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Why Indonesia's anti-graft drive is backfiring on the president

Cleaning up corruption in Indonesia could be the main legacy that Susilo Bambang Yudhoyono will be remembered for when he steps down after ten years as president in 2014. It looks increasingly likely, though, that history will view him differently in light of the revelations that many officials close to him have been involved in money scandals.

The resignation of Sports and Youth Minister Andi Alfian Mallarangeng over allegations of corruption -- a close confidant of Yudhoyono and a key figure in his Democratic Party -- indicates that the anti-graft drive which Yudhoyono unleashed has come full circle. The reverberations threaten to undermine his legacy and the future of his party.

The party has already lost its chief treasurer, Muhammad Nazaruddin, who was sentenced to five years in jail for using his position to win lucrative government contracts and for siphoning off the commissions to the party's coffers (with the help of top party figures). A Democratic legislator, former beauty queen Angelina Sondakh, is also now on trail, facing a 12-year jail term for her alleged part in Nazaruddin's financial scam.

Following his court conviction in April, Nazaruddin named Sondakh and Mallarangeng among his alleged accomplices. Also named in court was Democratic Party Chairman Anas Urbaningrum, but while he has managed to evade prosecution, the barrage of negative media publicity is hurting the party's public standing ahead of the 2014 general election.

The Democratic Party is already resigned to the possibility that it will lose its lead in 2014, and some say the party will be lucky to end up among the top three. As the party's chief patron, President Yudhoyono reportedly warned party leaders in a closed-door session that it must be prepared to play the role of opposition after 2014 unless the party manages to clean up its act.

To compound its problems, the Democratic Party has no viable presidential candidate to offer voters in 2014. Yudhoyono is constitutionally barred from running for a third consecutive term, and he has already said that none of his immediate relatives -- meaning his wife and two sons -- will run for president. Two names earlier mentioned as possible candidates for the Democrats were Mallarangeng and Urbaningrum, but thanks to the corruption scandals, they can now be scratched off the list.

The Democratic Party came first in the 2009 elections with more than 21 percent of the vote; that was only the second time it participated in an Indonesian general election. A former lieutenant general, Yudhoyono created the party for the 2004 elections that helped him win the presidential election that same year and again five years later.

A crucial platform in both the 2004 and 2009 election victories was Yudhoyono's promise to rid Indonesia of corrupt practices rampant at the top level of government and society. The Corruption Eradication Commission (KPK), set up at the start of his presidency in 2004, has become the center piece of his anti-graft campaign, jailing dozens of corrupt powerful politicians, businessmen, senior policemen, and members of the attorney general's office.

In the past year, the KPK has been targeting more and more people close to the president. Neither Yudhoyono nor his Democratic Party should take this personally. The KPK has been going after everyone. All the big political parties, state institutions, and powerful individuals have felt its touch.

To complicate matters for the president, two members of his cabinet are waging their own personal anti-corruption campaigns to take down colleagues in the Cabinet or politicians in House of Representatives. Minister of State Enterprises Dahlan Iskan has accused some members of the House of extorting money from the directors of state enterprises. Cabinet Secretary Dipo Alam has reported to the KPK about procurement irregularities in three ministries.

So what went wrong with President Yudhoyon's anti-graft campaign?

One possible explanation is that the Democratic Party, which started small in 2004 as a vehicle for Yudhoyono's presidential bid, may have become too big and too powerful for its own good, inevitably becoming involved in corrupt practices along the way. Operating a big party requires huge financial resources. Nazaruddin, a businessman by training, was recruited to become treasurer for the purpose of raising funds for the party.

It is also the case that the bigger the party became, the more difficult it became for Yudhoyono to control the behavior of its members. Although he is still the most powerful figure in the party, he does not have full control over the behavior of some of the party members.

He appears reluctant to act firmly against people in his inner circle accused of corruption, even when the evidence has been strong. He refused to intervene by maintaining the presumption of innocence until the law took its course, and even offered a meek defense on their behalf, stating that some government officials may have "unintentionally" engaged in corrupt practices, implying that some of these irregularities could have been carried out by staff without their knowledge.

Whatever his reasons, he is not helping the case for his party, whose popularity rating is dropping as the corruption investigations involving senior party members drag on. As for his legacy as Indonesia's top graft fighter, he can forget that for now.

BAY ISMOYO/AFP/Getty Images

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The fall of a tycoon stuns Serbia

Tycoons in Eastern Europe are well known not only for their lavish lifestyles (complete with yachts and private jets), but also for the power that they exercise through their cozy relations with those in government. The term "oligarch" is often associated with the group of Russian post-perestroika businessmen who made their fortune during Boris Yeltsin's tenure in the Kremlin. But such figures are no strangers to the Balkans, either. No man in Serbia (and perhaps in all of Southeast Europe) deserves the label more than Miroslav Miškovic, the owner of the Belgrade-based conglomerate Delta Holding.

