16 May 2012

The hazy state of the Indonesian military's land

Land owned by Indonesian army
Jakarta Globe - May 14, 2012

Samantha Michaels & Ulma Haryanto -- In 2009, more than a decade after the fall of Suharto, a presidential and ministerial decree ordered the Indonesian military to restructure the way it uses the vast array of state assets under its control.

This meant changing the way the Indonesian Military (TNI) used hundreds of buildings and about 2,500 square kilometers of land it had been controlling and renting out for more than half a century.

The decrees state that idle state assets can legally be used by the Defense Ministry and the military, who can earn money through them -- renting them out or partnering with companies to manage them -- but only under certain conditions. They are that the military first has to acquire a permit from the Finance Ministry, and all income earned from the assets must be put in state
coffers for an official audit.

But three years later, the Defense Ministry and the military acknowledge that they have not secured permits for about 90 percent of the land they still control and rent out. Furthermore, the military failed to deposit tens of billions of rupiah in rental income to state coffers in 2010, a Supreme Audit Agency (BPK) report shows.

"I admit that not all the assets are in order," said Lt. Gen. Eris Herryanto, the Defense Ministry's secretary general. "The problems are very complex."


In a statement posted on the ministry's website in March, Rear Adm. Bambang Suwarto, director general of the defense force, said the ministry and military held lease agreements or third-party partnerships for 2,626 plots of land, but only had permits for about 11 percent.

In separate letters sent to two civil society groups last October, the Defense Ministry revealed that the military lacked permits for 99.6 percent of its plots and was applying for permits for them. The Finance Ministry was processing applications for 1.8 percent of the land plots, and the military was applying for 97.8 percent.

The letters were sent to the Indonesian Human Rights Monitor (Imparsial) and the Institute for Defense, Security and Peace Studies, who had since April 2011 been requesting data about the military's business holdings, including its land and building assets, using the 2009 Freedom of Information Law.

"There is a decree [from the Finance Ministry] and right now this is what we're trying to sort out," Eris said. "Because we have some existing long-standing contracts [with third parties] that last for multiple years, so we cannot do anything yet." In negotiating for new contracts, he added, "we can arrange things according to the law."

Eris said that the slow pace of acquiring permits for all the assets was caused by lack of understanding of the regulations. "There are rules that aren't entirely understood, not by us [the Defense Ministry], but by Finance Ministry officials on the local level," he said. "Implementation in the field is not uniform and can be a challenge. But right now we're talking about that with the Finance Ministry."

Where's the money?

According to the 2011 BPK audit report, which covers 2010, the Defense Ministry and the military had failed to deposit profits earned through their land and buildings to the state coffers.

The auditing agency conducted sample audits on one of the ministry's hospitals in Jakarta, two Army bases, an Army education and training center, and seven Navy bases. It found that they failed to deposit Rp 36.6 billion ($4 million) of profit and rent from their state assets in 2010. The ministry's hospital alone failed to deposit Rp 25.7 billion.

The audit cited similar findings for military hospitals in Bogor and Cirebon, West Java. In 2006, the agency also found that military hospitals failed to transfer Rp 414.9 billion of revenue to the state.

"This violates several regulations, because utilization of state assets by parties outside the Defense Ministry requires a permit from the Finance Ministry," the audit said.

The military and ministry have not been punished for these cases. The BPK is only authorized to give warnings, not legal sanctions. If BPK finds wrongdoing during the audit of any other government institution, law enforcement bodies like the police and the Corruption Eradication Commission (KPK) can step in. But with the military, sanctions can only be issued internally.

Land conflicts

And the problem runs deeper. In many cases, the military lacks more than just permits to rent out its land; it also lacks the government title to own its land.

The Defense Ministry, military headquarters and the military bases lacked land titles in 2010 for 70 percent of their land plots, which included those that were not being rented, according to the BPK audit. They were in the process of applying for titles for about 17 percent.

A similar figure was confirmed in a meeting between the ministry, the military commander and House of Representatives Commission I, which oversees defense affairs, in February of that year; they said 80 percent of the titles for the military's assets had not been certified.

The BPK audit also showed that the military was involved in disputes covering 805 square kilometers of land. In the past, these disputes frequently sparked violent conflicts with local communities.

In the Pasuruan district of East Java, Navy personnel shot and killed four residents during a land dispute demonstration in 2007. The residents were protesting against the cultivation of their land by state-owned agriculture company Rajawali Nusantara, which was renting it from the Navy.

The Pasuruan District Court ruled in 1999 that the land belonged to the Navy, but residents appealed the verdict to the Supreme Court, which has yet to issue a decision, according to the Supreme Court website.

In April of last year in Kebumen, Central Java, 14 farmers were also shot during a confrontation with soldiers over disputed land, which the Army has long used for weaponry and ballistics training.

The soldiers opened fire after farmers blocked them from using the site and vandalized a nearby research facility. The Army claimed the soldiers had used rubber bullets but rights groups pointed to live ammunition. None of the soldiers were charged.

Also fueling the Kebumen dispute was speculation that the Army conspired with investors to mine the land for its iron. "We can't comment on the iron ore issue, because the military has nothing to do with business as stipulated by the law," Army spokesman Brig. Gen. Wiryantoro told the Globe last year.

A law passed in 2004 bans professional soldiers from engaging in business activities. But according to a document seen by the Globe last year, a military chief overseeing operations in the province sent a letter to the director of a mining company three years earlier, giving him permission to use the land for mining.

Locals and the Army both claim to hold certificates for the land. Government regulations hold that during a land conflict, the National Land Agency (BPN) must "lock" disputed land from both parties before a court ruling, Haris Azhar, of the Commission for Missing Persons and Victims of Violence (Kontras), said in a statement last year. "Most of these disputes never go to court."

Incomplete reform

The findings on the military's illegal use of state assets follow a years-long effort to pressure the military to divest its business holdings. The effort, which began in 2004, was undertaken to boost civilian control over the armed forces.

Military businesses, critics argued, allowed soldiers to earn money outside their state salaries, making them less dependent on the government and less accountable. The Defense Ministry announced that it had finished the reform in 2010, but many activists disagree.

"The government's decree and regulations do not address accountability for the TNI's unscrupulous behavior, including past misuse of state assets, unauthorized sale of its business interests, or any of the abuses associated with its commercial activities," Lisa Misol, a Human Rights Watch researcher, wrote in a report about the reform effort in 2010.

The report called on the government to "tighten the planned reforms to regularize income from the military use of state assets." If the military is not using its state land and buildings for a legitimate military reason, it added, they should "be immediately transferred to government control and the military should be prohibited from leasing out state assets to private parties."

"We consider it [the reform] a missed opportunity," Misol told the Globe. "It's disappointing that the government hasn't pushed for reform in a real way to be comprehensive and ensure accountability."

No comments: