The guest writer, J D Toh can be contacted by this email address.
Singapore has finally relented and agreed to an Extradition Treaty with Indonesia (CNA, 23 Apr 07). Indonesian politicians had accused Singapore of dragging its feet on the treaty because the country was harboring Indonesian fugitives of the Suharto era convicted of embezzlement. Any delays on the part of the PAP government was probably not to protect the freedom of any criminals, but more likely to be satisfied that any potential flight of capital out of Singapore due to an extradition treaty would not seriously impact the country's economy.
So how much money would create such angst in the Yudhoyono government and cause the PAP government to risk bilateral ties? A look at the top 7 most wanted Indonesian white collar criminals that are currently on the run might provide some indication:
• Eddy Tanzil: Sentenced to 20 yrs. Embezzled $620 million from state-owned Bank Bapindo. Escaped and is now believed to be living in China.
• Bambang Sutrisno: Former VP of defunct Bank Surya. Sentenced to life for embezzling Rp1.5 trillion. Now apparently living in Singapore.
• Andrian Kiki Ariawan: Former president director of defunct Bank Surya. Sentenced to life for embezzling Rp1.5 trillion. Now apparently living in Singapore .
• Samadikun Hartono: Former president director of defunct Bank Modern. Sentenced to 4 yrs for embezzling Rp169 billion. Whereabouts unknown.
• Sudjiono Timan: Former president director of state-owned investment company PT Bahana Pembinaan Usaha Indonesia. Sentenced to 15 years jail for embezzling Rp1.1 trillion. Believed to be in Singapore.
• Maria Pauline Lumowa: Boss of PT Gramarindo Mega Indonesia. Suspected of embezzling Rp1.7 trillion from state-owned Bank Negara Indonesia. Fled to Singapore before trial.
• Irawan Salim: Former president director of Bank Global, suspected of embezzling Rp830 billion. Rumored to have fled to Singapore, Canada or Europe.
(Source: Paras Indonesia)
For a country that has been ravaged by corruption for so long, who knows how much of Indonesian money that has flowed into Singapore is potentially tainted. With an extradition treaty in place, how much of that money will stay around and risk being frozen as corruption investigations in Indonesia widen? It is also not difficult to see why Singapore was wary of the potential economic fallout if Indonesian money starts to leave Singapore:
• Foreigners' share of total caveats lodged for private properties in Singapore in 2006 increased to 23%. Indonesians accounted for the lion's share of 22% of foreign buyers. (BT, 21 Mar 2007)
• A third of Singapore's 55,000 high net worth individuals are Indonesians holding PR status, with assets worth $87b. (Merrill Lynch and Capgemini, October 2006)
Not only are trillions of rupiah involved (1trillion Rp is about S$170m), Indon President Yudhoyono's political survival depends heavily on his ability to tackle corruption in Indonesia. Failure in pursuing these fugitives in an acceptable manner would seriously threaten his presidency.
Moral and ethical assertions aside, when would it be not in Singapore's national interest to hold out on signing a treaty? Indonesia had probably realized this line of thought and had fired the first salvo in a game of quid pro quo by banning sand exports to Singapore and threatening to widen the ban to granite and wood. It seems Indonesia has played the right cards and has succeeded in getting the treaty she wants. Although how much the treaty is in Indonesia's favour is still unknown as the terms of the treaty are yet to be made public. What is left is to see if Singapore has done its sums right and its economy can absorb outflows, if any, of Indonesian money.
Comments (9)
To this toh, what goes around comes around. I would reckon if Singapore became reputed for being a safe haven for embezzled funds and other dirty money, it would prove a greater risk to the PAP government for Singapore to become another financial hub, would it not?
So you would want to quarrel with sending back a few corrupt men, together with some millions over a potential financial hub? I say, you have no sense of proportion.
Posted by ted | April 24, 2007 4:33 PM
Are these the main "crooks"? Or are they just the ones who fell out of favour?
In any case we may have traded one can of worms for another. The terms of the extradition treaty have not yet been disclosed, but what if the potential extraditee (?) contests the extradition, on grounds that the original conviction was politically motivated?
Also not obvious from the list provided by J D Toh, is how many of the 7 on the list were Indonesian Chinese. Perhaps the author can provide this.
International geopolitics can be a murky business. One should not be too quick to cast murk at one side, without considering what murk lurks on the other...
Posted by CHEN | April 24, 2007 5:19 PM
Anyone remember Andy Xie, a former analyst later sacked, over his comments last year about dirty money from Indonesia propping up Singapore's bubble? How prescient.
Posted by AX | April 24, 2007 7:56 PM
AX,
I remember Andy Xie and he quit after his email about the World Bank "leaked" to the media.
Please don't post false information next time.
Singapore made the right decision. I don't like corrupted people in our soils.
Posted by whybegay | April 26, 2007 1:34 AM
ted, I personally do not support harboring convicted white collar criminals. My intent was to discuss why, in my mind, PAP took so long to sign the treaty. Our relationship with Indonesia was never very good since Suharto's fall and the subsequent riots. Remember Habibie taunted us with the "little red dot in a sea of green" remark. It was only until the sand ban and its potential impact on PAP's plans for growth that it was forced to act. In addition to trying to gain something in return by throwing other issues onto the table (PAP is fond of what it calls a "win-win" solution), I believe PAP had to also ensure due diligence by being certain IF and HOW MUCH dirty money is stashed in Singapore (not an easy task) and IF SO, would the key institutions involved be able to withstand any repercussions. I believe all these led to the delays.
In terms of questionable money's impact on being a financial hub, we only need to look at Switzerland.
CHEN, unfortunately Indonesian Chinese are not officially recognised as an ethnic group so such race details are not available from official lists.
Ax, we will never know how much, if any, dirty money is propping up our bubble. But having too much money from one place is never a good policy for a stable economy.
Posted by J D Toh | April 26, 2007 12:09 PM
1. Reality number One: Whether SG becomes a financial 'hub' ( don't you hate the word ? ) will depend on the returns big money gets from being parked or transacted here. As JD Toh has already pointed out, big money doesn't care if there's some dirty money around. Not all the money in the world's financial centres will likely to be 'clean' anyway, and that includes big money.
2. Reality number Two: Indonesia and segments of its political leadership needed the 'face' from getting an extradition treaty ( 'Face' is, by the way, not uniquely Eastern ). It doesn't help not to give it to them even if we don't get the sand back in our faces in return. We play along. We help the Indonesians make an example of a few high profile but lesser connected individuals and we tacitly assure the rest that it's business as usual. Accomodate and neutralise.We give them face and we keep the spoils. Sure, Indonesian dirty money helps the economy. Who are we kidding ?
Posted by Wong Hoong Hooi | May 1, 2007 1:47 PM
This is a pretty interesting article on this issue
Indonesia seeks lost trillions in Singapore
http://www.atimes.com/atimes/Southeast_Asia/IE02Ae04.html
Posted by Sze Meng | May 3, 2007 10:02 AM
From the Indonesian perspective, i would continue the bad of export of sand to singapore until a beneficial terms are made.
Posted by ax | May 11, 2007 2:27 PM
Hi Jim. Photos i received. Thanks
Posted by Bill Compton | June 5, 2007 5:24 AM