Agam recommends changes to laws on lobbying.

Irresponsible Lobbying in Indonesia

Policy-making and business interests have always been closely connected through lobbying. There are many public officials who would trade their power for personal benefit, while on the supply side there are many interest groups who would pay to get their cause attended. Therefore, it is an urgent call to rethink our lobbying practices from the perspectives of responsible lobbying and Anti-Graft Law.

Definition

Lobbying is an act of

“trying to influence the thinking of legislators or other public officials for or against a specific cause”

(AccountAbility & UN Global Compact, 2005). In the business world, lobbying is part of “Corporate Political Activity”, which certain interest groups engage in when they wish to influence political processes and decisions. In this sense, it covers a wide range of activities from political advertising and other forms of public communication to stakeholder engagement, commissioning research, preparing position papers, launching legal action, or U.S.-style contributing to election campaign financing.

Responsible & Irresponsible Lobbying

Interest groups, including corporations, have the political rights to influence public officials by voicing their interests. However, this right is only legitimate if balanced by the obligation to act responsibly. This can be referred to the notion of “corporate citizenship”, when companies involve themselves in the citizenship arena, exercising their rights to actively participate in societal decision-making.

Just as citizens have an obligation to obey the law, so do corporations. Responsible lobbying from a legal perspective means that any law pertaining to lobbying should be taken into account, particularly anti-bribery law. The Anti-Graft Law (No. 20/2001) states that any gratuity (gratifikasi) for a civil servant or state apparatus shall be considered as a bribe when it has something to do with his/her position and is in conflict with his/her official obligations.

AccountAbility and the UN Global Compact (2005) define responsible lobbying as being consistent with an organization’s stated policies and strategy, commitments to stakeholders, and adhering universal principles and values, such as the UN Global Compact.

These international organizations also urge companies to assess their lobbying practices. Firstly, companies should ensure their lobbying is consistent with their self-proclaimed values. Many organizations fail to adhere to their own standards, a case in point being Bank of Indonesia (BI)’s standard of “integrity” after it deliberately allocated 31 billion Rupiah to a campaign for retaining its role in the bank supervisory business – and allegedly illegally channelled more than half of it into legislators’ pockets (Kontan, 2/11/07).

Secondly, companies need to be transparent and responsive to stakeholder needs. Taking the above example, BI spent large amounts of funds on seminars and workshops, book launches and other public events designed to build support for its stance in relation to proposed amendments to the Bank of Indonesia Law. This kind of “stakeholder engagement” is always part of responsible lobbying practices, however later it was revealed in the BPK (Supreme Audit Board) 2005 Report that the campaign was part of a 100 billion Rupiah budget for lobbying, campaigning and legal aid for troubled former BI directors (Koran Tempo, 27/8/07).

This massive pool of lobby funds was not even reported in BI’s financial report – it had to be uncovered by the BPK in their audit. In the U.S. , by contrast, money used for lobbying purposes must be declared. The Lobbying Disclosures Act, for example, makes it public knowledge that between 1998 and 2004 Pfizer spent $54.8m on lobbying, Boeing spent $71m and the Altria Group spent $125.2m.

Thirdly, companies have to set up sound management system in lobbying practices. BPK reported that BI’s lobbying funds were diverted from an education institution belonging to BI (LPPI). It is clear that in this case BI had no clear management systems in place to ensure that their lobbying practices were in-line with their strategy and policies.

Therefore, for BI it is a question of irresponsible lobbying, while on the legislators’ side, it a case of extortion in which they traded their power for personal benefit. This is clearly an act of graft.

Best Practices

The challenge for Indonesia now is to establish a framework for responsible political lobbying. The U.S. has its Lobbying Disclosure Act, while the E.U. is currently formulating directives on transparency in lobbying practices. The U.S. and U.K. have their own professional lobbying associations with strict code of ethics.

A simple framework to complement the Anti-Bribery Law is needed for guiding public officials and business lobbyists, whether they are professional lobbying companies and individuals, or in-house company lobbyists with departmental names like Corporate Affairs, External Relations or Government Affairs.

We need to rethink engagement practices that foster more collaborative approaches to public policy-making, such as igniting public debate to influence decision makers, so as to prevent lobbying from descending into back room deals. Lobbying should seek to affect public policy by providing key stakeholders, notably policy-makers, with options in the policy-making process. Some good examples include the collaboration between the NGO Coalition for Freedom of Information and Ministry of Communications, and the cooperation between Kadin and the Ministry of Finance on the amendment of taxation laws. However, such initiatives should be extended beyond the executive arm of government to legislators..

Civil society organisations (such as Indonesian Corruption Watch), relevant government bodies (such as the Anti-Corruption Commission and Parliament) and the business community should work together to prove that lobbying can become a legitimate and valuable part of citizens’ rights in our democracy.