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everal months into 2016 and new corruption cases in Indonesia are emerging one after another. This makes many Indonesians wonder if we will ever see the end of our corruption eradication journey.

According to the latest data of the Corruption Eradication Commission (KPK), in total, there were 485 major corruption cases investigated by the commission over the past 12 years, from which nearly half were related to bribery.

New corruption cases in 2016 allegedly involve public officials and professionals of various fields and positions such as heads and former heads of regions, procurement officials, judicial institution officials and business professionals.

Meanwhile, on the other side of the world, the leakage of the Panama Papers has led to unconformable tension among many prominent figures in several countries including Indonesia. Many are questioning the integrity and accountability of several Indonesian public figures as their names are listed in the documents.

Uncovering fraud cases can be a lengthy process; there are so many uncertainties about timing and end results. The complex and secret nature of fraud requires investigators to meticulously gather and analyze evidence from multiple sources — all by maintaining the “natural setting” of the investigated parties.

Even starting an investigation can be a daunting task when numerous considerations have to be taken into account, especially regarding whether or not, based on existing preliminary pieces of evidence, the alleged offence constitutes grounds for criminal prosecution.

The Sumber Waras Hospital acquisition case is an example of such a case. Here public opinion is centered on “who has made what mistake”. Some believe that based on the Supreme Audit Agency’s (BPK) investigative audit there have been several instances of misconduct in the acquisition process of the hospital and thus the KPK must act accordingly. Others believe that BPK’s audit was not carried out properly and thus cannot be used to determine whether fraudulent acts took place during the acquisition process.

Regardless of who is right and who is wrong in this case, in reality, fraud investigation is often misunderstood by many and is often thought of as a straightforward process of determining right from wrong.

 As with many allegations of corruption in Indonesia (and the rest of the world), in principle, one major issue that needs to be assessed is the existence of the “gap” between “what is there” and “what should be there” prior to the launch of a full-scale investigation.

Once the gap has been identified then investigators can continue to inquire further about whether the gap caused losses for the organization or the state (i.e. in the case of corruption) as well as identify the parties responsible for it.

As simple as it may sound, the first step of determining the criteria of “what should be there” in itself may pose problems for investigators when the lines between “what can be done” and “what can’t be done” (by the alleged offenders) are not explicitly drawn by existing rules and regulations.

Further, assuming that breaches of rules and regulations can be identified, investigators still need to determine the existence of “evil intention” thereof.

Human intention has been the subject of various studies, which have focused on its origin and construction.

For example, some experts believe that attitude (i.e. favorable or unfavorable evaluation) of behavior, subjective norms (i.e. perceived social pressure) and perceived behavioral control (i.e. perceived level of difficulty) are three important factors behind human intention that will lead to certain behavior (also known as the theory of “planned behavior”).

This is to say that so far as studies are concerned human intention, including that of fraudulent behavior, is a convergence of multiple internal and external factors.

In the science of fraud prevention, identification and understanding of these factors and how to properly manage them is fundamental in designing effective preventative measures.

On the other hand, in fraud investigations, generally proving (or disproving) the existence of an evil intention is an essential part in the inquiry process to arrive at the right conclusion in answering the questions of “what, who, when, where, why and how” regarding the alleged fraudulent acts.

Generally every incident of fraud has three major elements: the act, concealment (i.e. hiding the proceeds) and the conversion (e.g. converting the proceeds into forms that can be consumed).

In terms of concealment, so far as evidence from all over the world is concerned, by offering greater privacy, little or no taxation, easy access to deposits and protection against instability, offshore accounts are among the most common means to hide proceeds of crime from the authorities.

Despite the fact that not all funds kept in offshore accounts can be associated with illegal activities, multiple reports from bodies such as the Financial Action Task Force on Money Laundering suggest that in many crimes, such as fraud, drug trafficking, terrorism, and tax evasion, the use of offshore accounts can be an early indication that there may have been attempts to hide proceeds from illegal activities from the authorities.

According to a number of reports such as the International Narcotics Control Strategy Report 2016, Indonesia is still considered vulnerable to money laundering and terrorist financing due to gaps in its financial system legislation and regulations, a cash-based economy, weak rule of law and ineffective law enforcement institutions.

According to a 2015 report by the AM Best, Indonesia is included in Country Risk Tier 4 which represents a high level of economic, political and financial system risk, as well as a high risk for fraudulent acts such as corruption.

In practice, due to the secrecy of financial networks of offshore accounts as well as the complexity of the placement, layering and integration processes involved in money laundering, proving the existence of “evil intention” behind the financial activities in these accounts can be a resource-consuming task, which also requires multi-jurisdiction cooperation.

Many behavioral experts argue that a major indicator of intention is how hard people are trying or are willing to try to be “evil”. In other words, it is about how much effort is exerted to perform the actions in question.

Yet there is no clear-cut formula to precisely decide whether an alleged fraudulent act was intentionally carried out. For example, judges in a number of countries often struggle to decide whether an act is a legal form of tax avoidance or illegal tax evasion due to the thin line that differentiates the former and the latter.

Only sufficient understanding of human behavior can assists decision makers (e.g. judges) to make the right decisions on issues related to “evil intention” and take the right course of action.
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The writer is the director of the Center for Forensic Accounting Studies at the Islamic University of Indonesia. He obtained his Masters and PhD in forensic accounting from the University of Wollongong, Australia.