Indonesia’s notorious oil and gas mafia, which has existed since the beginning of the New Order in the 1960s, is responsible for institutionalized corruption that has pushed up fuel prices and drained state revenue

The Thinker: Mr. Two Dollars

By Yanto Soegiarto on 10:05 pm August 21, 2013.
The oil and gas industry is indeed slippery. Whoever is at the top, whether he or she is a professor, academic or an honest person, can easily be influenced by the glitter of gold and money. This appears to be demonstrated in the case of Prof. Rudi Rubiandini, the former head of the Oil and Gas Regulatory Special Task Force (SKKMigas) who was allegedly caught red handed by the Corruption Eradication Commission (KPK) for possession of hundreds of thousands of dollars in an alleged bribery case.If he is convicted, Rudi may not be alone. Some media outlets have said the notorious oil and gas mafia, which has existed since the beginning of the New Order in the 1960s, is responsible for institutionalized corruption that has pushed up fuel prices and drained state revenue.

Some editorials nominated people who should be investigated, with one saying the Italian mafia is no match for its Indonesian oil and gas counterpart.

Rudi, a respected Bandung Institute of Technology (ITB) alumnus, is a top expert in oil and gas. He now appears to be in the grip of the oil mafia’s tentacles and it is unlikely that he can free himself unless there is a political will to crack down on the mafia and wipe out institutionalized corruption. That is unlikely, though, as the mafia has endured during the administrations of presidents Suharto, B. J. Habibie, Abdurrahman Wahid (Gus Dur), Megawati Sukarnoputri and Susilo Bambang Yudhoyono.

Ironically, a mutual symbiosis between the fund-raising interests of political parties, corrupt officials and corporations has deprived the nation’s coffers. The mafia has in the past proven itself able to maneuver through the bureaucracy, especially in compromising permits and huge contracts, due to lax law enforcement.

Economist Rizal Ramli, a former coordinating minister for the economy under Gus Dur, has for eight years called for a crackdown on the oil and gas mafia. As a former activist jailed under Suharto, Rizal dared to point out the existence of “Mr. Two Dollars” in the oil and gas regular, who collects a fee of at least $2 from the each barrel of imported crude, or more depending on the oil price.

When oil costs $60 a barrel, he calculated that the mafia profited by at least Rp 10 trillion ($940 million). The money could have been partly channeled for political purposes.

KPK chief Abraham Samad has said the oil and gas mafia has deprived the state of at least Rp 15 trillion. He claimed that 60 percent of large corporations evaded tax and royalties. If that money was given to each Indonesian, he or she would get Rp 20 million.

Abraham spoke after the KPK confiscated $700,000 from Rudi and $200,000 from the office of the Energy and Mineral Resources Ministry. He also revealed that the money was given to Rudi by Singapore’s Kernel Oil, an oil and gas trader, as an alleged bribe. These claims led many people to believe they knew who the real culprits were without a mention of names.

State Enterprises Minister Dahlan Iskan, who previously has sought to probe alleged misdemeanors at Pertamina’s oil trading arm, Petral, was also rebuffed recently. His push to disband Petral, which has long been accused of involvement with the oil and gas mafia, failed.

If Yudhoyono fails to wipe out the oil and gas mafia by the end of his term, accusing fingers are likely to be pointed at his office or other people in high places. Jailed former Democratic Party treasurer Muhammad Nazaruddin, who himself became a whistle-blower, warned of dark forces at work. His claims being proven true will support Rizal Ramli’s theory of the mysterious Mr. Two Dollars.

Yanto Soegiarto is the managing editor of Globe Asia, a sister publication of the Jakarta Globe. The opinions expressed here are his own.