A Certain Uncertainty: Assessment of Court Decisions for Tackling Corruptions in Indonesia
Universitas Gadjah Mada (UGM) - Department of Economics
August 30, 2011
CLEA 2009 Annual Meeting Paper
This paper aims to assess court decisions for erradicating corruption in Indonesia. The data are based on Indonesia Supreme court decisions from year 2001 to year 2009. The data set comprises of 549 cases involving 831 defendants. After the end of Suharto’s regime, the Anti Corruption Bill was ratified in 1999 and was refined in 2001. As Indonesia follows civil law system, legal certainty has been manifested by stating the level of punishment clearly for each type of offences in the Bill. Despite a clear guidance on the intensity of punishments for each corruption types, judges’ decisions on the intensity of punishments sentenced across defendants are far from consistent. Using logistic regressions, we found that the probability of judges in sentencing defendants with financial punishments (i.e. fines, compensation and the seizure of evidence) does not depend on the level of economic losses inflicted by the defendants. On the contrary, the judges’ decisions tend to be more lenient toward defendants with particular occupations but harsher toward the others. The intensity of punishments has been sentenced idiosyncratically and has weakened the deterrence effect of the punishments. In estimating the social cost of corruption, prosecutors have estimated only the explicit cost of corruption, therefore the impact of corruption to Indonesia economy is under underestimated. Brand and Price (2000) defined that the social costs of crime includes the costs in anticipation of crime, the costs as a result of crime and the costs in reaction of crime. The total explicit cost of corruption from 2001 to 2009 was Rp 73.1 trillion (about US $8.49 billion), however the total financial punishment imposed by the supreme court was Rp 5.33 trillion (about US$619.77 million). The data show that corruption is mostly committed by people with medium-high income and they usually have good careers.
Number of Pages in PDF File: 38
Keywords: Corruptions, Legal Certainty, Explicit Cost of Corruption, Financial Punishment, Deterrence Effect
JEL Classification: C70, K42
Date posted: September 30, 2009 ; Last revised: August 31, 2011
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