P

rivate firms have been urged to adhere to good corporate governance as the country’s anticorruption body seeks to widen its “sweeping” coverage to include business entities.

Multinational nickel miner Vale Indonesia applied for a forestry permit to open a new mining site in Soroako, South Sulawesi, in 2009. It completed the requirements according to the law, but has yet to obtain the permit.

Vale’s hard time in obtaining the permit occurs on the back of rampant illegal mining activities on the island. Last month, the Corruption Eradication Commission (KPK) even named Southeast Sulawesi Governor Nur Alam a suspect in a bribery case linked to the issuance of several questionable mining licenses.

“In the extractive industry, firms with good governance are aliens, but those taking the backdoor solution by bribing here and there get the permits easy,” Vale Indonesia communications director Basrie Kamba said during the launch of the Alliance for Integrity project by the German government on Thursday.

As illegal practices to obtain business permits rises, the KPK has asked the Supreme Court to familiarize all judges in the country with the “corporate liability” article within the Corruption Eradication Law, which allows them to name corporates as suspects.

“The law is already there, but the judges are not familiar with the article yet. If they are already familiar, it will be easier for us to eradicate corruption cases that involve firms,” KPK deputy for corruption prevention Pahala Nainggolan said, adding that it expected the court to approve its request by issuing a circular in October.

The antigraft body plans to do a massive sweep for corruption cases involving firms. Its data show that since 2002, 30 percent out of the 500 suspects that have been named by the KPK are businesspeople. The cases are mostly related to permit, procurement and tax-related bribery activities.

Besides Sulawesi, Bangka and Belitung Islands also have seen numerous illegal tin mining activities as the miners export the commodity for bargain prices, thus worsening the global glut. An estimated 1,000 to 1,500 tons of illegal tin ore are exported each year, according to the Indonesian Tin Exporter Association (AETI).

Pahala pointed at mining as a sensitive sector with a lot of illicit practices. From 2010, Rp 23 trillion (US$1.77 billion) in business related fees have accumulated that are still payable to the government from the sector alone.

Overlapping authorities and different spatial planning tasks among ministries, central and regional administrations had resulted in 3,966 mining permit applications being stuck in limbo, he said.

In addition to permits, the procurement process carried out by government tender also provides opportunity for firms to bribe officials in order to win tenders.

The KPK has approached the Home Ministry and regional administrations to fully implement an e-procurement system and e-catalog by next year to minimize bribery. The e-catalog will enable the government to refer to previously used products, without having to hold a tender.

Transparency International Indonesia chairman Natalia Soebagjo acknowledged the private sector’s role in the current culture of corruption. “We can’t only depend on the public sector to eradicate the culture of corruption. The private sector needs to be pushed to change as well because in the end, they’re the ones who’ll benefit from clean governance.”

Indonesian Employers Association (Apindo) executive director Agung Pambudi said there were good companies that complied with existing regulations that should be made examples to others.