There was a time, not that long ago, when Miškovic -- the country's wealthiest man and its largest private employer -- was considered to be virtually untouchable politically. But last week, in a stunning twist, Miškovic fell from the heights of Forbes Magazine's billionaire list to the crime section of the local press. On December 12, he was arrested, along with his son Marko and eight other people, on charges of abusing several privatization deals for road construction and maintenance companies. According to Serbian prosecutors, he is suspected of illegally obtaining more than €30 million, and has been remanded in custody for 30 days.

Miškovic's arrest on charges of corruption is a major coup for Serbia's new government, particularly for its forceful deputy prime minister, Aleksandar Vucic. A former hard-line nationalist, Vucic -- the head of the ruling center-right ruling Progressive Party, Minister of Defense, and secretary of the National Security Council -- is perceived by many to be the most powerful man in Serbia. A former MP for the Radical Party (whose leader Vojislav Šešelj sits in the Hague tribunal accused of war crimes), Vucic has successfully reinvented himself as a corruption slayer.

Miškovic's arrest is sure to be welcomed by many Serbian voters, who have waited for a long time for their government to take action against corruption. If the Miškovic case goes to court, and if the trial is perceived to be fair, this will undoubtedly bolster Serbia's effort to join the European Union. But if Serbian courts show no greater sense of political independence than their Russian counterparts, the trial of Miškovic might come to resemble the saga of jailed Russian businessman Mikhail Khodorkovsky.

Khodorkovsky, once Russia's richest man, has been in prison since 2003 after running afoul of President Vladimir Putin. Khodorkovsky, like Miškovic, was hardly an example of moral rectitude before his arrest. But because Khodorkovsky's trial was so clearly tainted by a political agenda, the oligarch's prosecution transformed him from a bad guy into a martyr.

Miškovic got his start in the business world in the early nineties. After a short stint in politics in 1990 (as a deputy prime minister in the era of Serbian strongman, Slobodan Miloševic), he launched the Delta M Company. The company soon became Serbia's largest conglomerate, holding a dominant stake in retail, agriculture, finance, and real estate.

According to a 2010 study by the German Friedrich Ebert Foundation, Miškovic is merely the most notorious of a number of Serbian oligarchs who made a fortune by closely guarding the country's retail sector from foreign competition while inflating prices for the country's impoverished consumers.

"One could describe [the oligarchs] as war profiteers," Michael Ehrke, of the Ebert Foundation's Belgrade office, told Radio Deutsche Welle. "Those who profit during a war are also interested in war itself. One could describe them as persons who certainly did nothing to stop this war."

In June 2006, the United States considered recommending that Miškovic be banned from entry into the U.S. under a provision targeting "individuals who engage in egregious corruption to the detriment of U.S. national interests." Three years later, in 2009, he was dining with U.S. Vice President Joe Biden, invited to a state dinner in Belgrade along with former Serbian President Boris Tadic. For many Serbs the invitation highlighted Tadic's cozy relationship with Miškovic.

If Miškovic prepared the way to his ascendency during the Miloševic era, he continued to flourish after its collapse by changing tactics -- specifically by buying influence through the financing of political parties. In 2007, Forbes Magazine named Miškovic as the richest man in Serbia, with a fortune estimated at €1 billion. According to a 2009 State Department cable released by WikiLeaks, Miškovic's operations may have accounted for more than five percent of Serbia's GDP.

Dozens of Serbian politicians are suspected of receiving monthly allowances worth tens of thousands of euros from the tycoon. Following Miškovic's arrest, Vucic has called on Miškovic to reveal his political backers for his own good.

"It's important to find out whom he financed," Vucic told the daily newspaper Politika, adding that at least some 20 senior politicians were on the take. According to Vucic, some politicians were getting a monthly allowance from Miškovic in the amount of €30,000 to €50,000.

Bringing a man of such wealth, resources, and political influence to justice would be hard even in more established democracies than Serbia's. The endless corruption trials in Italy against former Prime Minister Silvio Berlusconi attest to the challenges involved. Serbia is a country where, only a decade ago, Prime Minister Zoran Dindic was assassinated in the middle of Belgrade by a sniper. When he was detained, Miškovic allegedly told the police that Vucic would not live to see the evening.

Vucic's stand against the sleaze and corruption that oligarchs have cultivated in Serbia is commendable. The challenge will be to avoid making the case against Miškovic look like a political vendetta against the oligarch and the politicians he financed. The Khodorkovsky affair serves as the perfect cautionary tale: The trick is to bring down the oligarch without destroying the justice system at the same time.

Photo by ALEXA STANKOVIC/AFP/Getty Images