The Institutionalization of Anti-Corruption Practices in Indonesian Companies

Governance and corruption remain controversial and misunderstood topics (Kaufmann, 2005). Hess (2012) stated that combatting corruption has taken place alongside human rights, labor rights, and environmental protection as one of the major issues in corporate social responsibility during the last decade. Since then, corruption has become a central discussion across nations, especially in developing countries. On the global stage, several anti-corruption movements have been introduced, for example, the anti-bribery conventions of OECD, the Council of Europe, the World Bank, and the United Nations Global Compact. Transparency International (TI) is the most well-known civil society in the area of corruption. TI is active in a wide variety of ways, such as drawing media attention to anti-corruption, providing policy input to governments, assisting with multistakeholder initiatives, facilitating engagement opportunities between corporations and their stakeholders, and working directly with corporations to help them develop the most effective ways to combat corruption (Hess, 2012).

According to Hamilton-Hart (2001), there are three strategies to combat corruption, which are: (1) reducing the scope for corruption through policy changes, (2) increasing the costs of corruption through external monitoring and sanctioning, and (3) devising systems to induce self-restraint within government organizations. It is also suggested that there must be more significant consideration of the government’s role in initiating and steering anti-corruption initiatives (Hess, 2009). Furthermore, Hess (2012) pointed out that the CSR community seeks to solve corruption problems via disclosures, dialogues, and developments. Thus, from the CSR perspective, corporations should be encouraged to improve the environment in which they operate. This is important to maintain the public’s perspective to give trust to corporations. As a leading country in terms of population and natural resources, the position of Indonesia in the world is significant (National Geographic, 2015).
Moreover, Indonesia is one of the world’s major producers of a broad range of commodities (Coordinating Ministry for Economic Affairs, 2011). These factors may attract foreign investors to Indonesia, offering a significant business opportunity. Therefore, trust is essential for investors to conduct their businesses in Indonesia.

Indonesia has been rated by the Corruption Perception Index (CPI), published by Transparency International (2014), as the highest corrupt country among ASEAN countries. It was ranked on the CPI at 107, far below other countries, such as Singapore, The Philippines, and Thailand. This “bad label” has forced the Indonesian government to create laws and rules to curb corruption. Consequently, Indonesia has also been known as a highly regulated country. Apart from many regulations, three leading institutions in Indonesia promote anti-corruption programs: The Indonesian Corruption Eradication Commission (KPK), Indonesia Corruption Watch, and Transparency International Indonesia. The government of Indonesia and other regulatory authorities are seen to be committed to combating corruption and bribery. However, there is still a long journey to see the results of how effective these regulations and institutions are in reducing Indonesia’s corruption rate. Moreover, as ACP has been considered one of the CSR elements (e.g., by the UN Global Compact), many studies and discussions are needed to monitor the progress.


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Tommy Andrian, S.E., M.Ak, Cert.DA., MOS.