Whistleblowers can get Rp200 million for reporting graft under Indonesia’s new law. Will it be effective?

Many questions about the new policy on whistleblowers have yet to be answered. www.shutterstock.com

Whistleblowers can get Rp200 million for reporting graft under Indonesia’s new law. Will it be effective?

Indonesia has revised a regulation that rewards whistleblowers in corruption cases.

Under the new regulation, whistleblowers can get up to Rp200 million (US$13,175) for reporting corruption cases that cause state losses. The previous law did not set a reward limit.

To date, no one really knows the exact background of these changes. The government has not given any official explanation yet. It only states that the revision is made “to create an easier reward system for the people who help law enforcement to prevent and eradicate corruption”.

Unfortunately, though the idea is very appealing, it is still reasonable to claim that this kind of regulation has never been used, or at least rarely, and succeeded practically.

The lack of a clear reward mechanism and the small amount of the incentive are among the reasons this regulation may not be effective.

Key details are lacking

Since medieval times a writ of qui tams has allowed a private person to receive a percentage of the money recovered as a result of financial crimes that they have reported.

Such regulation basically aims to persuade people to help law enforcement officers by providing incentives. Analysis on the economic side of the law suggests that people usually respond to incentives. This regulation is based on that assumption.

However, it’s still unclear how it will be implemented. Clear provisions about technical mechanisms to disburse the rewards have yet to be provided.

For example, it does not regulate cases involving two whistleblowers or more. For these cases, so many questions are unanswered. Who has the authority to count the reward? What is the mechanism to distribute the reward? Will the reward be split equally? Or will it be based on the value and relevance of the witness statements in court? If it is based on the value of the witness statements, who has the authority to decide this?

As long as these question cannot be answered properly, this new regulation will be useless.

Too small to act

The financial prize for whistleblowers in fraud cases in other countries can reach up to 30% of the total recovered money. These countries really understand the importance of a valuable witness in a criminal procedure.

Under the new regulation in Indonesia, the government limits the rewards for whistleblowers. The reward is pegged at 0.2% of the total recovered money from corruption cases, or not more that Rp200 million (US$13,175). For bribery cases, the same limitation applies but with a cap of not more than Rp10 million.

The old regulation did not set a limit. It only stated that the whistleblowers could claim 0.2% of the total recovered money and that this only applied to corruption cases. Under the revised regulation, despite the limit, the scope of rewards has been expanded to include bribery, though with a limit of not more than Rp10 million.

Having said that, it means whistleblowers’ tips on either small or big corruption cases will receive the same amount of rewards. A reward for a whistleblower in a mega corruption case like the E-KTP case, which cost the state more than Rp2 trillion, will be the same as the reward for a small corruption case of Rp100 billion.

Just looking at the numbers, it seems that there would be no additional benefits for whistleblowers uncovering major corruption cases. Even though they may face bigger risks when reporting high-profile corruption cases, the reward is still the same.

Despite being based on the economic assumption about providing incentives for whistleblowers, the regulation may not be attractive enough for uncovering major corruption cases.

Furthermore, based on the same economic assumption, the limitation may instead encourage people to work with perpetrators who are trying to avoid being caught. People may conclude that they can benefit more if they cooperate with the perpetrators in a corruption case rather than with prosecutors.

Prospective witnesses may negotiate with the perpetrators to not report their crimes to the police. They might even hide all related evidence and in return the perpetrators would pay the witnesses more than Rp200 million. To avoid a heavy sentence, it is most likely that the criminals would do this as the amount is nothing compared to the money they have stolen.

It is important for the government to appreciate whistleblowers and encourage them by giving them incentives that match the courage needed to step forward in major corruption cases. The current regulation, with its lack of clear mechanisms and small incentives, may discourage people from coming forward as whistleblowers. It could even encourage them to cooperate with criminals to get a better financial benefit.

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