Corruption Normalization

in the Public Sector:

A Case Study of Indonesia
Dr. Hendi Yogi Prabowo

University of Wollongong
2015

Bio
Name : Hendi Yogi Prabowo
Occupation :
Lecturer at the Faculty of Economics, Islamic University of Indonesia
Director of the Centre for Forensic Accounting Studies
Research fellow at the School of Accounting, Economics and Finance
Education
Bachelor of Commerce - Faculty of Economics, Islamic University of
Indonesia
Master of Forensic Accounting School of Accounting and Finance,
University of Wollongong Australia
Doctor of Philosophy Centre for Transnational Crime Prevention,
University of Wollongong Australia

About Corruption
Corruption is a worldwide problem. It is spreading throughout

the systems of governments like a cancer.

For transition and developing economies corruption has
become an issue of major political and economic significance
which highlights the necessity to tackle it.
As corruption becomes an intrinsic part of the way state
operates in many countries, remodeling the state is next to
impossible without the elimination of corruption.

About Corruption

The Organisation for Economic Co-operation and Development (OECD)

defined corruption as the abuse of public or private office for personal
gain.
In Indonesia, as stipulated by the 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:

acts that cause losses to the nation;

bribery;
occupational embezzlement;
extortion;
deception;
conflict of interests in procurement of goods and services; and
gratification.

Corruption in Indonesia
In the 2014 Corruption Perception Index report Indonesia was ranked 107 in terms of its

cleanliness from corruption which basically means that Indonesia is still one of the most
corrupt countries in the world.
The thirty two years of the Suharto regime is particularly known as the most
highlighted case of corruption in Indonesia where, unlike in other corrupt nations,
rampant corruption seemed to go hand in hand with high growth.
Suhartos massive fortune was believed to have come from numerous companies,
monopolies and control over vast sectors of economy in particular during the three
decades in power.
Even long after the fall of the regime its signature rent-seeking practices still
characterize the Indonesian economy today.

Corruption in Indonesia
Anti-corruption laws along with an anti-corruption agency, the

Corruption Eradication Commission (KPK) are Indonesias

primary arsenals to bring corruption to its knees.
The numerous corruption cases with high profile offenders in
Indonesia in the past few years suggests more still need to be
done in the future.

Big Questions

What is the current behavioral trend in corruption in the

Indonesian public sector?

What are the behavioral factors that make corruption in the
Indonesian public sector so resilient?

Three Behavioral Lenses

The Schemata Theory

The Corruption Normalization Theory
The Moral Development Theory

The Schemata Theory

Frederic Bartlett (1995) defined schema as an active

organization of past reaction, or of past experiences, which

must always be supposed to be operating in well-adapted
organic response.
The schemata are living, constantly developing, and are
affected by various sensational experience.

A Simple Illustration of Human

Schemata

Corruption
Normalization
Theory (Ashforth and
Anand, 2003)

Moral Development Theory (Lawrence

Kohlberg, 1981)

The Corruption Infection Model

Extensive Corruption Normalization in Indonesia

(1967 1998)

The Concept of Power in the Javanese

Culture
The
concept
of
power
in
the
Javanese
culture is very distinct from those of western

countries.
Javanese see power as something concrete, homogeneous, constant in total
quantity, and without inherent moral implications as such
In terms of concreteness, Javanese generally believe that power is some sort of
intangible, mysterious, and divine energy as a foundation of the universe. Such
energy, despite the absence of physical evidence, is very real in the minds of
Javanese and does not originate from its users.
In terms of homogeneity, Javanese generally believe that, being a concrete energy,
all power assume the same form that originates from the same source. It does not
matter who wields it, be it a farmer or a noble, it will still be seen as the same power
by the society.
In terms of its self-limiting nature, power is perceived by Javanese as always in the
same total amount. This means that, despite being wielded by many users, the total
amount of power in the universe will never increase or decrease. The only thing that
can be changed about power is its distribution which means in order for a power
wielder to get stronger at least another power wielder must get weaker.
In terms of moral implications, the fact that power is perceived as a divine energy
emanating from a single homogeneous source makes it free of the questions of
legitimacy. This means that it does not matter if a power is based on wealth, military
force, or any other means, power will always be admitted as power.

Major Corruption Cases in Indonesia in 2004 2015 (Data per May 2015)

Goods and Services Procurement; 31%

Obstruction of Investigation; 1%
Money Laundering; 3%
Budget Misallocation; 10%
Unauthorized Collection; 5%

Unlawful Licensing; 4%

Bribery; 46%

Source: Corruption Eradication Commission

Corruption Suspects Occupations (Data per May 2015)

Others; 10%
Members of Central and Regional Parliaments (DPR and DPRD); 17%

Heads of Agencies and Ministries; 5%

Private Sector; 25%

Ambassadors; 1%

Commissioners; 2%
Governors; 3%
Mayors/Regents and Vice Mayors/Vice Regents; 10%

Judges; 2%

Ehcelons I/II/III; 25%

Source: Corruption Eradication Commission

Rationalization - Examples
A study by Budiman et al. (2013):

Denial of Responsibility:

Realistically, for a senior employee like me, if we lived based on my basic

salary, no incentives, no teaching, and not having a wife who is employed
as a civil servant, my family would not have survived.

I think that corruption was normal because the salary of civil servants
was just not enough.

People committed corruption to meet their basic needs. It was

acceptable. If they didnt do corruption, well, it was impossible to live on.

Rationalization - Examples

Appeal to Higher Loyalties:

To help and to overcome problems for civil servants, although small, we

also had to become involved in this corruption. But my feeling as a civil
servant is that it was wrong. We knew that the salary was small. Then, one
of my staff had a child fall sick or pass away or her husband was
hospitalized in Jakarta. She had no money to support herself. Well, for the
sake of human compassion, I had to assign her to do an official trip to
Jakarta, although she didnt have any work to do there. In the
administration system, this was not allowed. But, we allowed it.

Narcissism
Narcissism is essentially a state of being the center of a loving world

where one may act merely out of desire in a spontaneous way.

Narcissism is associated with pervasive pattern of grandiosity, need
for admiration and a lack of empathy.
Interestingly, despite their seemingly larger-than-life personality,
narcissistic people often suffer from lack of self-esteem and selfconfidence due to which they always try to make themselves appear
more important than others to compensate their shortcomings.

Narcissism
Core dimensions: authority, self-admiration, superiority and entitlement.
The authority dimension is related to ones desire to be seen as an

authoritative figure and thus a center of attention (Emmons, 1984; 1987;

Rijsenbilt & Commandeur, 2013).
The self-admiration dimension is related to ones preoccupation with how
extraordinary he or she feels (Emmons, 1984; 1987; Rijsenbilt & Commandeur,
2013).
The superiority dimension is about ones believe that he or she is better than
others and thus overestimate his or her own abilities (Emmons, 1984; 1987;
Kaufman, 2010).
The entitlement dimension is concerning ones believe that he or she
deserves more than what he or she actually accomplishes which is often
associated with ones interpersonal exploitativeness (enjoying manipulating
and exploiting others and expect favors from others) (Emmons, 1984; 1987;
Kaufman, 2010).

Future Directions
Bringing down the entire structure of corruption normalization requires the destruction of its

three pillars: institutionalization, rationalization and socialization.

Appointing morally sound leaders.
Once a morally sound leader is appointed to manage a corrupt organization, the next step is
to identify each element of the existing corruption normalization and develop
countermeasures accordingly.
To demolish the institutionalization pillar, preventing corrupt acts to occur in the first place
should always be a priority.

Many small and seemingly insignificant corrupt acts may later on turn into serious offences if they are
perpetrated frequently. Periodical reviews on the existing structures and process within an organization must be
performed to ensure that no part of organizational operations constitutes corruption.

Should any part of the operation is found to be of corrupt nature, it must be erased from organizational
memory immediately. This includes identifying unofficial practices by organization members outside the formal
structure as part of daily operations.

Regardless of the resistance, routinized corrupt acts must be explicitly sanctioned so as to create deterrence
effect for other organization members.

To take down the rationalization pillar an organization needs to have means to neutralize the

various types of denials used by corruption offenders. Denial of legality problem can be
addressed with formulating explicit and detailed job descriptions as well as code of ethics so as
to avoid multiples interpretations.

Future Directions
To take down the rationalization pillar an organization needs to
have means to neutralize the various types of denials used by
corruption offenders.

Denial of legality can be addressed with formulating explicit and detailed

job descriptions as well as code of ethics so as to avoid multiples
interpretations.

Denial of responsibility can be diminished by giving organization members

decent salaries to minimize financial pressure.

Denial of injury and victim can be countered by educating and raising

organization members awareness on the real damages caused by
corruption and other misconducts.

Other denials such as social weighting, appeal to higher loyalties,

metaphor of the ledger, and refocusing attention can be minimized by
educating organization members on the concepts of right and wrong in
their line of works as well as the principle of justice and fairness.

Future Directions
To take down the socialization pillar an organization needs
to have means to monitor employees individual behavior.

Fair and transparent recruitment and promotion mechanism

Monitoring employees moral development
Leadership role model
Rewards and sanctions for good and bad behaviors
Etc.

Thank You!