INTERNATIONAL MONETARY FUND WORLD BANK GROUP 2018 ANNUAL MEETINGS CIVIL SOCIETY POLICY FORUM FIGHTING CORRUPTION IN THE EXTRACTIVE AND NATURAL RESOURCES SECTOR Jakarta B, BICC Bali, Indonesia Friday, October 12, 2018 4:00 p.m. LIST OF PARTICIPANTS MARYATI ABDULLAH National Coordinator, Publish What You Pay Indonesia LAODE MUHAMMAD SYARIF Commissioner, Anti-Corruption Commission, Indonesia DADANG TRISASONGKO Secretary General, Transparency International Indonesia EMANUEL BRIA Indonesia Country Manager, Natural Resource Governance Institute SIMON CLYDESDALE Extractive Industries Campaign Leader, Global Witness * * * * * FIGHTING CORRUPTION IN THE EXTRACTIVE AND NATURAL RESOURCES SECTOR (4:00 p.m.) RISKI: Good afternoon, ladies and gentlemen. Welcome to the session of Fighting Corruption in the Extractive and Nature Resources Sector hosted by Publish What You Pay Indonesia along with NRGI, Transparency International-Indonesia, Global Witness. The issue of corruption in the extractive and natural resource sector is really a huge issue. Well, (Inaudible) growth in the sector will enable the countries, including Indonesia to finance meaningful development agenda. Anticorruption movement in the sector has been particularly growing, but the challenge persists. This panel will showcase the existing efforts, along with their impact, furthering a better collaborative strategy. It's also expected to exemplify country's effective practices in tackling corruption and also stimulate debate underneath to scale it up into a systemic policy reform. Without further ado, I'll invite our moderator, Ms. Maryati Abdullah, the National Coordinator for Publish What You Pay Indonesia to lead the session for this afternoon. Ms. Maryati Abdullah, the stage is yours. Thank you. MS. ABDULLAH: Thank You, Riski (phonetic). Ladies and gentlemen, thank you for your coming this afternoon. Let me please invite our four speaker in this forum. First, Mr. Laode Muhammad Syarif. Let's give applause. (Applause) MS. ABDULLAH: He's Commissioner of Anti- Corruption Commission. We call it KPK in Indonesia. And he also in-charge in the mostly last five years in terms of the Natural Resource Coordination and Supervision in Indonesia, particularly in the sector of extractive industry and natural resources. Secondly, we have Mr. Dadang Trisasongko. He is Secretary General of Transparency International Indonesia, where Transparency International Indonesia have chosen MACRA to assess the risks of corruption in the licensing of mining sector. Give applause. (Applause) MS. ABDULLAH: The third speaker, we will have Simon. One of the oil and gas campaigner from Global Witness. Maybe all of us know Global Witness has many investigative and also research in terms of the corruption, particularly interjurisdiction country. And last but not least speaker is Mr. Emanuel Bria. Mr. Emmanuel Bria is Country Manager of Natural Resource Governance Institute where NRGI has many expertise and also provide technical assistance to improve transparency and anti-corruption effort in natural resources sector. So we have four speaker now. As I wanted to reemphasize that our forum today we will discuss more on the many angle of the effort to tackling anti-corruption in the mining sector, oil and gas and also other natural resources sector. Even though from the preventive side, from the improving policy side in along the extractive industry failure chains and also from the law enforcement body sides, because we have anti-corruption commissions and we also wanted to emphasize how the important to tackling corruptions in extractive industry, because in many natural resources rich country they are dependence on the natural resource as part of the resource mobilization to finance their development, also to tackling inequality and poverty in many countries, but we see there are many problems in terms of lack of transparency, lack of governance and also anti-corruption and this would be herald (phonetic) as the people like in terms of the natural resources. Secondly, in many country on dependent on oil and gas, mining in natural resources facing a high risk on the dependent their national fiscal in terms on the natural resources, and also to some extent on the fossil fuel sector. So that's why this anti-corruption issue is very important. And I know and we know, IMF and the World Bank put the anti-corruption as the new critical issue. As we know also in the spring meeting this April, IMF launched the report on the anti-corruption, think to improve the governance and also macroeconomic of a fiscal structure. So I didn't want to be taken very long. I want you to give time for Mr. Laode Syarif to highlight some issue and also presentation. Mr. Laode, please. MR. SYARIF: Thank you very much, moderators. And