Februari 24, 2024

Panama Papers and Money in Political Whirlpool

Panama Papers reveals company”s ownership in domestic tax havens. 899 Indonesian tycoons” names, a few of which are affiliated with the parties strengthen the thesis that parties are controlled by illicit money.

A glass of mineral water was sipped by Marcin Walecki when opening a roundtable discussion about the international standards in the regulation of political party finances. A Senior Advisor to the International Foundation for Electoral System (IFES) for Political Finance issue then described financial governance of politics with that glass full of water.

“Financial governance policy does not only require a transparent system, like this glass, but also a clear source. We will not want to drink this water if we know that the water or its source are dirty, “said this doctorate from Oxford University (29/3).

A week after discussion, millions of financial documents of shadow companies incorporated in tax havens leaked. Panama Papers, leaked documents belonging to the law firm Mossack Fonseca, by the International Consortium of Investigative Journalists of the German daily Sueddeutsche Zeitung. Illicit money allegedly flows and controls parties.

Political Actors in Panama Papers

Some of the names in the document affiliated to parties. Tempo Magazine 11-17 April 2016 issue entitled “Tax haven Occupants of Senayan.”

Harry Azhar Azis is the Chairman of the Budget Committee of the House of Representatives (DPR) in 2010-the same year when Mossack Fonseca registered the company. This Golkar politician born in Riau Islands has been a member of DPR since 2004. He is in the financial sector, banking and taxation. In the period of 2004-2009, Harry had become Chairman of the Special Committee on Local Tax Draft of Law. He was also involved in the committee of the Supreme Audit Agency (BPK) draft of Law, an institution that he is leading.

Another Golkar politician, Airlangga Hartanto, was also detected in Panama Papers. Currently he is in Commission XI of DPR RI, a commission in charge of finance and banking. In politics, his work began as a Deputy Treasurer of Golkar in Jusuf Kalla era. Under the leadership of Bakrie, Airlangga is listed as one of the chief.

Johnny Gerald Plate, Vice Chairman of the Party NasDem, was also recorded in Panama Papers. His company called Serenity Pacific Limited was registered in the British Virgin Islands on 18 October 2007. He is now listed as a member of Commission XI of DPR RI.

Money in the Political Whirlpool

Wahyudi M. Tohari, Economic Governance Program Coordinator of Transparency International Indonesia, revealed that the money that fled to countries tax havens is not necessarily derived from corruption. In Panama Papers case, he emphasized something else-not about the source of halal/illicit money to tax haven countries.

In looking at the case of Panama Papers, he emphasizes about many conglomerates in this country that utilize tax mafia and tax havens countries. They take advantage of the availability of facilities for corporations, super-rich, and the other criminals in order to avoid and evade paying taxes.

There are still many tax havens countries that make the most of their regime confidentiality to grant legal immunity to the criminals, money launderers and taxpayers. Many Super-rich residents of Indonesia do that. Foreign capital companies and some domestic companies in the country also do tax avoidance and evasion.

Money from this tax haven country is then utilized by the oligarchs to control politics that can benefit their business. “Anti-corruption regime is getting stronger. Corruption from state or regional budget is very old-school. So they look for other ways of generating income. One of them is by avoiding taxes to tax haven countries, “said Wahyudi, in South Jakarta (8/4).

The conglomerate which went into politics, became oligarchs, and mastered politics-according to Marcin-has become a global trend in the last 20 years. A similar pattern has occurred in the countries of Eastern Europe and Central America.

Oligarchy can form a party or even buy a party member. Party or a party member is then used as a business investment to access resources. For investments in politics as the market place certainly need a lot of money.

“It takes 10-15 million dollars to form a party in Indonesia,” said Marcin.

Study of Association for Elections and Democracy (Perludem) in 2011 estimated budget of National Mandate Party (PAN) class is to reach Rp. 51.2 billion. This amount consists of the operational secretariat of Rp 1.4 billion, Rp 8.2 billion consolidated organization, political and cadre education Rp 33.7 billion, Rp 6.7 billion public demonstrations, and official trips for Rp 1.2 billion.

Political costs are also getting expensive when entering election phase. The average spending party in legislative elections in 2009 reached Rp 91.84 billion. “The highest was Gerindra to spend 300.34 billion and the lowest was PKB with 3.61 billion,” said Lia Wulandari, researchers at Perludem when contacted (11/4).

These conditions make party so dependent on the oligarch. “The party ended up trapped on specific interests,” said Marcin who now heads the Department of Democratization of Office for Democratic Institutions and Human Rights, ODIHR.

Panama Papers at least proves it. Network crony of Muhammad Nazaruddin, treasurer of the Democratic Party who involved in, revealed. Nazaruddin hot money obtained from a number of contractors who are enrolled in Panama Papers for services in winning many government projects for the development of education and health facilities in the area.

There is also the name of Paul Tannos and Azmin Aulia (brother of former Home Affairs Minister, Gamawan Fauzi). They are in the vortex of corruption cases of electronic ID card project. Azmin Aulia incorporated in the State Printing Company Consortium RI (PPNRI). PPNRI Consortium allegedly approached Minister of Home Affairs through Azmin Aulia.

Party Financial Assistance: Cutting Off the Oligarch

Party law mentioned that party finance comes from membership fees, donations, and state aid. Since citizens had been exempted to form a party during the general elections in 1999 until the 2009 elections, no single party managed to collect fees from members. Most funding came from donations, both contributors to individuals and business entities.

This was where party faced a dilemma situation: on the one hand, to fund operations and win the election, the party requires a lot of money; on the other hand, the contribution may interfere with the independence of the party to defend the interests of the people. The amount of donations could disrupt the party as a mandate of the people because the party can put the interests of donors rather than the interests of the people.

To face this situation, since the 1970s gradually, the trend of Western European countries has implemented two policies: first, to restrict individual and company donations to political parties; second, to provide financial assistance or financial subsidies to the party.

In the Indonesian context, financial aid is important to get attention. It can help parties avoid the shackles of the owner of the money and also help restore the party as an organization of people”s struggles. 1945 Constitution gave many strategic roles to parties to manage the country. Negligence will only make the party not only ignore the interests of the people, but also can develop into a destroyer of democratic institutions.

Lia Wulandari thinks that the government has not seriously worked on party”s financial assistance policy. Party financial aid to this day is still Rp. 108 per vote only meet 1.3 percent of the total funding of national level per year. “Total financial aid at 9 political parties” seats in DPR of 2007 election was only 0.0007 percent of the state budget,” said Lia.

Therefore, the financial political parties need to be increased from 1.3 percent of total party needs per year to at least to 5 percent per year. Further financial assistance is necessary to develop the design of the party so that within the next 10-20 years, party”s financial aid can reach 30 percent of the total needs of the party per year.

“This is the ideal number that can optimize the function of parties” financial assistance as to guard the independence of the parties,” said Lia.

Marcin, at the end of the discussion, recommended financial aid to be started to be practiced after 2019 Election. The provision will be done after the party qualify specific auditing and control requirements. Meanwhile Lia asserted that parties need to work on their financial statements in advance.

“Party would be required to make annual party financial reports and financial reports after the election campaign. Two of these reports are instruments to force the parties to uphold the principles of transparency and financial management of parties accountability, “said Lia.

Marcin then again as mentioned in the beginning: raise a glass and fill it with mineral water again. “Financial assistance from countries is like clean water and money from illegal sources is like the dirty water that we all would not want to drink it,” added Marcin.