Does Corruption Pay in Indonesia? If so, Who are Benefited the Most?

Abstract:     
This paper aims to assess the discrepancies in sentencing corruptors by judges in Indonesia’s judicial system. The data are based on the Supreme Court’s decisions during the period of 2001-2009 which available in public domain. The data comprise of 549 cases, which involved 831 defendants. The defendants have been classified into five groups depending on their alleged scales of corruptions (i.e. petty, small, medium, large and grand scale of corruptions).

The explicit cost of corruption during the period of 2001-2009 was Rp73.1 trillion (about US $7.86 billion). In this paper, total financial punishment was estimated as the summation of the value of fines, seizure of assets (monetary only), and the compensation order sentenced by judges. The total financial punishment sentenced by the supreme judges during the period of 2001-2009 was Rp5.33 trillion (about US$573.12 million), therefore Rp67.77 trillion (US$7.28 billion) gap between the explicit cost of corruption and total financial punishment sentenced shall be borne by the tax payers.

Logistic and Tobin’s logistic (TOBIT) regressions have been used to analyze both the likelihood and the intensity of sentencing offenders, respectively, with particular punishments (i.e. imprisonment, fines, compensation order, etc.). The results show that the probability and the intensity of sentencing across various types of punishment do not correspond to the scale of corruptions. Offenders who committed petty and small scales corruption tend to be punished more severely than their medium, large and grand corruptors.

Number of Pages in PDF File: 27

Keywords: corruption, court decisions, probability of sentencing, intensity of sentencing, logistic regression, Tobin’s logistic (TOBIT) regression

JEL Classification: C70, K42

working papers series