ladies and gentlemen, good afternoon. Yes, they asked me actually to talk about addressing corruption on natural resources exploitations in Indonesia and things the KPK actually have some program on how to tackle natural resources related corruptions. But I think we are still in the beginning. We need to scale it up. But before that I'll try for the audience that not familiar with the KPK, I'd like to explain a little bit of KPK, what we are doing and also I always love this. This is actually about 350 years before Christ and this is impossible for one dealing with the government funds not to taste at least a little bit of the king world. So -- but in the case of Indonesia or in many countries they do not only taste a little bit but I think big chunk of it. So this is not the case in Indonesia, so that's why I always said as the opening of mine. So basically we never change since Kautilya time. And even actually Bu Hatta, the Indonesians -- the first Indonesian Vice President said do not let corruption become part of Indonesia culture. He said it in '61. But I think now it has become -- I will not admit it that corruption has become a part of Indonesian culture, but I think if you check it correctly maybe yes, unfortunately. Yes, so this is the KPK. KPK is independent from the judiciary and the legislatures. We are responsible only to the public, financially audited by the Indonesian Supreme Audit Board. It is established in 2003 and it is actually led by five commissioners, collective collegial and I am one of them. But in the prosecution side we only have -- I have to change it about 300 now, it is not 250 but about 300 investigators and prosecutors. And what is actually KPK duties and functions. Based on the KPK law, we do coordination with government agencies, including with civil society. We supervise other law enforcement agency that look after corruption like, Attorney General Office and the police. Also we are monitoring government's policies and we do preventions of corruptions, and last one, this make us a little bit famous little bit because we do pre-investigation, investigation and prosecution in one roof, which is actually bit different from like ICAC in Hong Kong or CPIB in Singapore or Malaysian Anti-corruption Commission in Malaysia. We are similar with, say, SFO, Serious Fraud Office in UK, because we investigate and prosecute in one roof. Natural resources corruption is one of the main focus of the KPK, why, simply because there are a lot of money in it, and to be honest one of the worst governance this natural resources, compared to some other industry. And I give you an example. But then if you look at the map of Indonesian, we are quite rich actually, if you look at its natural resources. You name it, we have it. Gold, yeah, one of the biggest. Coal, we're quite rich and also the coal resources, but basically they are become actually -- if you look at oil and gas, we used to be an exporter, but now we are importers. So this is also a good sign that actually oil and natural resources, it is not unlimited. It is very, very limited, yeah, because Indonesia used to be part of OPEC and now we are importers, net importers and actually killing our economy. I think this is to not today importance, but what is actually corruption in natural resources. There are many. For example, preventing state losses in Indonesian forestry sectors. I work on this report before I join the KPK actually. I used to assist the KPK in the past, but it is quite interesting to see. If you look at the estimated actual timber production from natural forest 2003-2014, you can actually see it. The reported production it is actually on red. We actually the estimation one, it's mentioned, we saw commercial value and reported timber production is much, much better -- much bigger, but it is unreported, mostly illegal, some of them half illegal. Why I said they half illegal, they have a license but actually they cut more than they supposed to cut. They actually cut inside natural forests for examples. So that's why we are actually -- the KPK actually launched Gerakan Nasional Penyelelamatan Sumber Daya Alam, a national movement to save Indonesian natural resources and one of them actually on mining. This is the set reality of our finding. 90% of licenses holder do not report their mining activities. This is a real finding. That's why I'm saying, it's one of the worst. 90% licensing holder do not pay the obligatory reclamation and post-mining rehabilitation fund. About 2,000 license holder do not have a tax file number. I mean, how can you operate it within a country. Some of these licensing holder are operating within more than 6 million hectares of conservation and protected areas. So they're overlapping 6 million hectares.