal activity has contributed to the post-Suharto polity's perception of itself as a transitional and 'preliminary' state. Conveniently, this concept has allowed the elite to use the state as a forum to unabatedly compete for power while still upholding Weber's ideal of a positivist, unbiased regulator.