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Photo: Purwaningsih

Hardy Kurdi: „Bribery is part of daily business life in Indonesia“

Don’t Forget the Cigarette Money, Sir... Bribery remains rife in Indonesian business By Ayu Purwaningsih

Photo: Purwaningsih


Cigarette is part of Indonesian social life

n 2011, the anti corruption group Transparency International (TI) reported that businesses in Indonesia are the fourth-most likely in the world to offer bribes in their dealings. In Indonesia, cash used in bribery is called cigarette money and is supposed to smooth the business process. Ayu Purwaningsih met one entrepreneur who shared his experiences with cigarette money. In a early morning in late October he was waiting for me. When I met Hardy Kurdi (name changed by editor) in a hotel in the German city of Bonn, he greeted me with a bright smile. He is a successful businessman from Indonesia. As an agent in the export-import business, the 56-year-old often travels within Europe. Like many other Indonesian businessmen, he also knows what cigarette money means: “Our government has changed many times. The new government has promised to eradicate corruption. But everyone knows the practice of cigarette money remains a part of daily business in Indonesia,” In this Southeast Asian country, cigarette money also refers to the term sticky

handshake, which means furtive handover of cash from palm to palm. During a business negotiation the parties pay the officials extra money in order to receive unlawful priority. Ten years ago Hardy Kurdi founded his own company. He helps some top European engineering companies to sell and distribute machines in Indonesia. He gets a part of the profit made by those companies. Most of his customers are Indonesian state-owned enterprises. Sometimes Hardy Kurdi pays bonuses to potential customers just to attract their attention. But he has many strong competitors in this field. To acquire an order from the state- owned company, he approaches many officials with a lucrative offer. Kurdi explains, “This extra money is always part of our compay’s budget, registered under the term unexpected budget.” In Indonesia, a state-owned company cannot purchase any goods or machines directly from the seller or agent. The company must open a tender for a third party, who becomes a partner. And the third party will

government officials, for example, feel that provide the necessary goods or machines. In they have no choice but to do so as part of such a situation, Kurdi fakes a third party. He common business practices. explains it like this, “If I want to be chosen as Christoph Antweiler is a German an agent or seller, I have to bribe the officials, anthropologist and head of the Southeast so they would choose the third party who are Asia Department at the Institute for Oriental actually my business partners and would give and Asian Studies in Bonn University. He the orders to me. The amount of the bribery has been studying Indonesian cultures for money given to the officials depends on the a long time and price of the items. The more expensive “This extra money or bribery fund is says: “The term of cigarette money the item, the smaller always part ouf company’s bribery is.” budget, registered under the term of or bribe has been known for many Kurdi gives unexpected budget” centuries. The examples: “For an trigger of corruption in Indonesia is not only item that costs 10,000 euros, the bribery a cultural factor, but also an economic factor.” money might be seven percent of that price Antweiler doubts that economic growth or 700 euros. But if the machine costs one and the elimination of poverty in Indonesia million euros, the percentage that we give would directly reduce corruption cases. the officials could be two percent or 20.000 According to him, ”changing the business euros.” environment is seen as an important first step Transparency International’s Corruption in reducing bribery. Therefore putting in place Perception Index as well as the Bribe a sound control mechanism is essential to the Payers Index indicate that in a country process.” Antweiler adds: “Other alternatives where corruption is commonplace, such as to eliminate bribery are law enforcement Indonesia, the level of bribery tends to be and a good will of government.” With these high as well. According to that report, the efforts, Indonesia might have a better chance decision to bribe is often affected by the of eradicating bribery and can say goodbye to culture existing in the work place. In many the phenomenon of cigarette money. cases, companies or businessmen who bribe

Photo: Purwaningsih

Christoph Antweiler is the head of the Southeast Asia Department at Bonn University

Dont' forget the cigarette money, Sir...  

Bribery remains rife in Indonesian business